Almost a decade after its creation as a peak national body advocating for the health of Australia’s queer community, the National LGBTI Health Alliance has found itself on its knees and gutted by a lack of government funding and allegations of infighting at its most senior levels.

Just as serious, there have been concerns about how the organisation handles its finances, and why the board is led by a chairperson serving a third term (the organisation’s constitution says a chairperson can only serve two consecutive terms, unless the board resolves otherwise).

The alliance was dealt a crippling blow in December last year when its application for federal funding was rejected. Health Department policy wonks said the application contained “insufficient detail regarding its proposed activities, risk mitigation and budget”.

Over the previous financial years, the alliance had received operating grants of more than $3.5 million (2014-15) and $2.85 million (2013-14) from the Department of Health and Department of Social Services — a large chunk of which derived of funding from the Peak Health and Advisory Body program.

It is expected funding for all programs except the QLife national online and telephone counselling service will end June 30.

Rumours persist that the application would have been approved but for a post by blogger Doug Pollard on his under-appreciated The Stirrer website this month that exposed some of the goings-on at the alliance.

“Rumours are circulating that the alliance believes the only reason funding has been lost is because I wrote about the issue,” Pollard told Crikey. “If I had not shone a light on this, the story goes the department would have passed the funding on the nod.”

But financial questions came up long before Pollard’s post. The alliance’s latest annual report shows that despite an increase in income of about $650,000 from the previous year, the alliance had managed to operate at a loss for 2015 to the tune of almost $90,000.

All those troubles were considered largely irrelevant to some as the alliance was said to have engaged an individual to deliver a set of “rolled gold” documents to bolster the group’s case for funding and improve its submission.

Except, it seems, those documents never arrived — leaving the government little choice but to switch off funding.

It’s been alleged a number of board members were kept completely in the dark about the alliance’s funding proposal.

The alliance denies hiring a consultant for the task, with its executive director, Rebecca Reynolds, informing Crikey by email that the work on the funding submission was “prepared internally by the alliance with the guidance of a committee established for this purpose”.

However, Crikey has learnt that two members of this internal committee are Victorian-based lobbyists, Corey Irlam and Tass Mousaferiadis, who are not elected members of the alliance board or on the staff, but instead were engaged on the promise they could sort out the funding mess.

Both Reynolds and the alliance’s chair, Susan Ditter, refused to be interviewed by telephone despite numerous requests.

Even with the alliance’s insistence on not relying on consultants for important tasks, according to its most recent profit-and-loss statement — which the alliance’s own auditors were unwilling to verify — almost $2 million of the organisation’s total $3.6 million budget for 2014-15 was spent on “subcontracting costs”. It was an increase of $800,000 from the previous year.

And that wasn’t the only noticeable increase in spending. Travel costs ballooned out to two and a half times more than the previous year, expenditure on advertising almost doubled, insurance costs trebled, meeting costs doubled, printing and stationery costs more than doubled, and salaries rose by about 25%.

The worth of the assets the alliance owns also diminished by nearly $600,000 in the space of one year.

Crikey sent a number of detailed questions regarding the alliance’s corporate and financial governance. In response, the alliance released a statement on its website. In part it reads:

“The 2014/15 profit and loss financial statements reflect the years’ activities and in particular the activities of the particular projects undertaken by the organisation in that year. As no two years have the same activity it is incorrect to compare the funds spent over those two years as if they were.”

The alliance refused to be drawn on questions on whether any of its board members have an accountancy or financial background, or hold a CPA.

Its current treasurer, Dr Mark Fuller, is a general practitioner by trade.

The alliance was founded in 2007 and originated out of a number of HIV/AIDS community-based organisations.

Until 2013, it had run on an annual budget of only a few hundred thousand dollars.

Its mission was to “provide a national focus to improve health outcomes for LGBTI people through policy, advocacy, representation, research evidence, and capacity building”.

As the years went by the alliance has, according to some, moved away from its core mission of providing policy development and nuanced advocacy and got involved instead in seeking funding for implementing programs and services that would usually be the job of its own member organisations.

Claims of conflicts of interest have arisen, with a number of board members also having significant stakes in some of the programs the alliance has advocated for and on behalf of, such as the MindOut mental health program.

Crikey has learnt of regular tension during board meetings, which has resulted, at least on one occasion, of senior management leaving the room in distress after being questioned on the alliance’s profit-and-loss statement.

Claims of “jobs for mates” have also been made, with up to five positions being taken up by close associates of Reynolds, including a former partner, since her tenure as executive director began in January 2014.

The alliance says it recruited the staff in accordance with its employment policies.

“This is a small sector in terms of professional roles and the people who are qualified and have the experience to hold them,” Reynolds said.

“There are often multiple ways in which people can know each other.”

Trans advocate Kelly Glanney, director of the Carmen Rupe Memorial Trust, told Crikey the alliance’s financial troubles offered an opportunity for the community to start again in a transparent manner.

“Given the … many legitimate grievances various community leaders have expressed about the way the alliance does business generally, I suspect some of us who are very active in this advocacy space won’t be that surprised at this federal government decision,” she said.

Another source close to the action summed up the situation to Crikey perhaps most bluntly.

“There will be so much blood on the floor; there already is,” the source said.

“They really need to have their board suspended … The government needs to bring in completely independent investigators and an audit team and clean out the mess, shut it down, or both.”

Disclaimer: Serkan Ozturk was contracted for work with the National LGBTI Health Alliance on three separate short-term projects in 2013 and 2014.