Children's charity closures prompt leaders to call for investigation

The collapse of two of the most significant and influential children’s charities in the space of a week, along with the merging of two others, has raised many questions about the health and governance of voluntary sector organisations.
Here, we outline the circumstances behind the closures and merger, what impact they will have and gauge the reaction of children’s bodies.


Kids Company

Q What happened?

Kids Company folded on 5 August, but its problems were widely publicised in the weeks leading up to its collapse. Reports that the predominantly London-based charity was experiencing severe financial difficulties came at the beginning of July, when an investigation by BBC Newsnight and Buzzfeed claimed the Cabinet Office had concerns about the organisation’s ability to run itself and was withholding £3m in funding unless charismatic leader Camila Batmanghelidjh stood down.

She obliged, announcing she would assume an advocacy and clinical lead role once a new chief executive had been appointed. A statement released by the charity at the time said that since the beginning of the year, the charity had received fewer philanthropic and public donations while trying to help a growing number of high-risk vulnerable children, young people and families, resulting in “unprecedented financial strain”.

By the end of July, the charity was in the headlines again after it emerged that the Metropolitan Police was looking into “a number of allegations” of child abuse.

Then just a few days later, Batmanghelidjh announced that the charity would be closing with immediate effect. She said negative media coverage around allegations of child abuse – linked to claims by the BBC’s Newsnight that the Cabinet Office was set to withdraw funding – led to a philanthropist withholding promised funds.

Speaking to CYP Now in the wake of the closure, she blamed civil servants, government ministers and sections of the media for the charity’s downfall.

Q What were the organisation’s key functions?

Kids Company provided practical, emotional and educational support to vulnerable children and young people. Services include a centre in Lambeth staffed by a multi-disciplinary team made up of social workers, youth offending workers, therapists and a GP who provided support to young people, who may have been involved in drugs, gangs or prostitution.

There were also street-level centres, which were open seven days a week, and an Urban Academy in south east London that offered post-16 education and training to young people with complex emotional or behavioural needs, helping them move into further education or employment.

Q What are the implications of the closure?

It is unclear exactly how many children and families are no longer receiving support following the closure of Kids Company. The charity employed about 650 staff and worked from bases in London, Liverpool and Bristol. Although it claimed to help 36,000 vulnerable children, young people and adults a year, the figure is disputed.

Efforts have been made to support young people affected by the closure, with local authorities that had commissioned services from Kids Company vowing to fund alternative provision for vulnerable children affected.

Both Lambeth Council in south London and Bristol City Council issued statements saying they would find new providers to run services Kids Company delivered for them, with additional support made available to those helped by the charity until new arrangements have been finalised.

Concerns have also been raised that the sudden closures of both Kids Company and BAAF has the potential to make service commissioners more reluctant to secure contracts with third sector organisations.

Andy Elvin, chief executive of The Adolescent and Children’s Trust, has called on the Charity Commission to investigate the circumstances behind the closures of BAAF and Kids Company to provide some clarity on the precise reasons, so that charities will be in a position to reassure organisations with which they are working.  

Q What do other professionals say?

Andy Elvin, chief executive, The Adolescent and Children’s Trust:

“For Kids Company, it was down to a lack of financial reserves. It wasn’t indicative of a wider problem – an overwhelming majority of children’s charities have robust financial planning and good reserves, good governance and management.

“Child and adolescent mental health services (CAMHS) in south London, along with others, will end up supporting young people [who were relying on Kids Company]. It will be interesting to see if the £3m [that the government was going to give to Kids Company as emergency funding] is now given to CAMHS in south London.

“Kids Company was a service that many young people valued, that hopefully will be picked up by other organisations that are more financially viable.”

Stephen Bediako, co-director, Project Oracle:

“Camila Batmanghelidjh is a charismatic personality and easily the sector’s most recognisable figure. But having such a formidable force inside and outside the organisation can seriously impede progress and change.

“Add to this a board that clearly struggled to take collective responsibility for the charity’s management and administration, and ministers who were reportedly ‘mesmerised’ by the whole enterprise and willing to fund ‘glamour over substance’ – and it’s easy to see decision making and mission drift further apart.

“Kids Company is also symptomatic of deeper issues within the youth sector.

“There are too many chief executives at larger, long-standing organisations who are not fit for purpose. They come from a previous generation of leaders who appeal to government for a handout, spend it frivolously and then go back asking for more. We must stamp out bad practice and put the needs of young people above adults who have had their time.”

