The charity People Can, previously known as the Novas Scarman Group, has gone into administration because of a £17m pension deficit.
The charity employs 298 staff and supports homeless people, victims of domestic abuse and ex-offenders. It works across the UK, but its projects are mainly in London, Bristol, Somerset, Liverpool and Brighton.
The professional services firm PwC announced that it was been appointed administrator yesterday.
In Somerset, 17 employees have already been made redundant because the local authority is exploring alternatives for the provision of the charity’s services, PwC said. The administrator said the future for remaining staff was dependent on discussions with the local authorities involved.
The charity’s pension obligations were the primary reason for its troubles, PwC said. At its most recent valuation the deficit was £17m, which was up from £11m earlier this year.
The charity registered with the Charity Commission in January 2011 and has not yet filed any accounts. The Novas Scarman Group re-launched as People Can in October last year.
Accounts filed with Companies House show that the Novas Scarman Group had an income of £11.9m in 2010/11.The group was formed in 2007 through a merger of the Scarman Trust, the homelessness charity the Novas Group and the employment charity Path.
The charity underestimated the costs involved, which culminated in a Tenants Service Authority investigation in late 2008 that was highly critical of the charity's financial management and questioned its ability to survive.
Ian Oakley-Smith, joint administrator, director and head of charity advisory at PwC, said: "Charities are currently facing a tough environment in which to secure funding for their services.
"These pressures are exacerbated for those charities with defined benefit pension schemes which require further funding. In these instances some trustees are facing an increasingly difficult task in balancing their obligations to their beneficiaries and former employees."
David Hurst, joint administrator and director at PwC, said: "The charity’s significant pension liabilities dated back many years to its previous role as a registered social landlord. A range of restructuring options were explored – however, a deal could not be reached that worked for all stakeholders."