Broken Rainbow: 'Chaotic' LGBT charity received £1.4m in grants
A charity for LGBT people that collapsed after receiving £1.4m in public money was "chaotic", according to a National Audit Office report.
Broken Rainbow received at least £120,000 a year from the Home Office between 2008 and 2016.
It received another £30,000 in April 2016 - despite being threatened with closure by Companies House.
The NAO said there were comparisons with Kids Company, the high-profile charity that collapsed in 2015.
Broken Rainbow, which aimed to highlight and combat domestic violence in the LGBT community, was founded in 2004 and was funded mainly by the Home Office.
Between 2004 and 2016, the charity received an annual grant of at least £120,000, with the exception of 2007/08, when it received £30,000.
After its collapse, Conservative MP Bernard Jenkin, who is also chairman of the House of Commons Public Administration committee, asked the NAO to investigate.
- The charity's management had been "chaotic"
- Its few organisational polices had not been followed
- The Home Office had not met its own requirements for monitoring its grant
- The charity owes more than £34,000 to HMRC in unpaid tax
Broken Rainbows' chief executive, Jo Harvey Barringer, was paid a salary of £57,500, plus a possible 15% bonus.
Between April 2015 and its collapse in July 2016, the charity paid £114,397 into her account.
Ms Harvey Barringer told the NAO the money had covered her salary, expenses, and wages for other members of staff, including her wife.
She said the charity's treasurer had approved the expenses, but the NAO report said: "None of the trustees we have spoken to recall authorising expense payments to the CEO's account."
According to the NAO, it is normal for charities to require two signatures before authorising payments.
But the report said: "From November 2015 onwards there was no second signatory on Broken Rainbow's account.
"The CEO alone authorised payments."
Ms Harvey Barringer said the high turnover of trustees, and delays at the bank, had meant she could not wait for a second signatory.
Last year, the charity was accused of excessive spending on gifts and first-class travel. The NAO said Ms Harvey Barringer "refutes the allegations".
In March 2016, Companies House - the UK's register of companies - publicly threatened to close the charity, because of late submission of accounts.
Despite that, the Home Office paid Broken Rainbow a quarterly grant of £30,000 in April 2016, as it was "unaware" of the threatened closure.
Between July 2015 and March 2016, Broken Rainbow answered an average of 463 calls a month, and received an average of 849 contacts via its online service.
When it closed, the service was taken on by another LGBT charity, Galop.
The NAO said there were comparisons between Broken Rainbow and Kids Company, the charity run by Camila Batmanghelidjh.
"Our report on Kids Company noted a pattern of lobbying and media coverage by the charity to secure further government funding," the NAO said.
"We noted Broken Rainbow had also adopted this approach."
In its conclusion, the NAO said: "There are rules about how to run small company charities, but in the case of Broken Rainbow they were not enforced...
"Light-touch regulation reduces the administrative burden on charities, but increases the risk that public money may be misspent."
The Charity Commission, and the insolvency practitioner, are also investigating the closure of Broken Rainbow.
The Home Office said it would carefully consider the NAO's report, adding that it would not comment further while investigations were ongoing.
The government has updated its grant monitoring guidance since Broken Rainbow collapsed.