The Cabinet Office has been criticised by the National Audit Office for weak design and poor oversight of a grants programme, after £750,000 was wrongly awarded.
The NAO also criticised gaps in the administration and record-keeping at Community Development Foundation, which administered the Grassroots Grants programme.
The criticisms were outlined in a document published earlier this week - Investigation into the matching of funds from the Grassroots Grants Programme with donations from the W O Street Charitable Foundation.
The Endowment Match Challenge Fund - a £50m fund which was part of the Grassroots Grants programme - offered match funding to individuals and organisations which were not giving grants effectively, to encourage them to distribute their funding through community foundations instead.
Donations from charitable trusts and foundations that were considered “ineffective” were eligible but not those from “active and effective” trusts.
The document concluded that donations from the WO Street Foundation to three community foundations should not have been eligible for match funding. But that a lack of clear guidance from the Cabinet Office and lack of safeguards meant claims were successful.
Three community foundations, the Community Foundation for Greater Manchester, the Community Foundation for Lancashire and the Community Foundation for Liverpool, received grants from the W O Street Charitable Foundation, which they claimed match funding against.
The foundations believed the grants qualified because the W O Street Charitable Foundation was “ineffective”. In 2012 Cabinet Office reviewed of the eligibility of the grants and found that “all parties acted in a proper and appropriate way”.
But the NAO report disagreed and said that the W O Street Charitable Foundation should not have been considered “ineffective” because it was making grants each year and its objectives were broad enough in scope not to restrict the trustees.
NAO investigated after the Conservative MP David Nuttal wrote to the Public Accounts Committee.
‘Unclear guidance’ and ‘weak oversight’
The NAO report found that there were “design flaws” in the fund that “weakened accountability” and “weaknesses in oversight” from both the Cabinet Office and CDF, with the Cabinet Office not requiring any “detailed information” form CDF about how the money was being used.
It also noted that the Cabinet Office’s guidance was “not clear on eligibility” and that this “lack of clarity for local funders created a risk that different funders would treat donations inconsistently”.
The report said that: “The Cabinet Office and CDF did not establish adequate safeguards to manage the risk that any local funder might misrepresent donations as eligible due to pressure to secure donations.”
Since 2011 the Cabinet Office has introduced measures to strengthen its oversight.
A Cabinet Office spokesman said: “We recognise that improvements could have been made to the Grassroots Programme. The issues highlighted by the NAO were addressed in the design of subsequent programmes such as Community First."
A spokesman for the CDF said: “CDF welcomes this report by the NAO and believes it is important that public funds and expenditure are open to public scrutiny.
“We are confident that all the organisations involved in the decisions at the time have learnt lessons about information management and record keeping and incorporated these into future programme design and delivery.”
