The massive New York Jewish social service agency FEGS will cut programs after discovering it lost a startling $19 million in the 2014 fiscal year, the Forward has learned.
The organization abruptly dropped its new CEO on the day it disclosed the loss to staff.
FEGS revealed the $19 million loss in an all-staff email on December 12. Ira Machowsky, FEGS’ executive vice president, was slated to replace the organization’s CEO on January 1. But he and the outgoing CEO, Gail Magaliff, were replaced on December 12 by Kristin Woodlock, the group’s former Chief Operating Officer.
A spokesperson for FEGS said that Machowsky has submitted his resignation to the board. “FEGS’ Executive Vice President Ira Machowsky believed that the FEGS restructuring would best be handled under new leadership and submitted his resignation, which the Board accepted,” the spokesperson wrote in an email.
The spokesperson did not directly respond to a question about how FEGS learned of the scale of the loss. “While FEGS has made certain cuts and changes, these did not go far enough,” the spokesperson wrote.
In an email to staff, Woodlock said that FEGS would cut services in response to its fiscal crisis. The $19 million loss, Woodlock wrote, “is particularly sobering, and demonstrates the immediate imperative for change… Our intention is to create a smaller and more focused portfolio of services.”
The group lost just $1 million in its 2013 fiscal year, according to tax filings.
Machowsky has worked in various positions at FEGS for over three decades, most recently as its executive vice president. He was tapped in November to replace Magaliff, who had been the CEO of FEGS since 2007. Machowsky was set to take Magaliff’s role in January 2015. Instead, Machowsky is now gone from the organization, and the CEO role has been handed to Woodlock, a former Acting Commissioner of the New York State Office of Mental Health, who had been the COO of FEGS since 2013.
FEGS is one of the largest Jewish charities in the country, with annual expenditures of $229 million. The organization provides a range of social services, from home care to workforce development, and received $94 million in government grants in the 2013 fiscal year.
The organization also receives major funding from UJA-Federation of New York, which gave FEGS $4 million in the 2014 fiscal year. In a statement, UJA said it was aware of FEGS’s financial situation. “Our priority remains that individuals currently served by FEGS continue to receive critical services and assistance,” the statement reads “We are in regular communications with FEGS, an independently governed and operated beneficiary agency, and support FEGS’s intention to undertake a comprehensive restructuring effort.”
The organization is audited by Loeb & Tropper, an accounting firm that services many Jewish charities, including the Forward Association, this newspaper’s publisher. A spokesperson for the firm, Paul Mendelsohn, said that the firm could not comment on client matters.
Josh Nathan-Kazis is a staff writer for the Forward. He covers charities and politics, and writes investigations and longform.