Monday 10 August 2015

Kids Company – a watershed moment?

It’s not David Cameron or indeed Gordon Brown’s fault that Kids Company has gone under. Indeed I applaud them for their instincts in wanting to support a charity they knew was working at the front line with vulnerable kids not reached or known by local authorities. But politicians, the charity sector and the public must learn the lessons from what has happened – and support charities that provide crucial services properly.

Kids Company is an important case in point. Their founder, Camilla Batmangeilidh was a wonderful character but she was also clear on one thing: the frontline was where the money had to go. She was very opposed to spending on overheads as she thought all the money must go out to her kids. This is a noble idea but if you take the time to view their publically available accounts their overhead costs are alarmingly low – way below what any sustainable organisation should expect. When you couple that with rapid, government-funded growth, which emerged in the wake of significant cuts to government provided services, problems are inevitable.

It appears that this was made worse by what is often called "founder syndrome." Any chief executive must surround themselves with a top quality team to deliver essential administrative functions. Batmangelidh’s approach appears to have relied heavily on her indomitable spirit, force of character and charisma. Without the sufficient collateral support of good governance and sound administration, these things, are, simply, not enough.

As council social care is cut to the bone, Kids Company was a major player in town. The social consequences of their demise are catastrophic for the individuals concerned and costly to the exchequer. Yet it would compound the catastrophe if criticism of the decisions by government on the funding of Kids Company caused government ministers to micromanage charities with which they work, or out of fear, overlook them altogether.

In order to square this circle, we need a more adult discourse on what it means to run a successful charity in the twenty first century. There is a broad lesson for the media, which must be less hypocritical about what it wants from charities. Take the recent furore on charity fundraising, which arose as a result of charities outsourcing this part of their activity to keep overheads down and funnel more money to the front line.  The negative stories were understandable but must be coupled with the understanding that to bring these functions in-house costs money – and that money will not go to the front line. And yet you can then be sure that the next slew of negative stories about charity overheads are on the horizon.

We must not return to a Victorian-style philanthropy where we rely on the occasional good will of some philanthropists but do not have the temerity to complain about the causes of poverty, to create sustainable organisations that make a difference for the long term and to fund and lead them effectively. The right lesson would be to acknowledge that running an organisation that helps people in the twenty first century requires good governance as well as good intentions – and the Government must support good governance and high quality leadership in the charity sector if it is to prevent future catastrophes.

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