Questions About UJA-Fed ‘Early Warning System’


With the community still grappling with the shocking news that FEGS (Federation Employment and Guidance Service), one of the largest Jewish nonprofits in the country, is going out of business due to a major loss of funds, there is a temptation to connect its demise to the recent troubles of other local Jewish social service agencies.

Metropolitan Council for Jewish Poverty, still reeling from the news that its longtime and popular CEO William Rapfogel embezzled millions of dollars, may be on the financial ropes as well. And Yisroel Schulman has resigned as president and attorney-in-charge of the New York Legal Assistance Group amid reports of financial irregularities. Each of these organizations provides vital services to the poor and needy; each of them is affiliated with UJA-Federation of New York, the gold standard in the field with a longstanding and proud reputation for both compassion and professionalism.

Indeed, UJA-Federation created guidelines after Rapfogel’s shocking arrest in 2013 to deal with just such situations. The document, “Accountability Guidelines for Network Agency Boards of Directors and Senior Management,” states that the purpose “is to ensure that agency boards have the tools needed to meet their responsibilities and to provide UJA-Federation with early warning of potential financial challenges at agencies.”

The guidelines call for detailed involvement in the areas of “governance, fiscal management and general oversight,” so that the effectiveness of boards of directors of agencies, charged with fiduciary responsibility, will be held to standards and evaluations set by UJA-Federation.

No doubt there are any number of reasons to conclude that the cases of FEGS and NYLAG are distinct and particular unto themselves, an unfortunate coincidence that they come to light within days of each other — and coinciding with the fall of Sheldon Silver, perhaps the most powerful Jewish politician in the state over the last 20 years.

From a public relations standpoint, UJA-Federation’s decision to say little beyond bland statements in recent days is problematic.

Rather than get out in front of a potential scandal and clear the air, key officials have resisted responding to questions from the press, like how FEGS could have sustained such a big loss unexpectedly in the last year. Some say UJA-Federation is keeping quiet in deference to delicate negotiations taking place with government officials and social service groups that may take over some of FEGS’ important work. “We’d rather take a PR hit than jeopardize these discussions,” one official said.

What is needed to assure continued trust in the community, though, is a thorough investigation into what went wrong, and how, and what will be done to reverse this troubling trend.