The collapse of Kids Company: lessons for charity trustees, professional firms, the Charity Commission, and Whitehall Contents


1.Founded in 1996 by Camila Batmanghelidjh, Keeping Kids Company (commonly known as “Kids Company”) was a registered charity which stated that its aim was to provide practical, emotional and educational support to vulnerable children and young people.3 It grew very quickly and by 2013 the charity claimed to support “some 36,000 children, young people and vulnerable adults.” It operated 12 street-level centres and worked in partnership with 40 schools across Bristol and London, and at a centre in Liverpool.4

2.As well as receiving support from high profile individuals, retailers and businesses, Kids Company was in receipt of some £42 million of public money allocated by central Government between 1996 and 2015. Throughout its existence, Kids Company’s fast growth and demand-led operating model meant that it was run financially “on a knife edge”.5 In June 2015, on the question of whether to make a further £3 million grant of rescue funding to the charity, Mr Richard Heaton, the then Permanent Secretary to the Cabinet Office, sought a ‘ministerial direction’ on the basis that such a grant would not represent value for money. Despite accepting Mr Heaton’s assessment of the charity’s precarious financial position and the risks associated with awarding such a grant, Cabinet Office Ministers Rt Hon Oliver Letwin, Chancellor of the Duchy of Lancaster, and Rt Hon Matthew Hancock, Minister for the Cabinet Office and Paymaster General, over-rode senior officials’ advice and directed that the grant of £3 million should be paid.6

3.Kids Company has stated that the grant arrived into the charity’s bank account on 30 July 2015.7 On 31 July, the press reported that the police had opened an investigation into allegations involving sexual abuse at the charity.8 Kids Company closed on 5 August 2015. The charity is currently the subject of both the Metropolitan Police investigation and a Charity Commission statutory inquiry.9

4.The Public Accounts Committee has also examined Government processes for awarding and monitoring grants to the charity. Its report, The Government’s Funding of Kids Company, published on 13 November 2015, concluded that the Government’s historic funding of Kids Company was a “failed and expensive experiment”.10 PACAC launched its own inquiry at the earliest opportunity on 8 September 2015. Our prime purpose in this Report is to identify lessons to be learned from the collapse of Kids Company.

5.In the course of this inquiry, we have found people whose enthusiasm for Kids Company is undimmed, and others who have been highly critical for many years. Equally, some witnesses (both staff and clients) have shared accounts of negative experiences of Kids Company, and some have done so in an anonymous capacity only, owing to their fear of reprisals from supporters of Kids Company. Such fears are indicative of what these people felt about the way in which Kids Company operated in its dealings with some staff and former clients. On the other hand, PACAC also received accounts from other former employees and associates who describe a positive and supportive staff environment in which all were treated with respect and consideration.11 We thank all of those who gave written and oral evidence to this inquiry, and those investigative journalists whose work has helped to shed light on Kids Company. A full list of witnesses is included at the back of this Report.

6.Significant media attention has focused upon the personalities and motivations of the charity’s leaders, most notably the Chief Executive. It is inevitable that some individuals will feel this Report criticises them personally, but its purpose is not to deliver a judgement about any individual’s personal conduct or abilities. Instead, PACAC’s priority is to identify the lessons to be learned from the collapse of Kids Company by Trustees of all charities, by the Charity Commission and by Government.

7.This Report begins by examining Kids Company, to assess the extent to which inherent weaknesses in the charity’s governance and demand-led operating model led to its ultimate collapse. In Chapter three, it explores three reviews carried out by three professional firms and what assurances these provided to donors and the Government. Chapter four examines the interaction between Kids Company and the Charity Commission, to understand whether the regulator could have done more to safeguard the long-term interests of the charity and its beneficiaries. The final Chapter explores the relationship between the Cabinet Office and Kids Company, particularly in the months preceding the charity’s closure. At the outset, we recognise the expertise that many charities bring when supplementing statutory services for vulnerable young people. Sue Berelowitz, former Deputy Children’s Commissioner and former deputy director in local government children’s services, stated:

