The Prime Minister, David Cameron, has insisted the government was right to offer Kids Company one last chance by giving it a £3m grant just days before the charity announced its closure.
Cameron said this morning that he was sad that Kids Company, which closed earlier this week, had been forced to shut its doors.
But he told the BBC that the government had been right to give the charity a final opportunity to continue operating by making the £3m grant, which was signed off by Cabinet Office ministers against the advice of the department’s most senior civil servant.
"The government thought it was the right thing to do to give this charity one last chance of restructuring to try and make sure it could continue its excellent work," said Cameron.
"Sadly that didn’t happen, not least because of the allegations that were made and private donors withdrawing their money, but I think the government was right to say ‘let’s have one last go at keeping this charity going given the excellent work it has done for so many people’."
It emerged last month that Cabinet Office ministers had decided to award the grant to Kids Company despite warnings from Richard Heaton, permanent secretary to the Cabinet Office, that the charity was unlikely to meet the government’s conditions for the funding.
It comes as The Guardian newspaper reported this morning that senior directors at Kids Company repeatedly warned trustees of the need to build up reserves or face going bust.
The paper quotes an unnamed senior source, who worked at the charity for several years, as saying: "If you keep building an organisation without building reserves, then it’s a house of cards and it will fall down.
"Kids Company didn’t have any reserves, the government knew they didn’t have any reserves, and they bailed them out time and again. The charity, the trustees, got complacent – they got into this habit, they knew they would always get bailed out," the source said.
The Times reported today that the trustees of Kids Company last week turned down offers of donations totalling £3m from a group of philanthropists.
This was because the trustees believed that the allegations around child sexual abuse at the charity meant that it would not receive sufficient donations to make it viable going forward, the paper said.
The Independent also reported that James Lupton, a multimillionaire Conservative party donor, was involved in the campaign to persuade the Cabinet Office to award the £3m grant. There is no suggestion that Lupton had acted improperly, the newspaper said.
The Daily Mail also reported that staff at the National Portrait Gallery were deciding whether to take down a painting of Camila Batmanghelidjh, founder of Kids Company, following the charity’s closure.
Supporters of the charity staged a march in London this morning to call for more funding.