The Salvation Army is facing a serious financial crisis after discovering a £9.6 million hole in its annual budget.
Need to get away
The disclosure will come as a huge embarrassment to the 126-year-old Christian organisation, renowned for its military-style uniforms and brass bands.
It has shocked senior officers, who received confidential letters this week ordering them to make swingeing cuts which could result in job losses.
The shortfall will provoke strong criticism of the army's hierarchy, which was restructured 15 years ago after a financial scandal in the early 1990s when £6 million was invested in a bogus scheme.
More professionals were employed in key areas such as finance and accountancy and the organisation modernised its image, introducing a less militaristic style of uniform.
Senior officers have now been told to find savings of 30 per cent to balance the books by the end of the financial year.
According to insiders, the problem has arisen because the army's spending plans were based on anticipated income from the charity's fundraising department which has not materialised.
Sources said that the deficit only came to light during a review of funding which found that "hoped-for" income had been treated as solid pledges.
The news comes on the eve of the Salvation Army's annual door-to-door appeal, and officers sought to reassure the public that the organisation could still be trusted.
Major Ian Barr, the divisional commander of the Southern region, said: "I am looking at my own budget and seeing where savings can be made. I have to cut back by 30 per cent, although I want to stress this will be in the area of administration, and not front line services.
"I cannot say at this stage where the savings will be made as I have not discussed my ideas with affected staff, although it has to be said that many of our building projects will have to be delayed."
Major Barr said that the public should remain confident about the way the army manages funds.
"There is no evidence of mismanagement, as I understand it, simply that budgeted income has not met projected levels," he said.
"I would also want to stress that none of the monies donated in our annual appeal will be used to make up this shortfall. All funds will be used directly to aid our social work."
The Salvation Army, which was founded by William Booth in 1878, is already suffering one the fastest declines in membership of all the mainline denominations in Britain.
A former senior employee of the Salvation Army, who asked not to be named, said: "For years the army has relied upon goodwill and positive thinking when it comes to fundraising.
"Historically, we have simply looked to God to meet our financial needs and trusted others to manage the pennies, but no longer. Salvationists will want straight answers to tough questions over this one."
A spokesman for the Salvation Army said: "In the light of reduced income projections we are currently conducting a mid-term budget review to ensure that these centralised administration costs are kept to the absolute minimum.
"The savings required are significant and while all options are being considered, including a realisation of some assets, a reduction in the number of staff at national and regional headquarters cannot be ruled out."