Takeaways from the Kids Company Select Committee car-crash

While all and sundry are having their say over the lessons from the demise of Kids Company, anyone who saw the spectacle of former CEO, Camila Batmanghelidjh and Chair Alan Yentob ‘giving evidence’ (I use the term loosely) can’t help to have opinions.

So, at the risk of depressing Nick Temple by adding to the noise, here are my takeaways from the whole affair:

1. Two sides of the same coin

Camila’s charisma, passion and ‘JFDI’ attitude charmed successive Prime Ministers and hypnotised a large band of celebrity supporters. It is precisely the same characteristics which meant strong governance and effective management were neglected at Kids Company. They are, in effect two sides of the same coin and that is just Camila. What attracted so many to the charity also became its Achilles heel. 

2. Charismatic leaders need good teams around them

Able deputies are essential to fill in the gaps that those with a tendency to focus on the big picture overlook. Detail does matter and whilst there are huge benefits of strategic thinking, you can’t forget the small stuff. You also need people that can challenge leaders when needed and stand up to them if required. A team of acolytes is not healthy for long term sustainability. 

3. Governance matters

We overlook the importance of strong and effective governance at our peril. We’ve seen this in the private sector and in the charity sector.  The board of RBS was roundly criticised for not having a clue what the company was up to and the risk they were exposed to until it was far too late. Charity governance – like corporate governance and even democratic governance – is patchy. Some are excellent. Some are poor. We need more consistently higher quality governance. Ten years ago (a bygone era) charity governance was considered important and investment made in providing support. That investment – along with much funding for VCS infrastructure – has now gone and that cut comes with a price. 

4. Kids Company aren’t typical but they aren’t unique

Some have been quick to point out that Kids Company are unusual – a maverick among the hundreds of thousands of charities out there. And indeed they are unusual. But I’d caution those so keen to this sort of thing would never happen elsewhere. Are we really sure that governance is so strong throughout the sector? I’m not saying it’s not, I’m saying I’m not sure. I’m not a betting man, but if pressed I’d probably say there is another Kids Company out there waiting to happen. Suggesting this is a unique, one off never to happen again set of circumstances could backfire terribly. 

5. A little bit of contrition goes a long way

The self-important posturing and defensiveness of Batmanghelidjh’s and Yentob’s display was unseemly and appeared almost disdainful towards the MPs on the Select Committee. The exasperation of the Committee Chair, Bernard Jenkin was obvious, telling Batmanghelidjh to ‘hurry up’ and ‘stop talking’. Paul Flynn was even more robust, saying ‘we’ve had a lot of psychobabble…can you just answer the question’. Sometimes – and I’d say when appearing before a Select Committee is one of those times – it pays to be sincere, courteous and contrite. You’re not Rupert Murdoch and nor, would I suggest, should you want to be. 

6. The sector must rebuild trust

Trust in charities has been damaged by a succession of scandals and exposés. I suspect any members of the general public watching these high profile charity sector representatives’ car-crash performance couldn’t help thinking ‘if this is the best you’ve got, what’s the rest of the sector is like?’

It might be unfair and untrue but the impression will have been made in some people’s minds. The die is cast and the sector needs to respond. In my view the response should not be simply to say ‘oh we’re not like that at all’, we need to listen harder take on board the concerns people have and be seen to act. 

7. Government has been let off the hook

The performance of Kids Company’s senior leaders before MPs has completely deflected attention away from the actions of Prime Ministers (Blair and Brown both courted Camila before Cameron did), their Ministerial colleagues and Whitehall officials. No one should come out of this sorry affair with any credit, but the shocking spectacle of the Select Committee has shifted the focus almost entirely away from the Government. 

8. Charity is about beneficiaries

The only reason we have charities is to help beneficiaries (normally – but not always – people). We shouldn’t forget that Kids Company did help a large number of extremely vulnerable young people and their families. We should never forget the children who are still in need and aren’t helped by the circus show playing out before our eyes.

The actions of a few do not mean the charity sector is rotten

I blogged yesterday about what I perceive to be a growing neo-liberal attack on the charity sector. Then I read an article by Michael White on the Guardian Society blog calling for increased charity regulation, reform of Britain’s ‘ramshackle charity laws’, ‘mergers of tiny bodies’ and a cull of charities, among other things.

Clearly it is not just libertarians that believe something is rotten in the charity sector.

There are of course legitimate questions arising from the recent collapse of Kids Company and before that the expose of some very unethical practice going on in big charity fundraising. But it’s worth bearing a few things in mind as we seek answers to the important questions surrounding these events:

There are hundreds of thousands of charities and smaller community groups that do amazing work supporting the vulnerable and most marginalised in society. They do so, in the main, because of state or market failure – picking up the pieces of an inability or unwillingness of others to help those in need.

The vast majority of these are small, local organisations that operate on a shoestring – with turnover below £20,000 – and are run by volunteers who give their time freely to help others. They are not – despite the sweeping generalisations of commentators – awash with lavishly paid executives or frittering buckets of taxpayers’ cash. They are delivering essential support to those in need for a pittance. Having supported grass roots community groups for 20 years – much of it as a grant maker – I can say with some confidence that you would be hard pressed to find a better example of value for money than in Britain’s community sector.

The questionable practices of a tiny number of large high profile charities should not be allowed to taint the entire voluntary and community sector.

Next let’s take the issue of mergers and consolidation. Since 2010 there have been huge pressures on the not for profit sector which was the first place many public bodies looked to cut their budgets in the face of central government austerity measures. That resulted in numerous closures, mergers – where they made sense, though shotgun weddings are generally a bad place to start – strategic alliances and consolidation. I myself saw the start of a slow and painful decline of the organisation I was running, Urban Forum, which was wound up last year.

