A Warning to Charities

Yet another example of how unwise it can be for charities to enter into the world of contracting for public services. This from the Guardian:-

Drug and alcohol charity Lifeline Project collapses

Shock failure of charity serving 80,000 people a year and employing 1,300 comes after allegations over financial controls

One of the UK’s leading drug and alcohol treatment charities has collapsed days after the Charity Commission launched an investigation into claims that it had critically weak financial controls. Frantic efforts are being made to save the jobs of 1,300 employees of the charity, Manchester-based Lifeline Project, and the services it provides for 80,000 people a year, including prisoners in 22 jails and young offender institutions. Staff were told on Thursday that the charity was seeking to transfer services to other providers and warned that not all the work the charity does would continue.

The shock failure of Lifeline follows the collapse of the charities Kids Company in 2015 and 4Children in 2016 and is likely to reignite the debate about the running of essential public services by charities. Lifeline was set up in 1971 and grew particularly rapidly in recent years. Its annual income soared from £26m in 2012-13 to almost £62m in 2015-16, when it reported annual growth of 45%. It was formerly chaired by Paul Flowers, the disgraced former Methodist minister and Co-op Bank chair whose drug use was exposed in 2014. He was asked to resign from Lifeline in 2004 over allegedly excessive expenses claims.

Allegations of mismanagement were made to the commission last month by Roger Howard, a former trustee of Lifeline’s board, who is a leading figure in the drug and alcohol treatment field and served as chief executive of the UK Drug Policy Commission.

Howard said on Thursday: “Those of us who work in the charity sector and have a long history of serving on boards or as executives know that good governance is absolutely crucial. We have seen examples of other bodies, like Kids Company, where governance and leadership has been questioned. It’s really critically important to ensure that organisations delivering large volumes of public services have the right assurances in place.”

Howard served on Lifeline’s board from December 2015 to November last year, when he was asked to resign after seeking to raise concerns. These included the sudden rundown of the charity’s working reserves. The Charity Commission said on Thursday that Lifeline’s collapse highlighted the need for tight financial controls and oversight by charity trustees.

Paul Holdsworth, the commission’s chief operating officer, said: “We are sad to hear of the charity’s planned closure, though note that the trustees have worked to ensure that the majority of its services will continue and that the impact on beneficiaries and staff is managed and minimised.

“In the meantime we are engaged with the charity and its trustees, both to assess the events that have led up to this outcome and to ensure that trustees fulfil their duties and responsibilities in winding the charity up and passing its services to another charity.”

The charity runs drug and alcohol services across much of England and in Scotland. Its last annual report said it employed almost 1,500 people, but it is believed that many have been made redundant in recent weeks in efforts to stay afloat.

The biggest not-for-profit provider of treatment services, CGL, confirmed that it had been asked by Lifeline “four or five weeks ago” to step in to help and that it was working to take over “a significant proportion” of its projects. David Biddle, CGL’s chief executive, said: “We are moving to ensure the security and stability of projects that deliver services to vulnerable people across the country. We are providing the resources to ensure that they are able to continue.”

CGL, which stands for Change, Grow, Live, has annual income of £158m and employs 2,800 people. Biddle said it would “initially” make no job cuts among the Lifeline staff it was taking on, including its head office team, and he praised the role being played by Lifeline’s long-serving chief executive, Ian Wardle.

Lifeline did not respond to requests for comment.