NSW Charity Accused of Misusing Taxpayer Funds for CEO Sabbatical, Pay Rise

A New South Wales charity responsible for finding foster homes for children spent more than $40,000 of taxpayer money to send its chief executive on a "sabbatical" to the US and Europe.

That same year, it awarded the individual a $120,000 pay rise, allegedly without "discussion or formal approval", boosting their salary by two-thirds.

Taxpayer money was also allegedly misused on Airbnb stays, rugby league sponsorships, parties, alcohol and more.

The ABC is not naming the organisation accused in a confidential forensic audit of misusing taxpayer funds for legal reasons.

The charity had received tens of millions of dollars under state government Permanent Support Program (PSP) contracts, to help more than 100 children under 18 years old find foster homes, mostly in Greater Sydney.

It is not the only organisation holding PSP contracts that is suspected of fraudulently using taxpayer funds.

The ABC understands five others are being targeted by the Department of Communities and Justice (DCJ).

Three of the organisations have to meet new conditions to keep their PSP contracts.

Three others are not having their contracts renewed and will no longer be allowed to find foster homes for children and teenagers.

The ABC is not naming the five other providers for legal reasons.

Overseas trips, cars and events a concern

A "high volume of complaints" against the chief executive, "financial impropriety, and a perceived lack of board oversight", were some of the reasons why the DCJ ordered a forensic audit into one foster care organisation in Greater Sydney.

The confidential forensic audit covered operations from October 1, 2022, to June 30, 2025, when more than 99 per cent of the charity's funding came from taxpayers, exceeding $34 million.

Independent firm BDO Services said $1.6 million had not been recorded because the organisation under-reported the interest it made from funds, overcharged or double charged services, and had not documented some of the assets it sold.

In addition to uncovering unaccounted-for money, the auditors flagged several expenses as "potentially non-compliant", because they had no clear link to the work it was contracted to carry out.

Travel was a "key concern" with more than $98,000 flagged.

This included almost $41,500 spent on a sabbatical to the US and Europe for its chief executive, and about $8,600 for a trip to New Zealand for the chief executive, the deputy chief executive, and chair of the board.

Another concern was a pay increase secured by the chief executive, as their salary of $181,761 jumped to $300,574 in the financial year ending in 2024, an increase of 65 per cent.

"Based on the Board minutes reviewed, we did not identify discussion or formal approval relating to the performance or remuneration of the CEO," the audit read.

Other transactions flagged by the forensic audit included:

Five cars sold to staff, family and friends at up to 55.3 per cent below the market rate

$226,971.72 for advertising and promotion, including the sponsorship of five football teams and events, mostly in regions the charity did not service

$22,876.16 on catering, make-up services, office amenities and entertainment

$14,978.10 on coaching lessons for the CEO and the Board

$6,709.09 on a security system and door camera installed at the CEO's residential address

$10,123.84 on food and alcohol at restaurants and hotels, both in Australia and overseas

'Genuinely shocked'

The cost of finding foster homes for children and young people soared by 239 per cent during a six-year period to 2024, according to state government figures, increasing from $322 million to $1.1 billion.

Executive and corporate manager fees tripled, from $38 million to $117 million.

Meanwhile, a smaller share of money found its way to the children and young people in need, dropping from 43 per cent to 30 per cent.

"I was genuinely shocked to find that the system that was created was allowing funding to flow away from vulnerable children and towards the financial interests of individuals and providers," NSW Government Families and Communities Minister Kate Washington said.

"One of the very first reports to land on my desk was about young children not even having the winter school uniform they needed to stay warm at school, despite the provider receiving millions of dollars in funding to provide services to those kids."

Years of reform ahead

The NSW government said one of the issues with the current foster care system was the "weak accountability for delivery of services".

It is changing the out-of-home-care strategy in stages until 2030.

"A large part of our reforms is ensuring that we are introducing stronger measures around accountability and transparency," Ms Washington said.

"Contracts will require information to be provided to us that wasn't required before, in terms of where and how they are spending their money."

Part of the reform process is phasing out the PSP contracts held by providers.

Shadow Families and Communities Minister Natasha Maclaren-Jones said the government should focus more on early prevention programs to lower the number of kids needing foster care.

"And of course, taxpayers' funds are being used appropriately."