Charity Commission report on the problems at Kids Company

Seven years ago, the collapse of Kids Company was headline news with even government ministers in the frame for carelessly giving them money. The general picture painted in the media was of incompetence. A report has now been published by the Charity Commission which has painted a less damning picture than we were led to believe at the time. It is not my purpose to go through the report – I am sure others will do that, but to discuss some of the implications.

One very clear lesson, and an issue I discuss in my book, is the problem of ‘founder syndrome’. Someone who sets up a small business or a charity usually exhibits a range of characteristics and personalities. They are determined, often set on a path, receptive only to advice they ask for and can be difficult for others to work with. These and other characteristics stand them in good stead in establishing the enterprise but if it is a success, they can become a hindrance. Growth requires a different range of skills and advice will be needed on management and on financial matters. Thus it was with Kids Company with a charismatic founder, Ms Batmanghelidjh. Growth – which was quite spectacular – led to a lack of control. As the Commission puts it in their report, a founders ‘permanent leadership role rarely is in the best interest of a charity’.

The whole story with its attendant often lurid publicity, had an effect on the charity sector. It is likely it made some people less willing to become trustees even though in this case, they were largely vindicated. Combined with the problems at Oxfam, it led to a fall in the good will that up until that time, Charites had enjoyed.

Another significant point however is that the charity shone a light on the problem of poor and deprived children in our society and the poor treatment they get from the state. There are many who do not like or want this light to be shone. Indeed, the problem has got worse in the last 7 years. The publicity the charity gained meant it shone a searchlight on the problem. This issue of visibility is frequently an anxiety for some boards and they can shy away from doing too much of it. They worry that the publicity will be unwelcome. ‘We do not want to bite the hand that feeds us’ they say (meaning a local authority or government department which gives them funds). Yet shining a light must surely be part of the role of a charity. There can be a reluctance to speak truth to power. What often happens in my experience is that a charity leader imagines they have spoken this truth but it was so wrapped up in conditional clauses and convoluted phrasing that the message was entirely lost.

Were there psychological factors at play as well? The Commission does not discuss this but was it a question of board members saying we do not want to limit growth or our activities because it is children we are helping? The less we do the less we help deprived children they argue. Likewise, if we divert resources to better systems of management and governance, it means less to go to the front line. I suspect that these factors were in play. We’re here to help people not spend time and money on ‘red tape’.

All the problems at the Kids Company, which repeat themselves less dramatically in other charities and not for profits, are about managing change and managing growth. For a small charity these can be significant. Quite small changes in a small charity can mean relatively significant changes in management and systems. Getting the information in a succinct form so that trustees know what is happening is key. It is why I devote a chapter to the subject in my book.