The collapse of 4Children comes just a year after another major charity, Kids Company, went bust due to funding shortages. The key similarity between the two cases appears to be that both organisations were operating without sufficient cash reserves to see them through difficult financial times (Analysis, p8). It is seen as good practice for charities to have sufficient reserves to cover their operating costs for three to six months to allow them to reduce overheads if there is a sudden drop in revenue.
Kids Company operated on a hand-to-mouth existence, and once the government and major donor funding taps were turned off, it quickly collapsed. In 4Children’s case, it was the loss of major contracts to run children’s centres on behalf of local authorities that hit revenue, ate up its reserves and resulted in it going £1.4m into debt.
While this deterioration in finances happened over a much longer period than in Kids Company’s case, some will say 4Children’s problems should have been foreseen and action taken to ensure it remained viable. What would have helped 4Children was for the government to publish its promised children’s centres review. The policy vacuum created by the delay left them “swinging in the wind”, as Sir Paul Ennals says. While the government dithered, councils had to make tough decisions about how to cut budgets, contracts and services.
For an organisation that had put much of its emphasis on running children’s centres, the delay, combined with a shrinking income and lack of reserves safety net, created the conditions for a perfect storm that proved impossible to navigate.
This is ultimately why the situation 4Children found itself in was more complex than the one faced by Kids Company. But both cases highlight the precarious nature of charity finances, which in 4Children’s case was exacerbated the government’s policy indecision.
The silver lining is that most of 4Children services have been transferred to other providers.
Innovation in safeguarding can prevent abuse
Child protection practitioners and services face a constant challenge to keep ahead of child sexual abusers. Technology changes over the past decade have made it easier for children and young people to be groomed and exploited online. This has made it all the more important that the safeguarding system develops new ways to identify children and young people most at risk from sexual abuse and exploitation to prevent it happening.
For example, in Bristol, police and child protection teams have built a database containing the details of 55,000 children living in the city, which is regularly updated so changes in a child’s life that increase their risk of becoming a victim of exploitation or abuse – such as an arrest or running away from home – can be identified and responded to (Special Report, pp17-29). Such examples of joint working – the pooling of resources, expertise and technology – offer the blueprint for creating an early warning system for those children at greatest risk from sexual abusers.
derren.hayes@markallengroup.com
