Another twist to the ongoing controversy surrounding the financial dealings of out-of-school provider Catz Club has emerged after it was revealed that the charity that runs more than 100 breakfast, out-of-school and holiday clubs has had more than £840,000 in Government loans written off.
Catz Club, whose working name is Schoolfriend etc, is being investigated by the Charity Commission for making illegal donations to the Labour Party (News, 8 January).
In 2005, the charity received a £1.3m loan from Futurebuilders (FBE), a Government fund overseen by the Cabinet Office, which helps the voluntary sector run public services.
In a parliamentary answer last month, children's minister Kevin Brennan confirmed that the loan has been written off.
He said Futurebuilders 'invested a total of £1,536,000 in Catz Club, which consisted of a capital grant of £170,000 and a loan of £1,366,000. The total funding written off by FBE in relation to the charity Catz Club is £841,979.'
In a statement, Schoolfriend etc said that the charity had an agreement with Futurebuilders in March 2008 to pay a lump sum of £450,000 in place of an 11-year repayment schedule.
Futurebuilders confirmed last September that it had lent money to the charity but had a previous confidentiality agreement with them not to reveal the amount of the loan it had written off.
However, in the wake of the Catz Club debacle, Futurebuilders has re-iterated its commitment to transparency. In a statement last month the board said, 'Futurebuilders will detail the value and number of any write-offs it makes. We may choose not to name the organisations concerned if we felt that to do so would inappropriately damage their reputations.'
Expansion
The loan and £200,000 of lottery funding enabled Schoolfriend etc. to grow rapidly.
In June 2007 they claimed to have 700 clubs running in 72 local authorities. But just 18 months later the charity had closed 150 clubs in deprived and rural areas and 300 staff were out of work. At the time chief financial officer Stephen Argent said the charity was expecting to gain extended schools' funding to keep the clubs running.
Schoolfriend etc has ongoing financial support from its chairman Anthony Mitchell, who lives in the United States and according to the Sunday Times, had outstanding loans of £13.1m to the charity in the year to September 2007.
Losses
Catz Club's accounts, submitted to the Charity Commission on 23 December - 146 days late - show a loss for the financial year ending September 2007 of £5,656,864.
This was against an income of £1,323,322 in childcare fees (total income £1,438,421).
The accounts also show that Catz Club spent £1,972,382 on activity materials. All the charity's clubs use Schoolfriend.com's numeracy and literacy software.
Despite the deficit, it looks like Schoolfriend etc will keep the remaining clubs open. The trustees' report concluded the charity would continue to operate, given 'continued support from the chairman'.
WHAT THE CHAIRMAN SAID
Nursery World spoke to Catz Club chairman Anthony Mitchell this week
Labour Party
'We've clearly made mistakes in terms of inadvertent donations and we're looking forward to working this through with the Charity Commission. The payments were not intended to be donations.'
Futurebuilders loan
'We're grateful to Futurebuilders for the loan in the first place. We made all the repayments we were required to do and made overpayments. The money did not go into the clubs themselves. The targets for drawing down the loan were infrastructure-based. (Access to the loan was dependent on the number of employees.) In many settlement agreements there's a confidentiality agreement. We had to get it waived so we could answer questions (about the loan).'
Expansion
'Rolling out clubs nationwide is harder than we expected. We may have expanded too fast. The areas of most need proved to be the clubs that weren't sustainable.'
On his personal investment of £13m
'Most of the funding comes through me. It's interest-free and not fixed-term. I'm doing this because it's a very worthy cause. There are a lot of children who have benefited.'
