In 2006, when David Cameron was leader of the opposition, he made an infamous speech that is remembered as an exhortation to hug a hoodie. Feral youth, he said, should be helped rather than demonised. He was reaching towards what he hoped would be a new, ‘compassionate’ conservatism inspired in part by the charismatic social activist Camila Batmanghelidjh.

She was the perfect lodestar for the young Tory leader. She began her drop-in centre — the Kids Company — in 1996 and within a few years, was helping thousands of disadvantaged inner-city children. She’s colourful, powerful but also a former Sherborne girl with whom Cameron and other members of the establishment felt at ease. Cameron told his shadow ministers that Camila embodied the Big Society. He suggested they study her work and design policies that reflected it.

The cash has rolled in to Kids Company. It has received more than £25 million from the government, and another £4.25 million has just been agreed. Prince Charles is a fan; the rock group Coldplay have donated £8 million. Then there’s Richard Branson, J.K. Rowling, Jemima Khan, Credit Suisse, Morgan Stanley, John Lewis and more.

Good for Camila Batmanghelidjh, you might say, but there are a number who believe that Kids Company has perhaps grown too quickly and would, despite its undoubted achievements, benefit from a review of its operations and controls. They worry that Kids Company has become too famous, untouchable, and now acts as a drain on well-meaning donations that might otherwise go to better causes. Having investigated the charity for several months, I’m afraid I agree.

I first became interested in Kids Company after meeting and writing about a recent benefactor of theirs, Joan Woolard, who sold her house just over a year ago so as to give the proceeds to Kids Company. Less than a year after making her enormous donation, of about £200,000, she became so disillusioned that she complained to the Charity Commission and is demanding back her money. I wrote about Mrs Woolard, a 76-year-old widow from Lincolnshire, for the Oldie magazine. My piece covered her wider life, which included working as a Labour MP’s secretary. But one observation I made was this: ‘What is perhaps most bizarre about this tale is that Joan has no idea what has become of her money. The charity has never informed her how it has been or will be used, despite her being its largest individual donor.’

Ms Batmanghelidjh does not take criticism on the chin. She wrote to the then Oldie editor Richard Ingrams insisting he ‘repair’ the ‘incredibly damaging narrative’. She stated Kids Company had ‘worked very carefully’ with Joan for more than a year before accepting the donation.

Is that right? Not according to Mrs Woolard: ‘Contrary to what she claims, I never received a personal letter from Camila thanking me for making my donation. I had a few meetings with her in the 15 months before I made my donation but it’s not correct to say I “worked” with her.’

So much for hurt feelings — more interesting are Joan’s other misgivings. After the Oldie spat, by way of making up, Joan spent a week volunteering at Kids Company, to see how donations were spent.

One of its therapy centres she attended was the Morgan Stanley Heart Yard in south London. It was bought with £1.6 million given by the London arm of the American investment bank after which it was named and opened by Joanna Lumley. What struck Mrs Woolard was the absence of children. She says: ‘Camila said that the charity is “short of money” because summer is a busy time because so many more children need to be fed and looked after during the school holidays. But I was told by staff that during the summer holidays there are fewer children to look after. I can’t square this fundamental contradiction.’

Nor, as it happens can some other former senior members of Kids Company, who claim that there are ‘exaggerations’ in the numbers of people it says it helps. In the charity’s annual reports, the numbers increased from 13,500 in 2008 to 16,500 in 2010 before jumping to an astonishing 36,000 the next year. That figure of 36,000 has been used in Kids Company literature ever since, but some ex-staff members have questioned it. In response to this, the charity stated it uses a computer system tracking all the children, young people and families with which it works, recording why money was spent on them and what outcome arose, and that the earlier figures were under-estimates.

This all sounds very professional, but it turns out it is not just children who are included in the much-touted 36,000. In an email to me the charity wrote: ‘When we refer to clients they include children, young people, young adults with special needs, carers, i.e. foster parents or parents who predominantly have mental health difficulties, and school staff.’ Strange to include parents and school staff in the number of those helped.

