Are there lessons to be learned by all charity Trustees in the collapse of Kids Company?
I have been interested in the fate of Kids Company since the recent publication of the fact that in 2003 HM Revenue and Customs wrote off almost £600,000 in unpaid national insurance contributions in return for a deal that Kids Company paid up just £100,000. This was a staggering deal, maybe even unprecedented. The Chair of Trustees, Alan Yentob, also Creative Director at the BBC, has been said to have helped broker a deal that I refuse to believe smaller charities could even imagine possible.
So far, mainstream media treatment of the débâcle that is the precipitate closure of Kids Company has largely not directed its investigatory searchlight onto the Board of Trustees who, of course, are also company Directors, Kids Company being a charitable company limited by guarantee.
Instead, for instance, the front page headline in The Times today, “Cameron accused as troubled charity fails", directly links the failure of Kids Company with the Prime Minister. David Cameron, the writers assert was “mesmerised” by Camila Batmanghelidjh. If so, BBC Radio 4 Today seems to have been likewise enthralled, giving Camila Batmanghelidjh airtime to set out her four reasons why the charity failed, not one of which reflects on herself or the charity Trustees.
Undoubtedly, some explanation is required of this government, of the previous coalition government and, earlier still, the Labour Government for what might be described as a serious failure of due diligence in awarding funding of around £37m to Kids Company, ensuring that it was properly accounted for.
Undoubtedly, too, the concept of ‘the Big Society’ and the transfer of local authority duties to charities as well as to the private sector (by which I intend no political comment) created an environment in which politicians (Tim Loughton MP in 2012 was a notable exception as Minister for Education) were likely to over-rule more cautious civil servants, as is said to have repeatedly happened right back to 2007.
Like the mainstream media, social media is full of such finger-pointing. But very little of it points the finger where it firmly belongs – the Board – which is responsible for the viability, sustainability and solvency of the charitable company.
The decision to close Kids Company without notice, apparently at the loss of redundancy payments to staff, will have been taken by the Board of Trustees/Directors. When did they know as a Board that the financial future of Kids Company was at risk? What action did they take then? Three resigned earlier this year, "over doubts about the charity's future". Only annual accounts to December 2013 are available online - the annual accounts to 2014, together with the Auditor's Statement may make interesting reading when published. As of yesterday there were 7 Trustees - the Chair was Alan Yentob. The Vice-Chair is interesting in this context: Richard Handover - look him up - These are the people responsible - for the viability, sustainability and solvency of the Company/Charity. They accepted some £37m in public funding - £3m of it just last week. It seems that for one reason or another, they got their statutory duty badly wrong.
Kids Company was exceptional in its collapse as in so many other ways. However, its Trustees should have known, like all Trustees of all charities, that the cold winds of austerity would be blowing their way, as Kathy Evans, chief executive of the Children England charity, told BBC Radio 4: 'There are 60,000 children's charities. Last year alone, their Government income dropped by £150 million. So the circumstances of Kids Company are certainly unique, troubling, high profile and not the norm for most charities, but the norm for most charities is very serious financial pressure." My suspicion is that it was ever thus – except for certain well-known high profile charities with excessive reserves – for most middling and small charities. In implying that the government should have given Kids Company even more funding as Kids Company “did not receive enough to deal with the number of young people the charity supported”, Camila Batmanghelidjh forgets a simple truth: no single charity can help everyone and hard decisions sometimes need to be made, if not by the chief executive, then by the Board of Trustees. It is for the Board to hold the chief executive to account for the charity’s performance but it is their larger responsibility, too, to safeguard the ethos of the charity, its long-term aims and its definition of success. Palpably, as sad as it is to say so, the Trustees of Kids Company failed to safeguard the charity, its work and those children and families it served to such acclaim.