Charity folds owing £650,000

The charity which managed funding for the Lottery and the Arts Council owed more than £650,000 to 125 creditors when it collapsed a month ago, it has emerged.

The Freedom Festival's programme next year could be affected  following the collapse of HEYCF.
The Freedom Festival's programme next year could be affected following the collapse of HEYCF.

Hull and East Yorkshire Community Foundation, which was in charge of £3m Arts Council funding to develop the city’s creative talent, went into liquidation, with the loss of a dozen jobs.

A report to creditors who met this week admitted there would be “losses to a number of charities who had placed trust in the company” but said efforts had been made to minimise the loss.

Although liquidators intend raising funds including selling the building HEYCF owned, one creditor feared they may get as little as 20 pence in the pound back. He said: “There are lots of independent artists who will have lost lots of money. The liquidators estimate the shortfall at £234,000, but that is banking on selling the property. Some of the artists were concerned how bad it looks for Hull in the run up to City of Culture. But they are more upset about the lost opportunities for their communities.”

Creditors include the Freedom Festival Trust, which runs the annual arts and culture festival and is owed £57,250, Hull Council, £311,336 for eight months staff wages, while Big Local lottery funding is owed £99,784. Bransholme Community Arts Enterprise is owed £3,000. Freedom Festival board member Rick Welton said: “If we do suffer this loss it could have an impact on the range of programmes at the festival next year.”

The report states that the board did not have its attention drawn to several major problems which would have raised a warning flag.

Matters only came to light when a whistleblower reported concerns to chairman Kath Lavery. Mrs Lavery, a former NHS Hull chairman, said liquidators would conduct a forensic investigation. She said: “We acted in good faith with the information we had. As soon as the whistleblower reported we acted again with the information we had. There are many reasons why the board didn’t know, some are simply the fact people you would expect to tell, but didn’t, some of it was around misreporting and some was they didn’t tell the board and we had no other way of finding out. It was a lot of things that came together in a perfect storm. No one is more shocked than me and the board members.”