March 16, 2015

Collapse of N.Y. Human-Services Nonprofit Was Years in the Making

A Capital New York review of New York’s Federation and Employment Guidance Services financial disclosure forms and tax returns found a pattern of long-term risky financial behavior and deepening debt as the agency continued to seek funding to expand its operations.

City and state officials as well as two umbrella agencies are investigating the group's downfall. Capital New York says the group had a history of unwise investments and used loans and grants to keep afloat.

The nonprofit announced last month that it planned to close amid a $19 million revenue shortfall. Now the agency may file for bankruptcy, and state and local agencies that contract with the nonprofit are making plans to shift the charity's caseload to other organizations.

The city first became aware of the nonprofit’s operating shortfall in December. Its chief executive, Gail Magaliff, whose 2012 compensation had totaled $638,880, according to tax records, had been replaced.