The Home Office raised concerns about governance at the LGBT charity Broken Rainbow before its collapse, but was satisfied that its £120,000 annual grant to the charity was properly spent, it has emerged.
The House of Commons Public Administration and Constitutional Affairs Committee this week published a letter it received from the Home Office in August in response to questions the committee had about the department’s funding of the charity, which ran an LGBT domestic abuse helpline but went into liquidation in June.
The letter, from Mark Sedwill, permanent secretary at the Home Office, said his department required Broken Rainbow to provide evidence of the service it had been running using the annual grant, including quarterly monitoring reports with details of the charity's expenditure.
The letter said that, although the Home Office had previously had concerns about the charity’s governance arrangements, no monitoring reports raised concerns about its solvency at the time.
"In May 2014, we began to have concerns about some elements of the charity’s… governance," the letter said. "We expressed these concerns in a meeting with Broken Rainbow, which successfully addressed these through changes to their governance."
After Broken Rainbow closed in June, the news website BuzzFeed reported that it had seen a cache of documents that showed grants worth tens of thousands of pounds from funders were spent within 24 hours of receipt, often on basic running costs.
The collapse of Broken Rainbow is also being investigated by the National Audit Office, with specific focus on the role of the Charity Commission and other public sector bodies, as well as the financial management of the charity, Home Office oversight and the clarity of grant agreements.
The Home Office said in the letter that it had provided £90,000 of funding to the LGBT charity Galop to run the helpline service for the remainder of the 2016/17 financial year.
The letter also said the department’s internal audit team carried out an audit of grants management as part of its 2014/15 audit plan, with Broken Rainbow one of the sample of grants included in the review.
The letter said the final report, which was issued on 30 March 2015, concluded that "compliance with the Home Office’s grants management policy, guidance and process is inconsistent across the Home Office and the quality of existing controls variable". According to the letter, actions were taken to address these findings.
The Charity Commission also has an open case on Broken Rainbow.