Southeast Neighborhood House in Anacostia will celebrate 50 years of operation in April, nearly shut its doors for good this month. The board of directors decided during the past two weeks to continue operation after discovering a $112,000 deficit, two cases of alleged embezlement and a history of mismanagement.

After a series of special meetings and discussions of a major reorganization, members of the board of directors, headed by D.C. attorney John Kirkwood White, said they believe the organization can now get out of the red and continue operation. The directors had imposed a deadline of March 31 on deciding whether it was feasible to continue operating the house.

Southeast House, a former settlement house, provides social services to the local community, including feeding the elderly and counseling youth.

Funded by United Way, the United Planning Organization and the D.C. Department on Aging, it has been the recent focus of controversy over the possible loss of jobs.

William Davis, executive director of the United Planning Organization, which funds a number of the community-based social service agencies, said, "There is a funding crunch and this is causing problems for everybody."

The crisis situation at Southeast House began more than two years ago when one of its main funding organizations, United Way, withheld its $113,000 grant for six months because Southeast House - which has a $1 million budget - refused to permit an audit.

Pressure continued when other funding agencies, including the D.C. Department on Aging, asked Southeast House to reevaluate its organizational plan because there seemed to be too much duplication in services and use of resources.

A recent audit showed the agency owed more than $90,000 in federal withholding taxes and another $3,000 to creditors.

An investigation by the new executive director of the community organization, Laplois "Lakey" Ashford, also revealed that despite its deficit the organization was actually returning money to funding agencies. "In some cases, we were not asking for enough money to operate our program and in other cases we just weren't keeping track of what was spent. There was no central accounting system," Ashford said.

Ashford said he also discovered through his investigation that two employees had allegedly embezzled funds from the agency. He said the most recent alleged embezzelment, which was settled out of court, involved $12,000. The employee signed a promissory note to repay the money, according to Ashford.

A source at Southeast House said there were other instances in which the agency's funding was put to "improper" use. These included the payment of tution for at least one employee and the leasing of a car for a worker both during her employment and two years after she left. The car leasing cost the agency $7,000, the source said.

The problems of the organization are now being worked out, according to White, who explained, "We've had a series of problems really going back some time. It has basically been a problem of finances and establishing a management and accounting system for the house. I think we are going to make it. What give us some hope is the audit. They (the auditors) have optimism we can make it."

The organization has now hired additional professional staff, including a new bookkeeper; added safeguards to prevent theft; worked out a repayment agreement with the Internal Revenue Service and other creditors, and has now begun a major reorganization.

This reorganization was announced last month to employees, setting off a chain of reaction. Employees were told the houses's 84 positions would be eliminated. The employes believed the announcement meant a "mass firing."

This prompted an emotional debate among the community leaders in Anacostia and sent reverberations to the mayor's office.

A series of meetings were held in Anacostia during the past two weeks and, according to Ashford, "the misunderstandings have finally been cleared up." He said employees now understand only seven person at the most will lose their jobs when the agency reorganizes its positions.

"We plan to give current employees special consideration when new positions are announced," Ashford said. He explained that reorganization was not only designed to eliminate duplication of services and use of resources, but to put more qualified people in the right places.

The 42-year-old executive director said that he took a poll when he first came to the agency a year ago and found that 27 of 58 staff members had not graduated from high school.

"Some of these people had technical positions requiring them to write proposals and even help community residents pass the high school graduate equivalency test," he said.

A former board member for the organization, Loraine Bennett, said a number of those with technical positions were "functionally illiterate" and "do not know or understand the relationship between the employer and employe." She said they would not do what was required of them.

"This is not totally the fault of the employes," Ashford said. Employes were not required "to improve so some of them just continued as they were," he said.

Ashford said there was one instance where a department head would "become ill" and return with a doctor's slip whenever major meetings occurred or funding proposals had to be written.

The director of Southeast House, who has served as the director of the Urban League in Chicago and in Rochester, N.Y., as well as the vice president of the National Urban Coalition here in 1974, said the problems with many of the employes began as long as 15 years ago during the socalled War on Poverty.

He said many of the employes at Southeast House were taken right from the community, in many cases without training, and placed in positions for which they were not qualified. Although these employes often had special abilities, especially in their knowledge of the community, they did not always have the necessary skills for their jobs.

Davis, of UPO, said many of these people have been able to move up by translating their experience and skills onto other jobs. "We have an alumni of 1200 people. Many of them have been able to get jobs in both the federal government and private industry," he said.

Ashford said the only way employes can move up is for the agency's administration to encourage people to get additional education. He said when he first joined Southeast House he required members of his staff who had not taken the high school equivalency test to take it. He said 11 of them passed the test.

"What I plan to do when we reorganize Southeast House is to make it a requirement for those who are put in positions that are above their educational level to continue taking courses so they will eventually qualify for their jobs," he explained.

Davis said more than half of the staffs employed by community organizations across the country were made up of people who had previously used the services of the agencies. "It was an attempt to decrease the welfare rolls and get some of the people familiar with the communities involved in providing services. It really made sense," he said.

Spokesmen for Friendship House and Southwest House, both social service organizations serving Washington neighborhoods, said their organizations also feel the funding crunch.

Southeast House, a non-profit organization, was started in 1929 by Dr. Dorothy Boulding Ferebee as a settlement house designed to provide recreational, cultural and day care services to poor people in Southeast washington.

The organization has a nutrition program, which feeds more than 400 senior citizens five days a week from six different sites, and has a day dare program, as well as a program for youth counseling and delinquency prevention.

Funding agencies, including the D.C. Department on Aging, say they will continue to work with the agency in hopes that they can prevent a sudden shutdown of services to the Anacostia community.

Richard Artis, director of the D.C. Department on Aging, said, "We have a substantial stake in their operation. We don't manage their organization for them but we will be watching them closely."