Family Service Units, a charity for children and families, went into administration this week following a significant decline in income and crippling pensions liabilities.
FSU, which has been operating since 1948 and runs services in England and Scotland, was a member of around a dozen local authority final salary pension schemes and faced a £5m pensions bill.
Chief executive Philippa Gitlin said this had “tipped [FSU] over the edge”.
She said: “With a decline in income we did not see how we could make a surplus, generate enough to fund FSU services and pay off our pensions liabilities.”
The charity was heavily dependent on local authority contracts. In 2003-4 it received money from streams including the Children’s Fund and its turnover was £13.5m. But last year that dropped to £10m and it projected it would only have £6m guaranteed funding next year.
Gitlin said: “There is a lot of uncertainty around children’s services. In October many local authorities were still unsure about what services they were going to commission and we could not afford to wait.”
She said FSU’s collapse should be a message to councils about the importance of full-cost recovery for services.
FSU’s services in England will be taken over in May by Family Welfare Association, provided employees agree to new terms and conditions.
Voluntary sector members of the Transport and General Workers Union, will be balloted next week and the union will announce their decision on 17 April.
FWA chief executive Helen Dent said: “FSU’s services are top quality and a good fit with ours.”
In Scotland, an independent charity will be established to take over FSU’s services there.