Alan Yentob, the chair of Kids Company, has said allegations of financial mismanagement at the charity are "rubbish", and that the board turned down £3m of philanthropic funding because sexual abuse allegations made it impossible to continue.

Speaking on Channel 4 News last night Yentob denied mismanagement.

“We have got audits from government auditors saying that we were well run and well managed," he said. "Over the last year or so we have had problems raising funds and the demand has been increasing.”

He said that the charity's funding crisis arose because it could not raise enough money while demand continued to increase but that the charity had been taking steps to address the problem.

“On Thursday the government, despite advice to do differently, gave Kids Company £3m. Philanthropists decided to put money in and we were going to raise some more money and everybody was happy that that was a good model,” he said.

Then, according to Yentob, the allegations of sexual abuse prompted the charity to turn down the funding it had been offered.

Yesterday morning Camila Batmanghelidjh implied philanthropists had pulled their funding after hearing about sexual abuse claims.

Yentob said the charity told potential donors: “We cannot accept your money, and we cannot even accept the government’s money, because we know that with these allegations around we will not be able to fundraise.”

There were also further allegations of financial mismanagement on BBC Radio 4’s The Report yesterday evening.

A former member of staff at the charity told the programme that sometimes the electricity would go off in the building because the bill had not been paid.

Another ex-member of staff told the programme that the charity had been paying contractors to provide “supervision” or counselling for members of staff who worked closely with children, rather than there being any kind of “formal training programme”, and that these contractors would often be paid four to five months late while the charity waited for grants to materialise.

BBC Radio 4 also claims to have seen leaked emails regarding a restricted grant from JP Morgan that was supposed to have been spent on a literacy specialist, but the charity did not have someone in that role for the whole duration of the grant. 

Batmanghelidjh alsom admitted during the programme that some young people had "made bad choices" and spent money given to them on drugs. 

She said: "80 per cent arrive addicted to substances. Much of our job is getting them off drugs.

"If we find out that a child is using money to buy drugs we will intervene."

She said that process was "part of the learning curve".  

BBC Newsnight reported further allegations of sexual abuse involving Kids Company clients.

The charity denies ever being told of sexual abuse. 

Cameron: Kids Company deserved 'one last chance'

Speaking to the BBC, Prime Minister David Cameron said he was saddened by the closure of the charity, but had felt it was right to give the charity the £3m grant at that time.

He said: "The government thought it was the right thing to do to give this charity one last chance of restructuring to try and make sure it could continue its excellent work.

"Sadly that didn't happen, not least because of the allegations that were made and private donors withdrawing their money but I think the government was right to say let's have one last go trying to keep this charity going, given the work it's done for so many young people."

Crisis meeting

Yesterday the Cabinet Office convened a crisis meeting between local authorities and charities to make sure that children affected by the closure of Kids Company are directed to other sources of support.

A Cabinet Office spokesman said: “We have met with local authorities and charities, youth clubs and other organisations who know and work in the local community and are committed to working together to support young people with the services they need.

“We are now working closely with charities, social enterprises and other relevant organisations including London Youth on a range of immediate measures to signpost young people to other services in the local areas. Local authorities will also be reviewing the most high risk cases on an individual basis to determine what support is required.”

Rosie Ferguson, chief executive of London Youth said: '"The most important thing right now is for any young people who were accessing Kids Company services to be directed to others who can help them. I’ve been really impressed with the way local youth clubs and other organisations have offered resources and support to ensure young people have somewhere to go throughout the summer where they can access quality youth work.

“Right now, it is about working together to use what provision already exists to give the best options possible for young people. In the medium term, our priority will be to convene a discussion with voluntary sector, statutory agencies and private funders on how to ensure long term investment in high quality, sustainable community youth work in those areas where Kids Company was operating, but also more broadly across the capital.”

Downing Street protest

Today supporters of Kids Company have arranged a march from the charity’s Camberwell location to Richmond Terrace opposite Downing Street.

A post on Facebook said: “Big shout out of love to all our amazing ex colleagues, clients and supporters holding a peaceful march from outside the Arches II Centre in Camberwell tomorrow (Friday 7 August) and joining voices in love as they walk to Downing Street, assembling at Richmond Terrace, opposite Downing Street at around 12.30.”