Camila Batmanghelidjh, the founder and former chief executive of Kids Company, offered to sell her flat to secure funding from government to keep the charity open, it emerged today.
Speaking at a Public Administration and Constitutional Affairs Committee hearing on the collapse of the charity, Batmanghelidjh said she agreed with the government to sell her flat if she failed to raise the £8m it was believed was necessary to keep the charity going.
She told the committee: "The deal was £3m from government and £3m from philanthropists. I was to raise £8m plus. I fell short by £350,000 and I put my flat up for surety – that formed part of a whole package."
She said: "The Cabinet Office wanted absolute confirmation of the amount of money that was being raised to see this deal through. I signed a letter saying that if I did not raise the remaining £350,000 I would sell my flat and they could have the money."
Batmanghelidjh and Alan Yentob, the former chair of the Kids Company, said that the £3m it received from the Cabinet Office shortly before the charity’s collapse in August was spent in accordance with the conditions set by the government.
It has been alleged that £880,000 of the money went on paying staff salaries, which was contrary to conditions set by the government.
Yentob said: "We were very clear and simple with the Cabinet Office. We said that we had to pay this month’s salaries and that we needed payroll to be paid."
The committee also heard that the charity made payments to individual service users running into hundreds of pounds a week.
Batmanghelidjh said that teams on the front line were given permission to authorise payments of between £10 and £200 to the young people and adults using its services, but it was very rare for payments to run into hundreds of pounds. She said that all payments over £5,000 had to be approved by the board, and disputed the allegation that funds were handed out "willy-nilly" to young people.
Yentob said the charity had not closed as a result of financial mismanagement but because it was thought it was not able to continue given the allegations of sexual abuse made against some of its staff. Yentob said the charity continued to contest these allegations.
Yentob said: "The charity would not have folded had it not been for the allegations of abuse."