Editorial: If public money is lost, the public should be told

After two months of insisting on a confidentiality agreement, the after-school childcare charity Catz Club has revealed some of the figures for the termination of its loan from Futurebuilders.

Nearly £570,000 of the £1.3m it borrowed was not paid back, and Futurebuilders has written it off (Third Sector Online, 31 October). Our feature on pages 14 and 15 chronicles the long road to a modicum of transparency about a large helping of public money. There is still no explanation of what went wrong, not least because the latest Catz Club accounts are three months overdue.

This episode throws a spotlight on the question of what should or should not be made public when Futurebuilders loans go awry. The current managers of the £215m loan fund, designed to prime voluntary organisations to deliver public services, points out that the confidentiality agreement was agreed by the previous regime. It asserts that it is in favour of transparency except when important issues of commercial confidentiality might be involved.

The latest Futurebuilders accounts show that £1.3m has been set aside to cover "underperforming investments". Five organisations are concerned, says Futurebuilders, and part of the sum relates to Catz Club and has now been written off. It declines to identify the other organisations on the grounds that they might not know they are considered to be underperforming and that naming them might damage their future prospects of investment.

But Futurebuilders also says it has written off £1.8m since it began, or 3.7 per cent of its loans. Given that its remit includes taking risks, this is nothing to be ashamed of and demonstrates, in a sense, that it's doing what it's meant to do. But the write-offs for Catz Club and the Who Cares? Trust, whose website for young people collapsed in 2006, account for less than £1.4m of this. Futurebuilders will not say anything about the other write-offs because the organisations concerned have not been consulted and the figures have not yet appeared in its accounts. So we are now in the topsy-turvy position where the 'confidential' write-off - also not yet in the accounts - is revealed, but others are not.

Futurebuilders says it needs a policy on all this and will be trying to set one when its board meets at the end of the month. The guiding principle, surely, should be that names and sums should be published as soon as loans of public money are beyond recovery.

Finance Editorial

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