I am not confident that there is any local authority in the land, including where I had those responsibilities myself, where we could all say that we were discharging all our obligations under section 17 [of the Children Act 1989] because the numbers of children in need in this country are quite substantial.12

8.Kids Company was by no means the only charity serving this client group, and many other varied charities are delivering vital support for young people without the high profile enjoyed by Kids Company.13 The failure and public criticisms of Kids Company must not be allowed to taint the whole charitable sector; we have no reason to doubt that the majority of Trustees and charities act responsibly and in accordance with their charitable purposes. Equally, discussions about “gaps” in statutory provision and Kids Company’s vocal criticism of statutory provision throughout the inquiry must not overshadow the exceptional work done by many dedicated individuals working within statutory services.14

9.Kids Company did provide valuable support to many vulnerable young people, albeit the evidence shows that this was on a considerably smaller scale than it claimed in its publications and annual reports. The failures in governance that led to the collapse of the charity should not detract from the commitment and hard work of many highly dedicated individuals working in the organisation. Submissions from former employees document the range of services that was offered by the charity - from material assistance, to educational provision and parental support - and we have reviewed a large number of evaluations that highlight the charity’s vulnerable client base.15 We note that some of those connected with Kids Company are seeking to continue three of its programmes through a new charity, 1UP, in the hope of continuing some of the projects judged to be amongst Kids Company’s most successful.16 We hope that the Trustees of 1UP will build upon the best of Kids Company’s programmes and provide effective and sustainable support to those people Kids Company sought to serve.

10. Kids Company’s most positive legacy is the dialogue to which it contributed about the need to improve support for vulnerable children and young people. The message the charity consistently promoted - that children and young people must be valued, trusted and supported with compassion - must not be lost amid the questions about the collapse of the charity and the criticism about the propriety and efficacy of some of its methods.

3 Q2, [Camila Batmanghelidjh] oral evidence 15.10.2015

5 Q484 [Nick Brooks] oral evidence 17.11.2015

7 KCI47 (Camila Batmanghelidjh)

8 BBC Kids Company charity in police probe,” 31 July 2015

9 Press release, The Charity Commission, New charity investigation: Kids Company, 21 August 2015

10 Public Accounts Committee, Eighth Report of Session 2015–16, The Government’s funding of Kids Company, HC 504

11 Amongst the evidence submitted are: KCI21(A10): “We all knew [sic] that our role and responsibility was first to support our vulnerable clients and secondly to support each other in an environment conducive to positive and adaptive responses”; KCI20, A9: “The level of support I received as a staff member in these roles was fantastic, mostly through  weekly therapeutic support in the form of supervision from an independent fully qualified therapist which made sure I was supported emotionally and professionally – able to properly process the experiences I had without succumbing to stress and exhaustion, and able to treat the young people and fellow workers with the respect and consideration they all deserved.”

12 Q525 [Sue Berelowitz, former Deputy Children’s Commissioner], oral evidence 17.11.2015

13 The work done by small charities, such as Imara in Nottingham, has been brought to our attention.

14 PACAC has also learned of the Innovations Programme, funded by the Department for Education. The ‘Rethinking Support for Adolescents’ Programme is running and evaluating a number of projects in local authorities aiming to meet the needs of this age group.

15 These include: Children and Parents’ Experiences of Food Insecurity in a South London Population (Harvey, 2014), Gang Questionnaire Report (Hillman, 2015), Kids Company A Diagnosis of the organisation and its Interventions (Jovchelovitch and Concha, 2013), Enough is Enough (Eastman, 2014) Needs Analysis on a sample of high risk clients (Hillman and Wainwright, 2012)

16 1-UP will continue the School of Confidence (a mentoring and befriending programme for young people), the Treehouse (a centre in Kilburn which aims to provide integrated support for children and families) and SidebeSide (a therapy service based in schools).

© Parliamentary copyright 2015

Prepared 28 January 2016