Five key lessons from Kids Company's demise

The hundreds of children, parents and former employees that demonstrated in central London over the closure of Kids Company illustrated the important role the charity played in their lives and the hole it will leave now it is gone. Unfortunately, instead of focusing on the needs of the children the charity supported, much of the coverage about Kids Company’s demise has focused on Camila Batmanghelidjh, its charismatic chief executive.

Criticism of Batmanghelidjh has led to children’s charities coming under intense scrutiny. So what are the key lessons to take from the sad demise of Kids Company?

First, the cult of personality can be a fickle beast. Batmanghelidjh’s communication skills, powers of persuasion and networking ability made her somebody that politicians wanted to be associated with, and found it hard to say no to. The Prime Minister was reportedly so “mesmerised” that he overruled sceptical ministers and civil servants to sanction millions of pounds of funding.

Batmanghelidjh’s profile certainly brought in much money and played a major part in the charity’s rapid growth. But Kids Company highlights what can happen when an organisation’s fortunes are so closely aligned to those of its leader. Once concerns over Batmanghelidjh’s management began to take root, government and private backers withdrew and her fate, and that of her charity, was sealed.

Second, strong governance is crucial. Batmanghelidjh’s mesmeric influence appears to have extended to the charity’s board of trustees. There had been signs for some time that Kids Company was living a hand-to-mouth existence, but nothing appeared to change. It is the job of a board to ensure there is a long-term strategy for success in place. If that had been the case at Kids Company, its complete collapse would have been avoided.

Third, you must plan for a rainy day. The Conservatives repeated the phrase during the 2010 election that Labour had “failed to mend the roof while the sun was shining”. It conjured in the electorate’s mind the idea you must set money aside to see you through the tough times. Kids Company ran with virtually no reserves, the philosophy being that the need was acute today. It was naïve in the extreme and meant there was no safety net when the money ran out.

Fourth, Kids Company is not reflective of the children’s charity sector as a whole. It is true that funding is tighter than for a generation and some charities are struggling, but most are well run. They hold six months of cash reserves, have trustees prepared to challenge management and rely on evidence of their effectiveness, rather than the charisma of leaders, to gain funding and work.

Fifth, councils can’t pick up the pieces. Local authorities where Kids Company worked have pledged to provide support in the aftermath of the closure. Considering their own financial pressures, it is unrealistic to expect councils to provide anywhere near the same level of services. The best that can be hoped is that some of the substantial financial backing received by Kids Company makes its way to other charities to set up alternative provision.

And one undeniable fact: the needs of the children Kids Company supported will not go away.

derren.hayes@markallengroup.com