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200 charities left in the lurch as Charity Business goes under 4

Finance | Tania Mason | 12 Jan 2012

Charity Business, the agency that provides outsourced financial back-office services, has ceased trading, leaving around 200 small and medium-sized charities without  services and around 20 staff without jobs.

Yesterday, clients of Charity Business received an email from the company which stated: “It is with sadness that the directors of CBusiness Holdings have resolved to the shareholders that the company be wound up voluntarily.

“After reviewing the many options but with no success it was resolved that a petition be made to the courts for compulsory winding up of CBusiness Limited and CBusiness Consultancy Limited.”

The company’s website is still live and neither it nor its voicemail message gives any indication that anything is awry. Calls to Valerie Austin, a non-executive director and wife of chief executive Mark Freeman, were not returned. Steve Round, another board member, also did not respond.

Staff told on Tuesday

Michael Wass, a senior accountant at the firm, told civilsociety.co.uk that staff were advised on Tuesday afternoon that the company was being wound up.  He said the directors had been pinning their hopes on a buyer taking over the business, but that deal collapsed last Friday.

Shortly after staff were told about the closure, the landlord of the company’s Swindon premises arrived and gave them all an hour to vacate the building. They were able to remove some clients’ documents, which are now in storage with Freeman, Wass said, but not all.

Staff feel terrible for the charity clients, he said. “I’ve had a number of clients ringing me today, very concerned and wondering what to do,” Wass said. “Some of them have just had their year-end and there we were all ready to do their year-end accounts, and now they have got to find somebody else.

“We really feel for them, because many of them had gone through the process of making their finance officers redundant and putting everything into us, obviously thinking they would be in safe hands, and then we let them down,” he said.

Around 50 charities outsource their entire finance function to the agency, and a further 150 outsource some tasks such as payroll.

Charity Business was launched in 1999 and in 2009 it received the first-ever investment from the Triodos Opportunities Fund.

Mixed reports from clients on service

The British Deaf Association and the National Youth Agency were clients of Charity Business. BDA had been a client since May 2011. Chief executive David Buxton told civilsociety.co.uk that there had been a few problems with the service but nothing to indicate the agency was in real trouble.  Generally the charity had been happy with the company’s performance, he said.

Fiona Blacke, chief executive of the National Youth Agency, was less complimentary.  She said the service from Charity Business had been “dire” ever since NYA became a client in March. “They were never any good, the problems were endless really,” she said.  “We were just about to send them a lawyer’s letter this week to say we would be leaving at the end of January because they had breached their contract, but then their email arrived.”

She added: “We’re one of the lucky ones because we’ve already found a new provider. God knows what it would be like for a charity that had no idea this was coming. Who’s going to make sure your staff are paid at the end of the month?”

Blacke said that one of the reasons the NYA selected Charity Business in the first place was because it was on the NCVO’s ‘approved supplier’ list.  “I’ve since heard that it’s been removed from the list but I don’t know for sure,” she said. “But it does make you wonder what sort of protection that approval list gives to the NCVO’s members.  Lots of us rely on that list and as the sector moves much more towards being slim organisations that are just expert and don’t do their own services, it becomes even more important.”

NCVO's business development director Richard Williams said Charity Business was removed from the 'approved supplier' list in the summer of 2010, having been on it for at least four years.  The umbrella body had received two complaints about the agency and was about to take it off the list, but Charity Business got in first and asked to terminate the partnership.

Documents filed with Companies House show that Freeman, a former CFDG chair, and Austin terminated their directorships of the company on 6 December and 19 December respectively.  Chairman Bruce Keith and non-executive Steve Round, who both joined the board in August 2010, are still listed as directors.

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