Coventry and Warwickshire YMCA has lost almost £4m of funding and made 19 people redundant after a council investigation uncovered poor financial management and administrative shortcomings.
Coventry City Council carried out an investigation into the charity in October. It revealed financial mismanagement and showed that Criminal Records Bureau checks had not been carried out on some workers. Both organisations declined to say why the investigation was launched.
As a result of the council investigation, the Big Lottery Fund and the Youth Sector Development Fund sent a joint letter to the YMCA in February saying they would withhold promised funding worth a total of £3.8m.
The BLF had agreed to provide £2.2m of funding through its myplace programme, set up to improve facilities for young people, to construct a new youth centre. The YSDF had allocated £1.6m for an anti-crime programme, a small amount of which had already been given to the YMCA. The YSDF will not attempt to take the money back. Both schemes are funded by the Department for Children, Schools and Families.
Coventry and Warwickshire YMCA admitted its use of subcontractors to provide outreach youth work could have led to workers without CRB checks coming into contact with children. The organisation declined to name the contractors.
"We were under some pressure to deliver this service on a tight timescale," said Andy Winter, interim chief executive, in a statement. "We have admitted we should be responsible for safeguarding the welfare of all young people who access services delivered in the name of the YMCA."
He said the YMCA had revised its policies and procedures and was continuing to work with the council to ensure that it was operating effectively.
Doreen Lennon, former chief executive of the charity, left in January before the decision to withdraw funding was taken. The charity said her departure was not related to the council report.
The YMCA said it had continued to receive funding from the local council and would not be forced to close as a result of the withdrawn grants.
A spokeswoman for the Big Lottery Fund said that although it was no longer funding the YMCA, the two organisations were continuing to work together to deliver the myplace programme in Coventry.