Kids Company has tarnished the charity sector

After reading the report by the National Audit Office, what worries me the most is that government funding of Kids Company continued even though the first concerns were raised in 2002 (poor cost controls and financial management). The ongoing dance of the charity claiming more funds to ensure viability and the government supplying them – in spite of growing doubts – has tarnished the sector.

The report reveals the workings of government in its continuing support. In 2002, 2003, 2013 and 2015 it appears that government officials raised concerns about the charity’s financial management but, even though there were suggestions that other organisations offered greater value for money, large sums of public funds were handed over.

There is an information gap as to why ministers continued to fund the charity even though there was an ever-present concern of poor financial management. It does seem there was some favouritism at play given the warning signals reported since 2002. However, it is not clear why or where that favouritism came from. I couldn’t say, after reading the report, whether it was because Camila Batmanghelidjh charmed individuals or not.

In these times of austerity, commissioners and providers must demonstrate the value and impact services have on society. The sector is already facing increasing demands for greater accountability and transparency in order to shore up much celebrated and coveted public trust and confidence. It does the sector no good if an organisation gives special pleading along the ‘too big/successful to fail’ line.

Efficacy and efficiency are not the same thing. It is essential that limited resources are used in the most effective way if we are to address society’s concerns. The sector is awash with innovative and successful charities making positive changes to their communities. It is disheartening to think that other organisations with a better record of delivery may have missed out on much needed funding.

The risk is that the lack of trust we are already seeing in the corporate sector will seep into the perception of charities, with adverse effects on their ability to obtain money both from government and from the public. I imagine that there may be calls for government to tighten up the monitoring of grants to charities. This would add administrative costs at a time when the public is somewhat disdainful of money spent on activities other than the frontline. Extra funds are unlikely to be included in grants to enable such enhanced reporting to be undertaken.

Government contracts should be awarded against clear criteria, which are available to all with an interest, to ensure that taxpayers are obtaining the best possible service at the best possible price. Results should be the driving factor, anything else is a sideshow.

Some commentators are already reporting that the issues at Kids Company are a result of poor governance – and yes they are – but we may need to wait for the Charity Commission and the Insolvency Service to shed more light on this. The National Audit Office report is about how the government was complicit/naive in funding an organisation that evidently had ongoing governance concerns. To me it smacks of an over-indulgent parent rewarding a favoured child for their inappropriate behaviour and giving in to emotional ‘blackmail’ demands. The charity was a cash-junkie and the government couldn’t help but oblige despite its instincts and the evidence.

Louise Thomson, FCIS is Head of Policy (Not-For-Profit), at ICSA: The Governance Institute

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