NEW YORK (JTA) — FEGS, one of the largest social service agencies in the United States, is shutting down after unexpectedly losing $19.4 million last year.
The New York-based FEGS, which has nearly 3,000 employees and is a beneficiary of UJA-Federation of New York, announced Friday that it would close, Crain’s New York Business reported. The group, whose name is an acronym for Federation Employment and Guidance Service Inc., made its announcement just days after another New York Jewish social service agency, the Metropolitan Council on Jewish Poverty, announced that it was looking to merge or partner with other organizations on various projects but also might close altogether.
The Met Council has been struggling in the aftermath of a major embezzlement scandal involving its former CEO William Rapfogel, who was convicted last year and is serving a prison sentence of 3 1/4 to 10 years. The group’s former chief financial officer also was convicted in the scandal.
FEGS, which claims to serve 12,000 people daily in such areas as health/disabilities, home care, job training and immigrant services, has an annual budget of $252 million and is one of the largest social service agencies in the United States, according to Crain’s. Its closure forces government officials to quickly find organizations that can take over the group’s government contracts.
In a statement cited by Crain’s, FEGS said it worked with financial and restructuring experts as well as funders and others to salvage the nonprofit, but ultimately decided such steps were not feasible.
An email that JTA sent FEGS media relations department seeking confirmation was not returned by press time.
It is not clear what led to FEGS’ major shortfall. An agency spokesman declined to offer specifics in an interview last month with the daily Forward.
The Crain’s article suggested the group’s financial problems “may be driven by the vast challenges facing social-service agencies in the city, triggered by growing demand and falling reimbursement rates.”