The warning came from Tony Page, former managing director of the charity's trading arm Age Concern Enterprises, or ACEnt, who left last year with an £815,000 payment (Third Sector, 26 September).
Since the launch, in May 2006, Heyday has recruited only 44,000 members against a target of 300,000. Investment has totalled £16.5m, £3.5m of it from the charity's reserves.
More than 30 organisers have been made redundant, local Age Concerns in London and north-east England have rebelled and the Charity Commission has questioned whether Heyday's objects are charitable.
Page had been involved in developing the business plan for Heyday, intended to help the over-50s prepare for retirement. As the launch approached, he was concerned about the decision to give more control to Age Concern England at the expense of ACEnt.
The decision came from the Heyday operating board, chaired by Gordon Lishman, director general of ACE. It assigned membership marketing and overall cost control to Ailsa Ogilvie, then membership director of ACE and now director of Heyday.
In a document dated 5 June 2006, Page argued that membership marketing should be ACEnt's responsibility because ACEnt was responsible for membership sales.
Page wrote: "It is essential that the sales channel controls and implements the marketing and creates a cohesive strategy that can be controlled and monitored. You cannot have accountability without responsibility."
The document, which has been seen by Third Sector, also said Ogilvie's proposals for Heyday's budget and financial control were not detailed enough.
"This is a big business and has the risk of damaging ACE and ACEnt financially, and Age Concern's reputation," it said.
A second document described the success of ACEnt under Page and said: "The declared intention of Gordon Lishman to bring together the resources of ACE and ACEnt will cause confusion, dysfunctionality and damage to the company.
"In the past five months the day-to-day involvement and interference from Age Concern staff has created more confusion and ineffectiveness than ever before. Greater merging of the two will make it worse - maybe to the point of management impotence.
"I believe that if this is the way the management of the charity sees the future, then it should be discussed and agreed by the finance committee and the board of trustees."
The documents were submitted to the board of ACEnt's parent company, Age Concern Holdings Ltd, of which Lishman is a member. They did not go to the ACE board.
Page's concerns were not acted on and he left. His departure was followed by that of Des LeGrys, former chair of ACEnt, and Norman Biddle, former chair of Age Concern Holdings.
A spokesman for ACE said advice about developing Heyday was taken from a wide variety of people. He said: "Unsurprisingly, they did not agree all the time and management decisions had to be made."
By early 2006, he said, the Heyday operational board and the finance committee had concerns about the business plan and changes were made. Page then left.
The spokesman said the decision that ACE should be more involved with Heyday was not taken by Lishman alone. "ACE's trustees considered and agreed a detailed paper on 8 March 2006, which proposed the changes."