# Building a kids castle on sand

- Link: https://fundraising.co.uk/2015/08/10/building-kids-castle-sand/
- Published: 2015-08-10T13:06:05+01:00
- Author: Howard Lake

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.

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## 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 ](https://www.fundraising.co.uk/2013/09/18/zombies-board/)
into inaction by any apparent suspension of the laws of finance and fundraising.

 

_**John Baguley** is Director of the [International Fundraising Consultancy](http://www.groupifc.com)_

 

_Photo: [sandcastle](http://www.shutterstock.com/pic-273533375.html) by Naturalhill
on Shutterstock.com_

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