The charities watchdog is investigating an evangelical church over allegations that young members were pressured by pastors take on personal debt and even sell their blood to raise funds.

The Charity Commission said it was looking into the governance, management, policies and practices of the Spac Nation church, a registered charity set up to spread Christianity, particularly in relation to the safeguarding of its beneficiaries and its financial arrangements.

Spac Nation’s trustees have been ordered to immediately bank all the cash held by the charity while the investigation takes place.

The church has previously won plaudits from politicians for work it said was doing to divert young people away from gang violence. But since last month a number of exposés have reported claims it was pressuring young members to beg, borrow and steal money for the church.

This week HuffPost UK reported allegations that some Spac Nation members had taken teenagers to donate blood for medical trials, in a practice known as “bleeding for seed”. The church denies the claim.

The commission said Spac Nation had been subject to a regulatory compliance case since April 2018 after it received reports about safeguarding and financial concerns. This summer it issued the charity with an action plan that required a response from trustees by November. Information contained within that response “raised further concerns about the charity’s financial controls, policy and procedures,” it said.

“Of immediate concern to the commission is that substantial amounts of charity money are held in cash,” the commission said in a statement. “As a protective measure, the commission has issued an order under section 84 of the Charities Act, requiring the charity to bank its money.

“The commission is also concerned about the apparent lack of clarity between the personal, business and charity roles of leaders within the charity.”

The commission said it had opened the inquiry after allegations emerged that individuals had been encouraged to give money to the charity by taking on personal debt.

A commission spokesperson said: “Charities exist to improve lives and strengthen society; the issues that have been raised related to Spac Nation in recent weeks are highly concerning, even more so as the allegations are entirely at odds with the expectations about the way that charities will operate.

“The opening of this inquiry is an important step that will allow us to examine these concerns further and establish the facts. We will seek to provide assurance to the public and the community that these matters will be considered fully and, where necessary, resolved.”

A report with the commission’s findings is expected to be published once the investigation is concluded.

In a statement from its board of trustees, Spac Nation said the inquiry was “needful to lay to rest some unverified allegations”. It added: “Inquiry is what we have always asked for. If anything is found wrong we will adjust it, and if not we will keep going strong.

“If any pastor or leader is caught pressuring people to donate, such leader will be expelled without delay, not to talk of pressuring to donate blood for money. We encourage people to donate blood and all they can for the community but we also say not for money ever, that just won’t happen here.”