The Charity Commission has published its long awaited report into Kids Company, in the latest twist in a six-and-a-half-year saga involving the closure of one of the UK’s best known children’s charities, unfounded sex abuse allegations, media and political outrage, mismanagement allegations and a lengthy court battle.
What was Kids Company?
The charity was set up in London in 1998 by psychotherapist and children’s rights advocate Camila Batmanghelidjh to provide practical, emotional and educational support for severely traumatised children experiencing poverty, violence and neglect. By the time it closed in 2015 it had become one of the UK’s best-known charities, boasting high-profile supporters from JK Rowling and Coldplay to David Cameron.
What went wrong?
By early 2015, it had expanded its operations to provide services for thousands of children in London, Bristol and Liverpool. Its finances soon came under strain. By July that year, the charity had agreed a rescue plan with ministers in return for a £3m Cabinet Office grant, to be matched by pledges from private donors.
So why did it close?
The day the £3m grant was paid, Kids Company was told it faced a police probe into allegations of sexual abuse at two of its sites, raised during a BBC Newsnight investigation. The charity’s board believed the allegations made fundraising for the charity impossible, and shut it down on 5 August. Five months later the Metropolitan police dropped the abuse investigation: it had found no evidence of criminality or safeguarding failures. A judge later ruled that were it not for the unfounded abuse allegations, a restructured Kids Company would have survived.
What happened when the charity closed?
Overnight, hundreds of staff lost their jobs and services relied on by thousands of vulnerable youngsters disappeared. Parts of the media, and many politicians, turned ferociously on Batmanghelidjh, accusing her of “mesmerising” powerful men. She became a tabloid hate figure, and Kids Company a byword for charity mismanagement.
What was Kids Company accused of?
The charity was accused of misspending charity funds on providing allegedly inappropriate small cash support payments to some children. Some questioned its purchase of trainers, clothes, birthday presents, holidays and housing support for some child clients. In 2016, an MPs’ committee declared the cash payments irresponsible and improper. It accused the Kids Company board of negligence, lax financial controls, pursuing a reckless business model and exaggerating the number of children it served. These criticisms and allegations were echoed in subsequent court proceedings brought against the trustees.
Were Kids Company bosses taken to court for mismanaging the charity?
Legal proceedings were brought against Kids Company in 2017 by the Official Receiver (at the behest of the government) to ban Batmanghelidjh and the seven trustees from holding senior roles in companies or charities for up to six years. In 2020, two reports amounting to 600 pages, along with 18,000 pages of evidence, were presented to the court to support its claim of trustee failings and mismanagement.
What did the court conclude?
The judge, Mrs Justice Falk, comprehensively dismissed the Official Receiver’s case; her forensic 220-page judgment exonerated the board of mismanagement. She praised Batmanghelidjh, and the trustees, who she described as “highly impressive and dedicated individuals”. The case was an expensive disaster for the Official Receiver and the government: it cost the taxpayer £9.5m.
What did the Charity Commission find in its investigation of Kids Company?
The commission made a formal finding of mismanagement, relating to failures to make payments to HMRC, and an instance when staff wages were one day late. It said the charity operated a “high-risk business model”, heavily reliant on Batmanghelidjh’s skills as a fundraiser. It criticised its failure to keep sufficient levels of financial reserves, though accepted this was not unusual in the charity sector. It questioned whether relatively high spending on payments to a small group of high-risk children was appropriate, but accepted the charity had the right to do it. It concluded no regulatory action should be taken against the trustees or Batmanghelidjh and agreed with the high court judgment there was no evidence the trustees were dishonest, acted in bad faith or sought inappropriate personal gain.
Does this mean the whole saga is over?
There is anger in some quarters that the Charity Commission did not acknowledge the scale of the injustice experienced by the trustees and Batmanghelidjh. There were claims that the commission seemed to underplay or ignore some of the judge’s findings, including her praise for the trustees’ conduct, and the suggestion the case should never have been brought by the Official Receiver in the first place. Batmanghelidgh questioned many of the critical findings, calling it a travesty and a rewriting of history. She has threatened legal action to overturn the report.
