|Public Accounts Committee Publishes Report on Kids Company|
The parliamentary Public Accounts Committee (PAC) has published its report on the charity Kids Company, which collapsed in August when its financial deficiencies were exposed.
The charity received nearly GBP50 million of public funds during its 19 years of operations. The money was handed out by ministers with 'staggering lack of scrutiny', says the PAC, which concludes that funding decisions were not based on evidence and accounting officers across government failed to stand up to their chiefs.
Until 2013 the government relied heavily on Kids Company's own assessments of its performance. In March of that year the charity's poor value for money was identified, disqualifying it from applying for grant funding from competitive schemes. But it was later given a further GBP3 million of direct grant awards.
Its main funding strategy, as applied by founder Camila Batmanghelidjh, was to threaten the government with bad publicity about dying children if its money supply were to be cut off. One of its trustees, Alan Yentob, even sent a risk assessment to government officials warning that a sudden closure of the charity could trigger arson attacks on government buildings, along with looting, rioting, and a general descent into anarchy throughout south London.
But in June 2015, the Cabinet Office advised ministers that a further grant to Kids Company would not be value for money. Despite this, ministers directed officials to pay more to restructure the charity and secure its long-term viability. The subsequent collapse of the charity saw the (probably irretrievable) loss of this money along with all the rest.
Aside from salaries for the 600 staff, much of the money raised by Kids Company seems to have been disbursed in cash gifts to its clients, who were typically poor and 'disturbed' young Londoners. Sometimes the cash gifts continued until the clients were well over 30 years old. No evidence was ever produced that these allowances, or the 'extravagant' gifts that sometimes accompanied them, produced any useful results. The charity claimed to have 16,000 clients but only 1,900 have been identified to local authorities since it collapsed.
The Insolvency Service is currently winding down the charity, while both the police and the Charity Commission are investigating it. Various serious allegations have been made about its practices, with GBP50,000 reported to have been spent on one individual, and two children of staff members allegedly receiving more than GBP130,000 of allowances.
The Public Accounts Committee report concludes by warning that such disasters 'must never be allowed to happen again ... we are very sceptical on the charity's inflated claims about what it achieved'. The affair has damaged the reputation of the voluntary sector, where many have complained that Kids Company received special treatment to the detriment of themselves and other deserving charities. It also casts some doubt on the government's current attempts to tighten the regulatory net on charity trustees, as it has clearly failed to judge its own ministers and officials by similarly strict standards.
In the meantime, though, the fiasco is likely to lead to controls on public funding of charities, probably through a register of grants to the voluntary sector so that the government can easily identify charities receiving large amounts of government funding from single or multiple sources.
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Published on our website on Nov.17, 2015