Financial crisis hits homeless charity Peter McVerry Trust after years of growth

Back when it was known as the Arrupe Society, the small homelessness charity set up by the campaigning Jesuit priest Fr Peter McVerry bought its first two apartments to be used for housing in 2004.

The following year the Dublin charity was renamed the Peter McVerry Trust (PMVT). It would go on to become a key pillar in the State’s provision of homeless services.

As the homelessness crisis has deepened over the last decade, the charity significantly expanded in an effort to tackle the problem.

In 2014, the year homeless man Jonathan Corrie died sleeping rough in a doorway near Leinster House, the charity reported €10.6 million in income.

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By 2019, the year the number of people recorded as homeless surpassed 10,000 for the first time, the charity had an income of €46.7 million.

[ Homeless figures rise again with almost 13,000 in emergency accommodation ]

Now, with more than 600 properties and an annual income of €60 million, the charity finds itself in a major financial crisis, sparking fears of a collapse.

At the start of this year Pat Doyle, chief executive of the trust since 2005, announced he was stepping down from the role in May. Around the same time deputy chief executive Brian Friel, another long-time senior figure in the charity, also left.

Francis Doherty, who had been director of housing and communications at PMVT, took over as chief executive on June 1st.

He wrote to the Department of Housing on July 10th, advising the Government that the charity was experiencing significant cash flow problems.

Four days later the charity informed the Approved Housing Bodies Regulatory Authority (AHBRA), a new watchdog set up in 2021 to regulate not-for-profit housing bodies, and the Charities Regulator.

The charity’s main funder, the Dublin Region Homeless Executive (DRHE), which co-ordinates homeless services across Dublin, commissioned an independent review of the trust’s governance and finances.

By the end of the month the DRHE had drawn up terms of reference for the review and shared them with the department, writing to the charity with details of the planned audit.

In an email on August 3rd, the charity said its board agreed with the scope of the proposed audit and that the DRHE could be “assured of our commitment to this process”.

A partner from auditors PwC, Ken Tyrrell, who specialises in restructuring and insolvency, was selected to lead the review.

Meanwhile, both AHBRA and the Charities Regulator were looking into financial issues at the charity.

In a letter dated July 18th, Thomas Mulholland, head of compliance and enforcement at the regulator, wrote to Mr Doherty, requesting minutes of recent board meetings and a copy of a financial plan adopted by the board to try to offset the cash-flow problems.

“I should also be obliged if you could provide further updates on this matter to the Charities Regulator on a timely basis, whether the situation improves or deteriorates,” Mr Mulholland wrote.

Deirdre-Ann Barr, a former partner at Matheson law firm, who has been chair of the trust’s board since last year, wrote to assure the regulator they were taking the matter seriously.

The protection of vulnerable people using the trust’s services was “paramount in all our decisions”, Ms Barr said in an August 18th letter.

“We further confirm that all our funds are used to further our charitable purpose and we are fully aware of our obligations in this regard,” she said.

The correspondence was released to The Irish Times following a Freedom of Information Act request.

At the department, an initial draft report from PwC last month sparked further concern. A more comprehensive final report is expected in the coming weeks.

The draft detailed issues around the warehousing of debt and significant cash-flow issues that were threatening the charity’s ability to meet its day-to-day running costs.

As the precarious financial position continued to worsen, parallel inquiries by regulators were ramping up.

The Charities Regulator wrote to PMVT on August 24th, using its powers to compel the charity to hand over records it deemed relevant to its ongoing inquiry.

AHBRA last week appointed inspectors to investigate financial issues of concern at PMVT, the first time it has used such powers.

Days earlier Mr Doherty had written to the charity’s board, raising further concern about the deteriorating financial position.

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News of the statutory investigation led to fears of fundraising drying up and staff leaving to work elsewhere. The regulator is continuing with its own inquiry.

One department source speculated that emergency funding will probably be needed to safeguard the charity’s services.

The trust has more than 700 frontline staff and provides emergency homeless accommodation to more than 2,000 people each night.

It also runs the Housing First programme, which moves people out of long-term homelessness into their own tenancies, while providing support to help them deal with addiction, mental health or other challenges.

Around three quarters of the charity’s funding comes from State bodies, with the rest largely made up from donations.

The crisis has arisen due to “mismanagement” – rather than financial wrongdoing – and the trust not having proper structures in place as it grew, one senior source in homeless services said.

If the trust collapsed, other homeless and housing charities in the sector would not have the capacity to take over its services, the source added.

Fr McVerry himself put the current problems down to the charity trying to do too much and expanding too quickly.

In 2021, the charity planned to triple the amount of housing it had, from 600 units to 1,800 over five years.

In the two previous years it had spent more than €20 million buying properties for use as social housing, according to its annual reports.

A source familiar with internal crisis talks in the charity said part of the problem was it had paid for properties from its own finances at times, rather than borrowing money, which had eaten into resources.

Ramping up the amount of social housing run by the charity would have come with significant staffing costs, according to one source in another large homeless charity.

On other occasions the State has funded the trust’s property purchases, only to have plans to open homeless accommodation run aground.

The charity bought two properties in 2021, Latchfords Townhouse, a former boutique hotel on Lower Baggot Street, and the adjoining building, to turn into homeless accommodation for 74 people.

The guide price was €5 million but the trust bought it for €6 million, with the DRHE funding the purchase.

The charity failed to secure a planning exemption to use all floors for homeless accommodation. To date the site has remained unused, save for a Chinese restaurant operating from the ground floor.

A PMVT spokeswoman said the charity was “currently assessing options for this property”, as its “original plans have been impacted by a planning decision”.

Another pressure is large debts the charity owes, which include a €8.3 million Revenue tax bill.

The charity had availed of a Revenue scheme during the Covid-19 pandemic to warehouse tax debts between 2020 and 2022, which it started paying off last September.

An oversight group of department and DRHE officials has been set up in response to the crisis facing the charity, which met earlier this week. Officials await the final report from PwC.

The view within the department, the DRHE and the wider homelessness sector is that the services provided by the trust are too important for the charity to be allowed to fail.

However, the trust has said it has not requested emergency funding from the DRHE or Government.

If significant financial assistance is needed to keep the charity afloat, State funding will likely come, but only if there are significant internal reforms.

Neither Mr Doyle or Mr Friel, two senior PMVT executives who left the charity earlier this year, responded to requests for comment about the financial crisis facing the trust.