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Social-service agency’s woes may have wider lessons

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Capital New York reports on the downfall of  Federation and Employment Guidance Services  amid a $19 million revenue shortfall. There may be lessons for other nonprofits.

“{T}he ruinous series of decisions that wrecked FEGS—a health and human services nonprofit that has long been one of New York’s largest, most well-regarded social services organizations—was years in the making, reports Capital New York.”

This was an agency “engaged in risky long-term behavior and slowly drowning in debt, seeking capital financing from an ever-widening array of sources to expand its operations and interests even as those operations failed to produce profit.

“As that behavior was intensifying, city and state governments continued to provide FEGS {with} grants and finance its debt, lending the organization money while it approached collapse.”

“The potential implications of the nonprofit’s collapse aren’t just financial and logistical—FEGS is responsible for running hundreds of city and state social-service programs—but also political, raising questions about how a host of well-connected directors, regulatory entities and elected officials failed to see the disaster coming.”

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