Some Chutzpah! Former ED of Failed Nonprofit Claims She’s Owed $1.2 Million

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May 3, 2015; New York Times

The bankruptcy of the 80-year-old FEGS Health and Human Services, one of New York City’s largest social service agencies, will require sorting through many claims from vendors and former staff members. One of the latter will be Gail Magaliff, who was the CEO during the period that the agency ran aground. She claims the agency owes her $1.2 million in deferred compensation. And while this kind of chutzpah is as common as corn among high-level executives at corporations, it is breathtakingly out of place in the nonprofit sector.

It was only around a month after Magaliff announced her retirement that Karen M. Woodlock, the current CEO, revealed that the agency had a $19.4 million shortfall and was in serious trouble. When FEGS filed for bankruptcy in March, Woodlock eventually revealed to the court that salaries and benefits at the $250 million agency in FYs 2013 and 2014 grew as revenues fell and that 74 percent of the nonprofit’s 350 programs were losing money.

While Magaliff earned a total of $638,880 in base salary and additional compensation in 2012, other employees earning far less also have claims for unpaid severance and vacation time, and there will not be enough to pay all such claims off.

Gina Thomas, for instance, was laid off after 28 years and is owed $11,000. She is a 53-year-old case manager for people with mental illness.

“I laughed,” said Ms. Thomas. “Then I got angry.”

Meanwhile, Magaliff has petitioned to prohibit the agency from using the funds for purposes other than her reimbursement. FEGS is in the midst of trying to transfer its programs for New York’s vulnerable to other agencies.—Ruth McCambridge


  • Jon Van Til

    I always love stories like this. I used to be just about the only observer of the nonprofit scene willing to talk about this kind of despicable executive behavior. I’d get calls from the Chronicle, the NPT, and various local papers. I once proposed that there be an annual “Babbitt” award for the nonrprofit exec whose hand got deepest into the pie, usually with the help of a board member or two and control of the key compensation committee. There was usually a lawyer involved, or the spouse of one. But the idea never caught on–I guess no one reads Sinclair Lewis any more. Cheers, and keep up the good work. Jon