The Charity Commission has contacted the trustees of the charity Kids Company to "urgently assess its funding position" after reports emerged that its chief executive was pressured by the government into stepping down.
Camila Batmanghelidjh, founder and chief executive of the charity, said on Friday that she would leave her current role. A statement from the charity confirmed she would retain a paid position in an advocacy and clinical role.
A joint investigation by the online news site Buzzfeed and the BBC claimed that the government decided it would not give the charity an additional £3m grant to help it to restructure unless Batmanghelidjh stepped down. The Cabinet Office declined to comment.
Batmanghelidjh told The Guardian on Friday: "There’s no point in shooting the messenger if the message is uncomfortable. I am being silenced."
The charity’s statement said it had received fewer donations since the start of this year, but had experienced an increase in demand for its services because of limits on public services to beneficiaries.
"This has led to an unprecedented financial strain," the statement said. It added that the charity had now secured support for its restructuring from a City-based group of philanthropists who wished to remain anonymous.
A spokeswoman for the Charity Commission told Third Sector on Friday that the regulator was aware of media reports about the charity.
"We are in contact with the charity’s trustees to urgently assess its funding position and the impact that issues reported in the media may have on the future of the charity," she said.
The spokeswoman said the regulator had received a complaint in November 2014 about "the charity’s application of a substantial donation from an individual".
She said: "We assessed the complaint carefully, including by verifying that information in the charity’s accounts was consistent with information provided to the complainant. We determined that, on the basis of the information provided, there were no grounds for regulatory action by the commission. We saw no evidence to suggest the donation made was not applied for the purposes for which it was given."