Fundraising Initiatives, the recently closed face-to-face fundraising company, has faced financial difficulties for years after being sued for millions over a charity which spent just 1 per cent on beneficiaries.

Fundraising Initiatives Limited (FIL) was set up in 1999 by husband and wife Kenneth Bauso and Cathy Sullivan. According to a Charity Commission inquiry report published in 2012, FIL signed a deal in 2000 to provide services to Caring Together, a fundraising agency owned by a charity, the Cancer Care Foundation. Sullivan was managing director of Caring Together at the time.

In 2002 the Cancer Care Foundation was investigated by the Charity Commission and the trustees replaced by interim managers, after it raised £13.5m but spent only £140,000 on grants to hospices, its intended beneficiaries.

Most of the rest of the money was spent by Caring Together on agency services, and the Commission said in its report that more than £4m of this went to FIL. The agreement between Caring Together and FIL also said that FIL would retain ownership of the face-to-face fundraising programme if it terminated the contract.

The interim managers, Ian Oakley Smith and Adrian Stanway of PwC, put Caring Together into administration and sued Fundraising Initiatives.

FIL settled for an undisclosed sum. Part of the agreement was that the settlement would remain confidential. However Caring Together has since filed liquidators’ statement receipts and payments with Companies House every six months.

These show payments of up to £800,000 a year between 2009 and 2014, totalling roughly £3.75m, from “Mr & Mrs Bauso” and a company named as “Funding Initiatives”.

Civil Society Media understands that “Funding Initiatives” refers to companies in the Fundraising Initiatives Group, although it is not clear whether payments came from FIL or its parent company, Fundraising Initiatives (Holdings) Ltd, which is entirely owned by Sullivan and Kenneth Bauso.

The holding company is late with its accounts but has not entered administration. Three other companies in the group, in addition to FIL, have also entered administration.

Staff at FIL were not paid for their final month of work.

At least 14 large national charities have been named as regular users of FIL’s services at the time it closed, and at least two of these have signed deals with FIL’s former suppliers to continue using the same services.