Kids Company's Camila Batmanghelidjh asked to step down by government
A high-profile charity has been told it will not get more public funding unless its celebrated chief executive, Camila Batmanghelidjh, is replaced.
A collaboration between BBC Newsnight and BuzzFeed revealed that officials are withholding £3m from Kids Company.
The Cabinet Office has concerns about the charity's ability to run itself.
Ms Batmanghelidjh said: "At this stage, I'm not at liberty to comment. I have to safeguard the provision for the children and the staff."
The charity, which started in south London and supports deprived young people and their families, is one of the most high-profile in Britain, and regularly hosts leading politicians.
It relies heavily on public funding: in the last set of published accounts, for 2013, the government provided £4m, about one fifth of its annual £20m funding.
The charity is also synonymous with its charismatic leader, Ms Batmanghelidjh - to meet their funding ultimatum, officials suggest she should take the non-executive position of "president".
These decisions have been taken at a high ministerial level. The prime minister has, in the past, defended the charity's funding against efforts by ministers and officials in the Cabinet Office and Department for Education to cut its funding or intervene.
Officials report that Justice Secretary Michael Gove and Oliver Letwin, minister without portfolio, have supported a tougher approach to the charity.
In March, Dominic Cummings, a former Department for Education adviser, revealed that officials from the department had questioned the financial management of the charity, and said "they did not think taxpayers' money should be given to it".
Mr Cummings insisted that the prime minister himself "overturned the decision" after receiving letters.
'Tears and fights'
A source within Kids Company claimed part of the motivation for the decision to move against Ms Batmanghelidjh was her lobbying for more financial support for some specific categories of disadvantaged children.
The government has repeatedly resisted attempts by Newsnight and BuzzFeed to use the Freedom of Information Act to obtain correspondence between the prime minister and either Ms Batmanghelidjh or the charity's chairman, Alan Yentob, the BBC broadcaster and executive.
Last year, the Cabinet Office ordered a review into the charity. However, concerns about Kids Company have not subsided.
Genevieve Maitland Hudson, a former employee, wrote earlier this year that after she joined in the summer of 2008, "little packages of cash were handed out to every young person through a small window in reception [each Friday]. It was always tense. There were tears. There was shouting. There were threats. There were fights."
Harriet Sergeant, an author on gangs, wrote in 2012 how the staff at an unnamed charity "handed out cash in envelopes ranging from £50 to £200".
One member of staff told her: "You don't see most of the kids coming any other day." Ms Sergeant has confirmed to Newsnight and BuzzFeed that, while the description was "seven or eight years old", she was describing Kids Company.
The charity has insisted that this support only goes to those children who are in particular need of this additional support.
In February, Miles Goslett, a freelance journalist, also reported the case of an elderly donor who sold her house in order to donate to the charity, but was not given details about how the money was spent, and ended up complaining to the Charities Commission about it.
Mr Goslett wrote: "What is perhaps most bizarre about this tale is that [the donor] has no idea what has become of her money. The charity has never informed her how it has been or will be used."
Ms Batmanghelidjh said that there was adequate transparency, the questions raised via the Charities Commission had been dealt with, and questioned whether the donor was in good mental health. Sources inside the charity claim that these allegations were misleading, and damaged the charity by impeding their ability to raise money.
In March, the charity's interim finance director, head of human resources and director of development all resigned. The charity put out a statement which said: "It was with great regret that they felt unable to continue working within the organisation because of the uncertainty of funding, which led to high levels of stress in the workplace which was unsustainable."
Cabinet Office officials were clear that they wished the charity to continue its work and sang its praises.
But they added: "Making sure that every child has the best start in life is our top priority. This is why we are continuing to support Kids Company during this difficult financial time, and we want to make their important work sustainable, so we have requested changes to their management structure which is in the best interests of the charity."