Building a kids castle on sand
Howard Lake | 10 August 2015 | Blogs
At its height Kids Company was the ‘go to’ children’s charity for three political administrations New Labour, The Coalition and then the Conservatives in 2015. Led by its charismatic director Camila Batmanghelidjh, who had the ability to impress all who listened to her, the charity grew exponentially; originally asking for professional staff to be on loan from local authorities and then, as the work grew, raising increasingly large sums until its turnover in 2013 was some £23 million. Indeed, David Cameron’s Big Society rhetoric found a home in Kids Company pleased that it reached kids that local authorities did not seem to be helping.
Begun in 1996 as a drop in centre, Kids Company worked with children from some of the most disadvantaged families in England, principally in Lambeth, Southwark and Bristol. It refused to turn any child away and the numbers which it helped rose from 14,000 in 2009 to 36,000 (including young people and families) in 2013. Local authorities have a legal duty to safeguard vulnerable children in their area and Kids Company was seen to work effectively with the most difficult children.
It suddenly closed its doors in August 2015, however, having effectively run out of funds, and used part of the final tranche of £3 million the Government to pay its last wages. Shortly before it closed, a potential donor of another £3 million pulled out, apparently citing a forthcoming police investigation.
Why the sudden closure?
So why had this amazing charity with its income in the millions of pounds, beloved of prime ministers, a host a celebrities and an often adoring press closed so abruptly?
The answer in part is in the fact they never turned a child away, so however much they raised there was always more to do. Year after year, the charity failed to put away adequate reserves and that built the proverbial house of cards. In 2009 the reserves were £127,000 in debt followed by a build up the next year towards 3 months reserves but in later years this too disappeared. Kids Company could have gone right round the world meeting endless needs if the money could be assured year after year. Yet, instead of building up secure income streams from a professional fundraising department which formed close and lasting partnerships with donors, it seemed to rely on the ability of the charismatic founder to raise ever larger grants from government and wealthy individuals.
Role of trustees
The trustees whose responsibility it was to oversee the finances were repeated warned that the reserves were inadequate for that size of organisation. The accounts lodged with the Charity Commission clearly noted the problem. This is where a zombie board’s lack of ability to act decisively at the right time can proved fatal. The ability of the Director to pull the chestnuts out of the fire year after year is no guarantee that being financially prudent is no longer unnecessary. Indeed, at a time of volatile financial change adequate reserves become a necessity to guard against a downturn.
Kids Company’s chair of the Board was Alan Yentob the BBC’s creative director, who was there almost from the beginning seeing its expansion from a railway arch to the establishment of its centres in London, Bristol and Liverpool; but though Kids Company’s own Financial Directors advised the trustees to build up adequate reserves they were never put in place, and a media storm has erupted over the closure engulfing both the Chair and Director.
Kids Company proved to be a very sad case but illustrative of the need to follow professional advice at all levels, and not become zombified into inaction by any apparent suspension of the laws of finance and fundraising.
John Baguley is Director of the International Fundraising Consultancy
Photo: sandcastle by Naturalhill on Shutterstock.com
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About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.