New York Nonprofits in the Aftermath of FEGS: A Call to Action

As with any industry, nonprofits in the human services sector close and merge, but recently, there have been many questions about why so many have disappeared. 18 percent of New York City's human services providers were insolvent in 2013. With the closure of FEGS, it became clear that action was needed, both to examine systemic issues in the sector and to respond quickly and be an active partner with government in addressing this problem. Although FEGS was a unique organization and its collapse was due to a number of different factors, its bankruptcy took place against the backdrop of a broken system in which there is a severe mismatch between program expectations and available funds. Too many nonprofit entities do not have the systems in place to appropriately assess risks, undermining their ability to evaluate government proposals, real estate, and other financial and programmatic decisions. This report serves to provide urgently needed attention to the looming crisis.