Heather Stewart, chair, Association of Child Psychotherapists:

“Children [receiving support from Kids Company] who have already suffered trauma and loss could experience a repeat of early upsetting experiences by the sudden disappearance of a therapist with whom they may have developed a trusting relationship.

“This could increase the damage they have already suffered and have an impact on their mental health. It is disingenuous to say that struggling local authorities and overstretched health services will be able to pick up this therapeutic work with children that Kids Company was providing.”


BAAF

Q What happened?

The abrupt closure of the British Association for Adoption and Fostering (BAAF) was announced on the organisation’s website on 31 July. A few days earlier, staff had been told by chief executive Caroline Selkirk that “financial pressures” and “changes in the sector” had made the organisation unsustainable. More precise reasons for the demise are still to emerge, with the charity’s former chair of trustees, Anthony Douglas, yet to comment publicly.

It has been suggested that its pension liabilities may have played a part in the sudden collapse. The charity was part of a multi-employer pension scheme alongside Camden Council, meaning the charity mirrored the generous terms of the local authority.

“Some charities starting up in the 1970s and 1980s felt that as they were employing local authority staff, they had to attract them by offering equivalent terms and conditions,” one sector figure told CYP Now. “But unlike councils, charities don’t have council tax and national insurance income to plug any holes.”

Although BAAF closed the Camden Council-linked scheme to staff who joined after 2002, the liability to the charity has risen in recent years. BAAF’s recent set of accounts for 2013/14 show that, as of 31 March 2013, it had pension liabilities of £3.6m, but by 31 March 2014, this had increased to £4.8m.

Besides pension liabilities, the charity was facing a number of other financial challenges. The 2013/14 accounts warned that a growing proportion of BAAF’s income is generated by major projects. The report stated that it was “increasingly important that such projects meet project objectives and timeframes”, but there have been issues in this area over the past 12 months.

After running the National Adoption Register for several years on behalf of the government, BAAF was also awarded a lucrative government contract to establish the Adopter Access Pilot – set up to increase adoptions by allowing would-be adopters to search the register and view videos and photos of children. The pilot had been due to launch last September, but is yet to begin operating.

Q What were the organisation’s key functions?

Many of BAAF’s functions are transferring to a new organisation owned by children’s charity Coram, called CoramBAAF. This will continue to operate as a membership organisation for agencies and individuals in the UK, providing services to local authorities, voluntary adoption agencies, fostering services and individual members. It will also take on BAAF’s work on research, policy and development in adoption and fostering, as well as professional advice and development.

The National Adoption Register for England will be managed by First4Adoption, the national adoption advice service run by Coram. The Independent Review Mechanism for England, which reviews the suitability of all prospective adopters and foster parents, is being run as a separate entity by Coram Children’s Legal Centre (CCLC).

CoramBAAF will also run adoption activity days, and advice and professional development in the South of England. National Adoption Week will be run by First4Adoption. BAAF services that will not be transferred include infrastructure and administration services, play therapy and elements of BAAF’s training provision.

BAAF employed 140 staff UK-wide, of whom 55 will transfer to CoramBAAF. Coram says a further 29 staff are being “retained” by administrators at BAAF’s offices in Scotland, Wales and Northern Ireland until a final decision is made on what will happen to those operations. Currently, up to 56 staff have been left without a job and will receive no redundancy payments.  

Q What are the implications of the closure?

Questions have also been raised about the way high-profile government contracts were transferred following the collapse of BAAF. Its accounts for 2013/14 show that during that financial year, the organisation received £634,000 from the Department for Education to run the National Adoption Register for England and Wales, and a further £608,000 to run the Independent Review Mechanism in England.

Discussions over the transfer of some of BAAF’s functions to Coram had been ongoing for around three weeks prior to the announcement of closure, with the DfE involved in the process. Labour’s shadow children’s minister Steve McCabe has written to Edward Timpson calling for an explanation of the circumstances in which the contracts were transferred.

It has also been suggested that there could be a potential conflict of interest in the fact that Coram, which provides services as a voluntary adoption agency, is now responsible for running the Independent Review Mechanism. Coram has said that the National Adoption Register and the Independent Review Mechanism are being run by independent bodies.

