When people talk of 'learning from mistakes,' they often hope their statement is hypothetical because no one wants to go down in history as a case study of failure. The biggest charity case study at the moment is Kids Company. There is no doubt that some people are sitting smugly thinking 'this would never happen to us' however I think we all need to recognise that this could happen to any of us. This situation poses some questions?
1. Does this highlight our continual failure to ensure good governance? We trot out the cliché of having a reliable volunteer Board of Trustees which understands the dual tasks of 'driving strategy' with relevant checks and balances but are there enough people available to carry out this role with such a large and growing number of charities? Does this governance work in an age where charities are getting most of their money from Government contracts?
2. If we are short of good governance, then are there too many charities? What can the Charity Commission do? In the 2013/14 financial year, the Charity Commission received 6,661 applications for new charities in England and Wales, a 16 per cent rise on the previous year causing the CEO to warn that so many new charities are being set up that some are duplicating each other's work and risk wasting the money they are given for good causes.
3. A Board of Trustees have the responsibility to ensure that the charity is viable. Financial management is key to the success of all organisations and perhaps many trustees will now be reading the financial reports more carefully in advance of their next board meeting. Why do Trustees (especially those whose day jobs are in Finance) fail to apply their knowledge and expertise in the charity?
4. Do charities understand the risks of rapid expansion especially if financed through Government contracts and grants? Politicians and civil servants like to give the impression that they can guide our national economy with assurance but seem unaware of basic principles of the management and growth of organisations. The brave - not so - new world of contracting with the state for the delivery of services has singularly failed to enable charities to build their resilience. 'Kings shilling'
5. What is the role of Social Investment in driving change in charities?
6. If the issue of 'Founder Syndrome' is such a problem, why are we unable to either recognise it or respond to it as quickly as necessary? Leadership is not just grabbing headlines or avoiding bad ones, it is also the long hard graft of making things work and last. There is no doubt that we are in a dangerous place when we start believing our own hype. Does fundraising actively encourage this dangerous behaviour?
7. We must recognise the role of the Press, which lauded Kids Company when it looked like a success and lambasted it as soon as it presented problems. How should charities behave when their fundraising strategy depends on press and media connections and air-time and celebrity backing?
8. What happened to the Big Society? How could Mr Cameron run two successive election campaigns on the importance of balancing the books whilst simultaneously endorsing a charity that were allegedly unable to do so? Should politicians learn to be objective and more able to listen to impartial advice from their Civil Servants? Are Civil Servants still able to be impartial?
9. Would charities that deliver services be better as social enterprises? Would they be more sustainable and independent? Would there be a greater financial expectation?
10. Given the biggest victims of any children's charity failure are the children, why therefore do they remain so dependent on charities for their basic support. 8 million pounds of tax payers money was given to Kids Company because politicians liked it?! Is that fair? Is that sensible given that these children remain without support while Local Authorities are cut to the bone?
Society is best judged by the way it treats its youngest and most vulnerable citizens. The demise of Kids Company is a sobering situation that requires us to be mindful and also compassionate for the innocent children caught up in something much bigger than them. Let's hope that if a phoenix arises from the ashes its one that is independent at every level.