Fundraising website CharityGiving shut down as £250,000 goes missing

As many as 10,000 individuals' donations to worthy causes may be lost as the Charity Commission cites a "shortfall between the funds due to the charities and the cash held".

CharityGiving.co.uk is not among the biggest websites to have sprung up in recent years allowing individuals to raise funds for worthy causes but it still processed about £100,000 per week in donations.

Individual fundraisers create "mini-sites" through the portal, and their friends and families can then pledge money and pay through the website with a debit or credit card. The portals process the payment, including Gift Aid, the tax break, and pass it on to charities once they have skimmed off their own charges.

The better-known providers of similar services are JustGiving, VirginMoneyGiving.com and BT's MyDonate.

Some services have sparked controversy in the past because of their charges, which can reduce donations by 5pc.

But until now there has been no instance of the sector's watchdog, the Charity Commission, freezing any of their activities.

In the case of CharityGiving, the portal is controlled by another charity, called The Dove Trust, which claims to have a 30-year history of successful fundraising. The commission is investigating both the portal and The Dove Trust.

The Charity Commission appointed an interim manager "several weeks ago" and the the shortfall, which the Commission has confirmed as around £250,000, emerged only very recently. The Commission said this was unprecedented and "very serious territory".

CharityGiving was also popular with small charities who, like individuals, used the portal to create mini-sites through which to raise funds. They could direct potential donors to their CharityGiving entry through flyers, emails and tweets. It is not known how many charities are implicated in this way, but they would tend to be smaller organisations lacking the means to host their own donor sites, the Charity Commission said.

Individuals giving via online portals donate an average £25, suggesting an estimated 10,000 could be affected. As yet there is no more accurate number available.

But there is likely to be widespread dismay among fundraisers and charities. CharityGiving was being used by participants in the London 10K race which took place yesterday in central London, for instance. The race is one of the biggest annual runs in Britain, attracting thousands of entrants supporting charities including Help for Heroes, Great Ormond Street Hospital and Kidney Research UK. It is as yet unclear how many participants used CharityGiving as their fundraising platform at yesterday's event.

Data collected by the Charities Aid Foundation shows The Dove Trust's total income mushroomed from under £400,000 in 2002 to almost £2m in 2011, after which no further information is available. It gives The Dove Trust's registered address as a farmhouse near the small village of Bawdeswell in Norfolk.

The Charity Commission issued a release saying: "The commission has serious concerns about mismanagement in the administration of the charity by the trustees in relation to the operation of the online donations portal and risk to charity funds."

It said a "recent assessment indicates that there is a shortfall between the funds due to the charities donated through CharityGiving and the cash held by The Dove Trust".

Michelle Russell, head of investigations and enforcement at the Charity Commission, said: “We recognise this will cause concern among the donors and fundraisers who have collected money for the charity through the site and for the charities who are expecting those funds.

"However, the financial situation of the charity means there was no option but to suspend the portal. We know that the public will be concerned to ensure that donations made reach the charities for whom they were intended, and the interim manager will now undertake an urgent, detailed review of the charity’s finances."

The commission added: "Our concerns are limited to The Dove Trust and CharityGiving portal and this should not undermine public confidence in online giving."

The commission said funds donated on or after July 12 should be automatically directed back to the donor through the banking system but warned them to "check their bank accounts to ensure this has happened".

CharityGiving published the following on its website: "We can confirm that the Charity Commission has opened a statutory inquiry into The Dove Trust, who operate the online donations portal www.charitygiving.co.uk. Pesh Framjee, partner at Crowe Clark Whitehill, has been appointed by the Charity Commission as interim manager to take full control of the management of The Dove Trust.

"We are currently working with the Charity Commission to consider as a matter of urgency the next steps in order to protect existing funds the public has donated, and any future donations. We recognise this will cause concern among the charities and donors using the website. Please note the facility to create fundraising pages or receive funds has been suspended until further notice."

Joe Saxton of nfpSynergy, a consultant specialising in the charitable sector, said: "There has been controversy in the past about some of these portals because they are structured as ordinary, for-profit businesses. They have become important sources of donations for charities especially around events. In the past, supporters of charities would have had to go round with pieces of paper and tins for the money - now they can use these websites."

• Have you used CharityGiving to raise funds? Email money@telegraph.co.uk