The Office of the Third Sector has denied claims by umbrella body the NCVO that it has rejected compensation applications from charities that should have received grants under the abandoned Campaigning Research Programme.
The £750,000 fund, which aimed to help small charities campaign, was cancelled at short notice last November by third sector minister Angela Smith after 32 successful applicants had already been promised funds. The money was redirected to the Hardship Fund.
The charities were told at the time that they would be compensated for expenses of up to £1,000 they had incurred in applying to the fund. The NCVO said it understood that most of the compensation applications had been rejected because the applications did not fulfil the OTS's guidelines. It said one charity, the Manchester Disabled People's Access Group, had submitted a claim for just over £1,000 but had only £3.96 approved.
Ruth Malkin, the general manager of MDPAG, said she had already submitted her expenses twice because she had been told by the OTS that she had done it incorrectly the first time. "I sent them what I thought they had asked for, but a lot of the work is quite intangible," she said. "I sent them the minutes of our planning meetings, but I was a bit naïve: I thought they would be falling over backwards to get us this money.
"Who knows what we are going to get and when?" she said. "I have never been treated this badly before. It was irresponsible of the OTS to set up a project that they didn't have proper permission for and had to be cancelled."
Stuart Etherington, chief executive of the NCVO, said the Government was continuing "to make an embarrassing botched job" of ending the project. "We understood that the Government would be flexible in covering expenses for these grassroots organisations and appreciate that it would not always be possible to document legitimate time spent on this through official receipts or papers," he said.
"We are extremely concerned that many of these small charities will be left out of pocket because they simply do not have the resources to pursue this through an ever-increasing number of Government hoops."
A spokesman for the Office of the Third Sector said: "This is completely ridiculous. We have not rejected any claims. Where organisations have provided no evidence, we have asked them to do so. It would be wrong to spend public money without properly accounting for the expenditure.
"To ensure no charity misses out, we have provided someone independent they can speak to if they need help. And we have also extended the deadline to make it easier for charities to come forward with information."
A spokeswoman for the NCVO said the umbrella body was still waiting for responses to two Freedom of Information requests on the cancellation of the fund, which were due by the end of the month. She said the organisation no longer envisaged taking any legal action over the cancellation of the fund.