Disenfranchised New Yorker’s Failed by Established Nonprofit

The New York Times recently reported that the Federation Employment & Guidance Service  or better know as FEGS, ‘discovered’ they had a budget shortfall of nearly 20 million dollars. FEGS is a New York City based non-profit organization that was created over 80 years in ago to assist returning veterans, individuals with disabilities, older adults, and other disenfranchised in New Yorker’s to find employment and fight workplace discrimination. As the New York Times reports:

“FEGS, the city’s biggest provider of job placement services to the impoverished and disabled” and the FEGS budget shortfall leaves “city and state officials scrambling to find new providers of job placement, housing, mental health care and other services for tens of thousands of vulnerable New Yorkers.”

FEGS maintains that “no fraud or malfeasance has been identified” so far by a forensic audit that is currently underway.”

Let’s just believe for a moment that top management didn’t commit overt acts of fraud. Even with that said, how, in good conscious can the FEGS board of directors approve a CEO salary of almost $700,000? In fiscal year 2012, Gail Magaliff, the previous chief executive officer, earned a base salary of $482,436, plus additional compensation of $156,444, for a package of $638,880, the tax return shows.

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Having worked in the fiscal department of a handful of New York City nonprofits, I understand that in order to provide valuable services, an organization must invest in staff and administrative costs. I am not saying that top leadership shouldn’t be paid well, but what I am saying is that when the signs indicate that there is a major budget shortfall, the money needs to be reallocated. This report sickens me because the signs of a major budget shortfall were certainly present and according to the New York Times, “FEGS reported operating losses two years in a row, according to the agency’s tax returns from fiscal years 2011 and 2012, the most recent returns publicly available.”

I personally don’t understand how a CEO can accept a salary that large knowing that the place is essentially going down in flames. Maybe its harsh for me to say this, but  just don’t buy it that the organization and the city had, and I quote: “never even a hint that the organization was about to go into a financial tailspin, or perhaps was already in one”

I’m sorry, I just don’t buy it.

It goes without saying that it truly angers me that a nonprofit organization would be run into the ground and knowingly fail the very people that need them the most. FEGS former CEO said at the organizations benefit gala at Cipriani 42nd Street that “she was inspired to see so many people gathered to celebrate our shared commitment to serving people who face barriers to economic and personal independence.”

Yeah, right. Sounds like she is more interested in rubbing elbows at one of the city’s upscale venues. Its obvious to me that she certainly wasn’t thinking about the vulnerable New Yorkers that FEGS claim they serve when she signed the check to pay the hefty Cipriani bill. I believe the organization as a whole and top-leadership should face the consequences for swindling donors out of money and then misappropriating that money.

If you’re reading, former FEGS CEO Gail Magaliff, please answer the following for me: At what point did you first start putting your personal needs above those you claim you serve? How did you live with yourself when the signs were clear that the organization was in real trouble? What are some concrete examples of how you tried to save the organization?