Moreover, two of BAAF’s former chief executives, Felicity Collier and Barbara Hutchinson, have written to the Charity Commission calling for it to investigate the circumstances surrounding the sudden closure and claiming that the correct process may not have been followed.

In the letter seen by CYP Now, Collier and Hutchinson claim some senior management figures were frozen out of the decision making process, not enough was done to find emergency funding, and the organisation was still trading after an “intention to declare insolvency” had been taken by the board.
 
The Charity Commission is considering the letter’s contents. But if the claims are investigated, they will focus the spotlight still further on the management and leadership of children’s charities.

Q What do other professionals say?

Kevin Williams, chief executive, The Fostering Network:

“We’re in challenging financial times, and lots of organisations, including BAAF, have pension liabilities. These are challenges we have to face. In terms of the sector, it is vital charities use their resources as effectively and efficiently as they can. Finance is tight, and there are challenges in being able to deliver government contracts in this financial climate.

“Charities need a level of stability to deliver on contracts. It’s very positive that Coram has been able to meet some of the needs.”

Andy Leary-May, chief executive, Adoption Link:

“Like any organisation, charities need to be agile, and keep evolving. Trustees should be constantly looking forward, and supporting innovation that can keep services relevant and effective. I’m not sure this was happening at BAAF, and it is shocking that it was allowed to come to the end it did.”

Andy Elvin, chief executive, The Adolescent and Children’s Trust:

“BAAF and Kids Company closed for very different reasons.

“BAAF looked like it was a combination of declining income and pension liability issues. These pensions have become unaffordable for charities. It was an independent umbrella organisation, so that won’t be provided, which is a great loss to all. It’s very regrettable and it’s difficult to see an excuse for treating staff that way [no notice or redundancy] in the charity sector.”


CRAE and Just for Kids Law

Q What happened?

The Children’s Rights Alliance for England (CRAE) and Just for Kids Law announced on 6 August that they had merged, with each charity retaining its individual brand and identity. A statement issued by the charities said they were “keen to harness each other’s strengths while pooling resources in financially straitened times”.

Arnaud Vervoitte, managing director of Just for Kids Law, says CRAE was finding it difficult to secure core funding for policy and lobbying work related to children’s rights. “They knew that prospective funders were welcoming the possibility of CRAE joining forces with an established charity delivering direct work.”

He says his organisation had already been considering moving into policy and lobbying work.

“As a growing organisation, we were aware of the benefits of acquiring a policy and lobbying strand, in addition to the direct and systemic change work we already do. This would have happened in the next few years as a logical development, so we were thrilled to engage with CRAE as they are established and renowned.”

Q What are the organisation’s key functions?

Just for Kids Law already provides legal support to young people in difficulty, particularly those in trouble with the law, looked-after children and those at risk of exclusion from school. Alongside this, the charity helps young people through its opportunities programme to get them into positive activities including work, education or training.

CRAE is a membership organisation made up of more than 150 organisations that lobbies government and others who hold power by bringing or supporting test cases and by using regional and international human rights mechanisms. It provides legal information and raises awareness of children’s human rights.

Q What will the impact be?

The two charities say that joining together will strengthen their work, suggesting that CRAE’s public affairs and policy functions, as well as its expertise on international human rights, will complement Just for Kids Law’s litigation capacity and direct service provision. They say that joining forces will increase the impact of their work for children’s rights, creating a body that combines strategic litigation, political affairs, policy and research alongside direct services to disadvantaged young people.

Q What do other professionals say?

Bharti Patel, chief executive, ECPAT UK:

“With the unprecedented demand for services to support child victims of abuse and negligence, there is a need to scrutinise the effectiveness of policy and practices designed to support children and young people.

“Mergers between direct service providers and campaigning organisations have the potential to improve policy and have a long-term positive impact on children.

“Direct service providers have valuable information and intelligence on what works in the best interest of children. This information and intelligence can help strengthen the case for change in policy and convince policy makers and legislators of the need to address systemic failures and introduce robust child protection systems.

“Many organisations in the third sector have recognised the benefits of coming together to form consortia and build partnerships to help advance their causes.

“This has proved successful in harnessing different strengths and professional skills, as well as helping raise funds from trusts and foundations, which are keen to see broader reach and impact in return for their financial support.

“At ECPAT UK, we have seen the direct impact of such partnerships in effecting change. The recent success in ensuring victim protection measures are included in the Modern Slavery Act is the direct result of working together.”