When One Plus, the charity which provided services for lone parents in the west of Scotland, went into liquidation last year it had a turnover of £11m and 800 employees. Since being set up in 1986, it had helped thousands of lone parents turn their lives around through training and employment and had become the largest organisation for lone parents in Europe, running nurseries and out-of-school care as well as training schemes and advice services. Its failure was disastrous for the families which relied on its services, but the story of One Plus should be a cautionary tale for all charities. Even now, a year after liquidation, several million pounds worth of European money remains unaccounted for in a financial morass involving 80 different funding streams. Funding packages were put together from a variety of sources including local authorities and the European Social Fund, but were paid retrospectively, which resulted in a cash flow problem when regular payments for wages and National Insurance were required. That led to a culture of robbing Peter to pay Paul and eventual collapse.

Some of its problems were the result of its success: it expanded from advice to training when it was clear that what lone parents needed most was a job.Once they started work, they needed childcare, and One Plus diversified further. However, as the Office of the Scottish Charity Regulator (OSCR) notes in its report into the failiure of One Plus, the board members did not have the skills or experience to run a large organisation, particularly one with a complex funding pattern. This was partly because of rapid expansion without a corresponding change of focus. One of its founding principles, for example, that lone parents should participate in the running of the organisation, did not help widen the board members' range of skills.

Similarly, when parents (who were mostly in high-deprivation areas) were in arrears with childcare payments, they would extend credit. One of the lessons that both funders and providers in the social economy of not-for-profit services must absorb from this disaster is the difficulties faced by organisations which are funded for specific projects rather than with a core budget.

As charities are contracted to provide more services for local authorities and government agencies, many will find their budgets increasing, although their funding remains piecemeal and short-term. This will put particular pressure on voluntary trustees. The governance of charities is now overseen by the OSCR. Its report into One Plus makes clear that its demise holds important lessons for trustees of other charities, who must be able to hold the chief executive and management to account and ensure they have up to date financial information and strategies for managing risk. The best of intentions are no substitute for financial rigour and accountability.