(image credit to Crain’s New York Business)
In early 2015, The Federation Employment & Guidance Service, or FEGS, announced that it would close its doors and cease operations. To the City of New York, this meant that the New York City Human Resources Administration’s largest and most prominent provider of job placement services would no longer be able to fulfill its mission of providing employment, health and social services to deserving New Yorkers through city, federal and private funding. Put into context, this means that over 100,000 of the neediest New Yorkers will need to turn elsewhere to gain assistance in finding jobs, affordable housing and other services.
According to FEGS, years of internal financial mismanagement, resulting in glaring gaps in funding streams and budget allocations, are to blame for what is amounting to be over a $20 million dollar budget shortfall. Meanwhile, those at top leadership in the 80-year old non-profit made over a half-million dollars in annual salary and perks.
It’s reminiscent of Fannie Mae, JP Morgan and Citigroup. In these cases, private institutions which controlled a considerable amount of public trust, deemed “too big to fail”, received considerable amounts of cash from the federal government to prevent insolvency. CEOs with padded salaries claimed they were unaware of the machinations which led with the downward spiral of their business. The Manhattan district attorney and state attorney general are investigating the root causes of the downfall.
The thought behind bailouts was that if these banking institutions, even with admission of their own malfeasance, were allowed to end, it would cause considerable damage to the overall economy and create widespread job loss.
While there are plenty of other non-profits in New York City, but few to none have the quarter of the $200 million dollar budget FEGS boasted, nor are they ready to take on the task of providing services on the same scale. Reallocation of the funds which were to be dispersed to FEGS will be a long and arduous process. In the interim, stand-in institutions must be willing to work twice as hard, for half as much.
Many may wonder why FEGS cannot receive the same corporate welfare espoused in the instances of JP Morgan and Citigroup. New York City is home to over 8 million people. To serve that number, the City has long depended on the service of non-profit organizations to administer vital social services to the public, through funding contracts administered by City agencies such as the Department for the Aging and The Department for Youth and Community Development. Loss of one of these providers will not only be inconvenient for the City, but devastating for individuals who rely on services which they may provide.
While the economic impact is nowhere close to that which might have been felt by the national “too big to fail” banks, the average New Yorker should be rightfully concerned with non-profits that provide aid to their friends, neighbors, or themselves. For the average New Yorker, FEGS is too big to fail.
About the Author, Eric C. Henry Jr.
Eric is a 2005 graduate of Binghamton University, where he double majored in Africana Studies and Philosophy, Politics and Law. Currently, he works for the New York City Council. He is also a member of Alpha Phi Alpha Fraternity, Incorporated and serves as Co-chair of the Community Service Committee of the New York Urban League Young Professionals.