The mental health charity CoolTan Arts will cease trading tomorrow and is expected to go into liquidation, it has told volunteers and beneficiaries.
In a letter seen by Third Sector, Lilian Nalumansi, the London-based charity’s chair, said the organisation had been faced with difficulties regarding funding and financial sustainability.
She wrote that the "very difficult funding climate has impacted on the charity’s financial position".
She said: "After months of board discussions and requests for help going unanswered, the organisation is no longer able to continue trading."
Trading would cease from tomorrow, she said, adding: "We anticipate CoolTan Arts will enter liquidation in the near future."
The charity had an income of £269,000 in the year to 31 March 2017, but spent £407,600 according to the latest report filed on the Charity Commission website.
Its spending has outstripped income for the past three financial years, the commission website shows.
The latest annual report warns of the need to "build up more in reserves to offset unexpected costs/uncertain outcomes".
The charity has faced a rocky couple of years after founder and chief executive Michele Baharier was suspended in September 2015 when allegations of bullying were made against her. Baharier denied the allegations. She in turn alleged she had been intimidated and harassed by a board member, which the charity denied.
Baharier was dismissed in May 2016. She has taken the charity to tribunal and the judgment is expected in September, Third Sector understands.
The charity’s latest annual report said: "Due to the HR legal difficulties with the ex-CEO, we were required to use £53,477 of our brought-forward unrestricted reserves."
The report says the charity was left with just £3,958 in undesignated reserves at the end of the financial year and the charity was "actively pursuing funding and re-examining its financial model" to ensure its sustainability.
At the end of March 2017, the charity had six full-time-equivalent staff and five part-time tutors, according to the accounts.
The charity declined to comment on the letter.
The Charity Commission began looking into complaints against the charity in June 2016.
A spokeswoman for the regulator said today: "The Charity Commission has had previous engagement with CooTan Arts, which included issuing the trustees with formal regulatory advice and an action plan. We have now become aware of the charity’s intention to close, so we will be re-engaging to ensure that our advice has been followed and that the charity is wound up properly in line with charity law."