Premier NYC Non-Profit Went from Blue Chip to Sinking Ship?

Federation and Employment Guidance Services shocked New York's nonprofit world last month when it announced its plans to shut down due to a $20 million revenue shortfall.

FEGS was one of New York's oldest and largest social services organizations. More than 130,000 city residents used one of the organizations 200 programs, which included everything from providing affordable housing for the disabled to administering welfare-to-work programs.

But after years of mounting debt and questionable financial decisions, the $250 million organization said they are closing down. Yet an investigation by Capital New York showed that despite years of questionable tax returns and financial disclosure forms, the city and state continued to loan the organization money.

"A lot of people told us that [the city and the state] definitely should have been asking more questions about the unusual financial statements that were being offered up by [FEGS] that didn't follow accounting practices that a lot of nonprofits said were standard practice," Capital New York reporter Laura Nahmias told WNYC's Richard Hake. "That should have been a red flag to people who were approving grants and continually awarding contracts."