No longer Keeping Kids Company

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In an abrupt manner the well-known charity Keeping Children Company has closed its doors to vulnerable children, young people and families. What has happened highlights some fundamental charity governance issues.

The trustees of the charity known as Kids Company have announced today that after operating for 19 years and supporting some of the most disadvantaged children, it is closing due to lack of funding. The Charity operated in London, Bristol and Liverpool through donations from individuals, trusts and foundations and government grants. It is reported that its support reached over 36,000 children throughout the United Kingdom.

The financial problems of the charity came to light last month when the Executive Director was reported to have stepped aside in return for a £3million grant from the Cabinet Office to be used for restructuring the charity. It is also reported that the grant was given with the condition that it would be used for restructuring and not for paying day-to-day costs. Once further reports came to light that it used the grant to pay staff wages contrary to the conditions of the grant, the charity announced its closure.

In an unrelated investigation, at the end of last month it was also reported that the Metropolitan Police – Sexual Offences, Exploitation and Child Abuse Command are investigating Kids Company over child abuse claims relating to allegations made by a small number of employees. Kids Company has refuted any wrong doing by saying that they take the welfare of children very seriously and are cooperating with the police fully.

Meanwhile the Charity Commission has also announced that it has been engaging with Kids Company’s trustees and staff once certain allegations and the funding problems came to light. In particular the Charity Commission reports that it was contacted by former employees in relation to alleged inappropriate spending, breaches of financial controls and concerns about the viability of the organisation. Through its engagement, the Charity Commission insisted on certain steps including an immediate independent examination into the specific allegations. The trustees agreed to this and prior to the Charity Commission’s engagement had introduced changes in relation to governance and financial control. Following its announcement to close, the Charity Commission has received assurances that the charity is working with relevant stakeholders to ensure the transfer of care of the beneficiaries to relevant authorities. The Charity Commission is also continuing with its regulatory engagement.

Financial controls are important for any organisation. In the charity sector where funds may be scarce effective financial controls are crucial to ensure viability. The lack of financial reserves within Kids Company meant that when funding stopped financial failure was immediate. The charity has sought to explain why it had no reserves and one explanation advanced to the media was that it had taken on unfunded work to advance its charitable objectives. Managing reserves and the potentially harmful effects of well-intentioned mission creep are routine aspects of being a charity trustee.

Additionally, understanding and implementing conditions of every grant is very important because as can be seen from this case the impact can be disastrous.

Furthermore when working with beneficiaries that are vulnerable such as children or young adults it is also very important to have robust policies in place and to review them to ensure that the organisation maintains effective safeguarding.

Forbes Solicitors have experience in assisting a range of charities with regulatory issues including understanding grant conditions and ensuring compliance with the regulatory framework. Also we have assisted organisations with reviewing internal policies such as safeguarding to ensure that they are robust and suited to the circumstances of that organisation. If you would like advice on any of the related issues, please contact Daniel Milnes.

Nat Avdiu

About Nat Avdiu

Nat Avdiu is a Paralegal in the Contracts and Projects team at Forbes Solicitors. Nat provides updates for clients on a range of issues including: governance, data protection and freedom of information, procurement and charity law.
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