LGBT charity collapsed after ‘chaotic’ management spent £1.4 million of public funds
An LGBT domestic violence charity which closed after receiving £1.4 million in public funding suffered from “chaotic” management, an investigation has found.
This was despite Companies House publicly threatening to close Broken Rainbow in March, a development which the Home Office stated it was “unaware” of.
The National Audit Office, which examines public spending on behalf of parliament, reported today that Broken Rainbow spent £25,000 of that grant on the day it received it.
NAO used the following chart to demonstrate how quickly Broken Rainbow spent the money it was given.
And HM Revenue & Customs is still owed £34,403 by the charity, which was given at least £120,000 by the government every year between 2004 and 2016.
NAO found the charity “had been spending much more than its income for a number of years before its closure.”
Broken Rainbow’s reserves shrank by 97 percent in two years, from £80,083 to £2,307 in 2014-15, despite income increasing by 52% over the same period, NAO said.
Instead of increasing funding to its helpline, Broken Rainbow spent £16,000 more on consultancy, £25,000 on campaigns, £27,000 on research and £17,000 on staff costs.
On most days after April 2015, the charity was “operating ‘hand to mouth,’” NAO reported, with less than £500 in its bank account.
And on more than half of the days it had less than £500 in its bank account, it actually had less than £100.
The report also discovered that between April 2015 and July 2016, one-third of payments from Broken Rainbow’s bank account went to former chief executive Jo Harvey Barringer.
This expenditure totalled more than £114,000.
Barringer told NAO that some of this amount covered her £57,500 salary as chief executive, her hourly fee as managing director, and salary payments to her wife, who she said worked for the charity.
Barringer told NAO she had a verbal agreement with the charity’s treasurer, and that they authorised her to claim money including a backdated salary increase from August to December 2015.
However, the person who was treasurer in August 2015 had left by October 2015, and therefore was not in a position to authorise this in December.
NAO reported: “We have been told, both by the former CEO and trustees, that there were lengthy periods where there was no treasurer in place, and none of the trustees we have spoken to recall authorising expense payments to the CEO’s account.”
There also appear to have been periods where Barringer had no formal written contract as chief executive, NAO said.
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Unfortunately, the investigatory team was “unable to establish a complete picture of Broken Rainbow’s finances in its final year, as the charity’s records were deleted remotely shortly after the liquidators seized the charity’s computers.
“There is disagreement between the trustees and former CEO about who was responsible for this,” the report stated.
The Charity Commission, which was investigating the governance and financial management of the charity, only became aware that Broken Rainbow had gone into liquidation in June 2016 from media reports, NAO said.
When the charity closed, the helpline was transferred to a new provider, Galop.
NAO reported that “a number of other organisations” are also investigating Broken Rainbow.
These groups include the Charity Commission and the insolvency practitioner charged with liquidating the charity.