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Kids Company faces investigation over financial collapse Kids Company faces investigation over financial collapse
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Kids Company is to be investigated by the charities watchdog over its financial management, as reports suggest the government will recover less than half of a public grant handed over to the collapsed organisation. Kids Company is to be investigated by the charity watchdog over its financial management, as reports suggest the government will recover less than half of a public grant handed over to the collapsed organisation. The Charity Commission, the regulator of charities in England and Wales, opened a statutory inquiry into Kids Company, which closed earlier this month after months of controversy over its financial accountability and a Scotland Yard investigation into alleged sexual abuse on its premises.
The Charity Commission, the regulator of charities in England and Wales, opened a statutory inquiry into Kids Company, which closed earlier this month after months of controversy over its financial accountability and a Scotland Yard investigation into alleged sexual abuse on its premises. The commission’s announcement came as the BBC reported the Cabinet Office’s estimate that the government would recover just £1.2m of a £3m grant handed to Kids Company in the week before it went bust. The Cabinet Office published in full a report by accountancy firm PKF Littlejohn from March 2014, which noted that the charity was facing a “serious cashflow” issue. Key details within the report had already been released.
The commission’s announcement came as the BBC reported that the Cabinet Office estimated that the government would recover just £1.2m of a £3m grant handed to Kids Company in the week before it went bust.
The Cabinet Office published in full a report by accountancy firm PKF Littlejohn from March 2014, which noted that the charity was facing a “serious cashflow” issue. Key details within the report had already been released.
The Charity Commission said its inquiry would address concerns about the administration, governance and financial management of Kids Company, which it has been engaging with since 17 July, three weeks before it officially closed.The Charity Commission said its inquiry would address concerns about the administration, governance and financial management of Kids Company, which it has been engaging with since 17 July, three weeks before it officially closed.
A statement from the regulator said: “In light of the intense public scrutiny and speculation over the charity’s activities, and the increasing number of allegations in the public domain about its governance and financial management, the commission has now formalised its engagement in a statutory inquiry in order to investigate and put on the public record whether or not these allegations are found to be true.”A statement from the regulator said: “In light of the intense public scrutiny and speculation over the charity’s activities, and the increasing number of allegations in the public domain about its governance and financial management, the commission has now formalised its engagement in a statutory inquiry in order to investigate and put on the public record whether or not these allegations are found to be true.”
The Guardian previously revealed that senior directors at the charity repeatedly warned trustees of the need to build up financial reserves or face going to the wall. The Guardian previously revealed that senior directors at the charity repeatedly warned trustees of the need to build up financial reserves or face going to the wall. Despite receiving millions of pounds in government funding, the charity lived hand to mouth, never stocking up reserves, and spent almost all its income each year.
Despite receiving millions of pounds in government funding, the charity lived hand-to-mouth, never stocking up reserves, and spent almost all its income each year. Two finance directors at Kids Company left in less than three years owing to frustrations that no one – from the board of trustees, led by the BBC’s Alan Yentob, to the chief executive, Camila Batmanghelidjh – heeded warnings of the need to build a financial cushion to protect the charity from catastrophe.
Two finance directors at Kids Company left in less than three years due to frustrations that no one – from the board of trustees, led by the BBC’s Alan Yentob, to the chief executive, Camila Batmanghelidjh – heeded warnings of the need to build a financial cushion to protect the charity from catastrophe.
A £1.8m loss for the Cabinet Office on the £3m grant, if realised, is likely to reignite the row over why the payout was authorised.A £1.8m loss for the Cabinet Office on the £3m grant, if realised, is likely to reignite the row over why the payout was authorised.
Batmanghelidjh agreed to stand aside from her position in order to secure the emergency restructuring grant, part of which was spent on overdue staff wages. Immediately after the charity’s closure, she blamed “rumour-mongering civil servants”, ministers and the media for having “put the nail” in its coffin.Batmanghelidjh agreed to stand aside from her position in order to secure the emergency restructuring grant, part of which was spent on overdue staff wages. Immediately after the charity’s closure, she blamed “rumour-mongering civil servants”, ministers and the media for having “put the nail” in its coffin.
The government has had to find alternative support for 6,000 vulnerable children as a result of its closure.The government has had to find alternative support for 6,000 vulnerable children as a result of its closure.