On to Joan’s next concern, which she heard from staff in Kids Company HQ. Some employees are former ‘clients’ — people helped by the charity itself when younger — and the complaint from regular staff was that some of these former clients did not bother turning up to work. Joan told me: ‘One girl had apparently swanned off for the whole summer, to the obvious annoyance of colleagues. I was also told that others who visit the charity are given cash allowances to supplement their Jobseekers’ Allowances and to prevent them from stealing or dealing drugs. I don’t think private donors or the government give Kids Company money so that it can be handed out to young people in cash?’

When I put this to Ms Batmanghelidjh, she said: ‘Money is only spent on the most destitute of our clients.’ She said this included ‘trafficked mothers’ unable to access welfare despite having children born in the UK, and young people in education who ‘receive food vouchers and a bus pass’. She said: ‘I want to be very clear that at no time have we paid or do we pay clients to come to us.’

However, I’ve spoken to former Kids Company employees who might disagree. I’ve also spoken to a former Kids Company member of staff, Genevieve Maitland Hudson, who left the charity in 2009. She told me that young people were given cash and travel cards. She said: ‘On Fridays in 2008, little packages of cash were handed out to every young person through a window in the Urban Academy reception. It was always tense. There were tears. There was shouting. There were threats. There were fights.’ What prompted Genevieve to leave Kids Company was not the challenging work and certainly not the young people, about whom she has only good things to say, but the ‘culture’ of the charity.

Finally, last August — six weeks after it was promised — Joan Woolard received the report setting out where her money had gone. It had been overseen and written off personally by Ms Batmanghelidjh. But instead of allaying the widow’s concerns, it only increased them. Five of its 11 pages were simply photographs of children. Within the text were three boxes referring to what her money had bought. This included the claim that £44,181 of her donation went on ‘the entirety of our food budget at Kenbury [one of its London centres] between September and December 2013’.

Mrs Woolard found this odd. A Kids Company report produced for the government — covering the period 2011 to 2013 — had stated: ‘In the past year, £174,379 was spent providing meals at four of our centres’ — including Kenbury. This suggested that the average monthly budget for each of the four centres was only £3,600. Yet according to the report given to Mrs Woolard, the monthly average for Kenbury during the period her money was spent on food there was £11,045 — three times higher. The charity says it’s confident about its figures.

Its special report for Mrs Woolard stated that Kids Company fed ‘approximately 3,000 children each week’. An article in the Evening Standard last October also stated that the Kenbury Street centre serves 3,000 hot meals each week.

The figures are confusing. Are 450 youngsters being fed a meal there daily — a total of 3,000 meals a week? Or are 3,000 youngsters getting one meal there each per week? Mrs Woolard tried to find out by visiting the Kenbury Street centre unannounced. She estimated that the dining space had enough room for 60 people at any one time. To serve 3,000 meals per week would require seven separate sittings per day, seven days a week. She feels these numbers just do not add up.

Camila Batmanghelidjh dismissed my concerns about the treatment of Mrs Woolard, saying in email: ‘We have been concerned about Joan Woolard and her mental health. A few months back we discussed our concerns with the Charity Commission and placed the evidence with them.’ Quite apart from the distasteful nature of the accusation, and the fact that I found Joan Woolard to be perfectly sane, the question remains: if Kids Company really thinks Joan Woolard might be mentally unwell, doesn’t it have a duty to return her £200,000?

Camila Batmanghelidjh claims that Kids Company has an open-door policy, and she invited me to spend time there, as Mrs Woolard had. I daresay I’d be charmed by Camila, as so many others have been. But I’m not sure a casual day-long visit is the solution for Kids Company. Like other charities in receipt of vast sums of taxpayers’ money, it needs to be able to demonstrate to donors — and the outside world — that the money is being used as well as possible, however worthy the objectives. If a government department, say, or a donor like Joan Woolard or a former staff member has concerns about a charity, they must be properly addressed.

Charm is no substitute for transparency. Or at least it ought not to be. Officials in the Department for Education, for instance, were so unimpressed by Kids Company’s financial management that they persuaded ministers to stop millions in funding. Ms Batmanghelidhjh’s response was to contact the Prime Minister, who personally intervened with the Department for Education to make sure Kids Company got its cash. Not a word of the argument leaked.

Who can blame Camila for fighting for her charity? But this sequence of events exemplifies the problem: if you’re too well connected for anyone to criticise you, if you’re always pulling strings, you risk losing transparency and therefore accountability — however well intentioned you are.