Early Lessons From Kids Company?

The news on 5 August of the sudden closure of Kids Company is a sad reminder that even well-known and well-established charities can become vulnerable to the changing tide of circumstances, not to mention media attention.

The immediate concern, of course, is for the children and young people who depended upon Kids Company’s services, as well as for the hundreds of staff who have found their jobs suddenly taken away. In time, the fuller details which led to the charity’s demise, and wider lessons, will, hopefully, be identified and published.

For now, the loss of such a high profile charity, and the very public manner of that loss, gives everyone cause to reflect on whether there are things which we can learn in the hope of preventing something similar in the future.

CHARITIES AND THE MEDIA
The media interest around Kids Company in recent weeks shows how charities can end up in the spotlight – no charity can be regarded as “untouchable”. Charities can expect to be subject to the same levels of scrutiny as politicians and the public sector and a simple enquiry can develop into a “perfect storm” of media interest in days, or even hours.

Charities should be prepared to react to media interest. An enquiry or story may have got the wrong end of the stick, or be the result of someone with a baseless grudge, but it could be a signal that the charity trustees and executives have missed (or dismissed) something. Have a strategy to deal externally with the media and internally to identify and address any concerns. Communications are often thought of only in an external sense but stories should trigger internal review processes as well.

CHARITY TRUSTEES – GOVERNANCE AND ADMINISTRATION
Charity trustees are required to act in the best interests of the charity to further its purposes. The natural urge can be to pursue those purposes at all costs and not to “waste” money on governance procedures and administration. But charity trustees are responsible for seeing that the bills are paid as much as for furthering their charity’s purposes.

Effecting strong governance and proper administration means keeping the lights on, but also being prepared to shine a light on all aspects of the charity’s operations. Trustees should be confident that they have a mechanism in place, with built-in checks and balances, which supports an atmosphere, environment and culture that allows for reviews and critical questioning.

Strong governance and administrative procedures aims to stop issues becoming problems. But, if something very serious should arise, such as an allegation of criminal activity, such procedures will also help the trustees to deal with the situation and manage the risks. The Charity Commission produces guidance which can offer help to charity trustees.

Good governance and administration is not something which stands still – it needs to be kept under constant review, as a charity grows, or downsizes, to be sure that it remains fit for purpose.

DONORS – THE BEST USE FOR YOUR MONEY?
Donors can protect their donations through appropriate due diligence checks and making staged payments, paid against agreed goals. (Where public money is at stake, clearly there are other concerns in ensuring the best use of that money).

Many donors can be reluctant to give for core funding, preferring to support particular projects. Increasingly in recent years, there has been an assumption that charities should not spend money on administration. However, as noted above, good administration is essential to a well-run charity. Perhaps donors should ask themselves how their preferred charities will keep the lights on?

CHARITIES AND THE REGULATORS
Charity trustees should be aware of their obligations and ready to engage with the regulators. For example, if a concern arises, it is generally better to engage earlier with the Charity Commission, letting it know what the concern is and how it is being addressed. If the Commission first learns about it from the press, the trustees will be playing catch-up.

As the Kids Company story continues to develop new lessons will emerge but even at this stage there are some obvious actions that charities, of all sizes, need to take.

Co-authored by Nicola Evans, Bircham Dyson Bell