The diversity of Britain’s not for profit sector is something that is rightly admired by the rest of the world. The US may have its culture of philanthropy – and UK efforts to replicate it have had only modest success – but that has developed in the absence of a welfare state and social inequality that anyone concerned with social justice would find abhorrent. We have a vast array of small, local community groups and charities that reflects the complex social mix which makes Britain great.

Should it really matter if a group running on a few thousand pounds in one neighbourhood is doing similar work to another group in another neighbourhood? Whatever their similarities they are also doing something different – and that is working in their own neighbourhood for their own community.

In fact I think one of the lessons to be learned from Kids Company is that the desirability of growth and expansion – a mantra that has sadly been appropriated from the private sector – can have disastrous consequences. Expanding from their South London base to Bristol and Liverpool increased the charity’s exposure to risks, but it also ran the risk of disconnecting the organisation from its beneficiaries. Any perception that small local groups are inefficiently duplicating services and support disregards the added value that a connection with a place brings. Merger should be approached with extreme caution.

A lack of transparency over how charities raise and spend their money that some have complained of is underpinned by one of the most heavily regulated statutory frameworks we have in this country. Charities are required not just to comply with company law but also with a separate, additional set of regulations set out by the charity commission. The Charity SORP (Statement of Recommended Practice) sets out very precisely how charities must report on their financial activity – and places a very high administrative burden on charities. I remember some years ago the Treasurer of the charity I ran, who was an experienced insolvency practitioner at a very large accountancy firm, expressed amazement at what was required – saying it was ‘more work than a million pound company’. If it’s not working for people then it should be changed, but don’t blame the charities that are already complying with some of the strictest regulation any corporate bodies face.

There is a need for proportionality in regulation – and this already happens to an extent with a threshold for increased statutory reporting of financial accounts. However, if there is an argument for greater regulation and administrative burden being placed on charities (and I remain unconvinced) then it should be highly targeted.

Sweeping generalisations attacking the charity sector do not help the poorest and most vulnerable that rely on their support.

The advocates for austerity now have charities in their sights

Recent scandals engulfing large fundraising charities dubious ethics and the collapse of Kids Company following the withdrawal of government funds have put the charity sector in the spotlight. However, things have quickly moved on from the legitimate questions around these affairs to more fundamental – and unwarranted – questioning of charity and charities.

Take this Petition calling on the government to end funding for all charities. https://petition.parliament.uk/petitions/105732

No matter that it has only 300-odd signatures, the fact is someone thinks this.

The proposer’s thinking (I use the term loosely) is elaborated in this post on the Libertarian Home website. Let’s start with this for an opening gambit:

“If a “charity” receives public funding, it’s not a charity, it’s quango.  That may just be semantics…”

Excuse me? Semantics? Hello!!!!

I have sat on quangos and I have run charities and they are very different. There are similarities in that the principles of good governance and standards in public life apply equally to both, but one is answerable to a Minister, the other (notwithstanding the need to operate within the regulatory requirements) should be accountable to its beneficiaries.

Now it’s not clear whether the author is talking about grants and contracts. But even if we assume that it’s just grants, the receipt of government funds does not turn an independent organisation into an agent of the state. Does that apply principle apply equally to subsidies given to private sector companies to run railways, or for research and development grants or a whole host of other purposes?

And the argument is even more absurd if you take in funding awarded for contracts. Are the many private sector companies that thrive off the back of public sector contracts merely ‘quangos’ too? I don’t hear that argument too often, even from libertarians.

Successive governments have pushed the delivery of public services by charities and social enterprises for many years. For nearly 20 years the mantra from Whitehall has been: grants bad, contracts good. Charities should not rely on handouts, but should earn their income by delivering services.

That’s fine….to an extent. I certainly have no opposition to charities being more entrepreneurial. But the implicit suggestion here that charities are ‘dependent on the state’ is just neo-liberal claptrap.

Now the charity sector is seen as fair game for the ideologues intent on cutting back the state to unfathomable levels, that would have ever more dire consequences on the most vulnerable.

I believe that with confidence imbued from a Conservative general election victory the government’s real puppets are now attacking the charity sector, emboldened by the spotlight shone on Kids Company.

We’ve seen these ideas before from the likes of the IEA and other free market zealots and they were utter nonsense then. They haven’t improved with age.

So there is something quite galling to see journalists lining up to criticise charities over how the conduct themselves. I am not for one second suggesting that charities should not be subject to scrutiny – far from it, I welcome the highest levels of accountability and transparency – but some of the criticism now being directed at the sector is as unwarranted as it is hypocritical.

Research conducted by Ipsos MORI shows that only around one in five of us trust journalists and Government Ministers to tell the truth.

Charities on the other hand have much greater levels of public trust and confidence – only doctors and the police are more trusted professions. As the figure (left) shows only 12% of the public think that charities cannot be trusted.

So when it comes to trust. There’s simply no contest.

That is not an argument against scrutiny of charities or their practice, but it does rather fly in the face of much of the rabid attack that seems to be a growing part of the current political and media discourse.

Some charity sector leaders have been defending Kids Company and the growing number of attacks on the charity sector. But fewer than I would have expected and less vociferously than I would have imagined. Perhaps they do not yet feel that their interests and values are – yet – in the firing line. But it is my firmly held believe that this is the beginning of a major offensive against charity and charities.

The battle lines are being drawn.

The attacks on Kids Company are becoming an attack on the charity sector

The Mail’s latest Kids Company exposé attacks the charity for employing two children of one of their trustees – the former WH Smith CEO, Richard Handover.

Coming on the back of all the other questions and very public implosion of the charity, I have to admit it doesn’t look great, but the Mail have certainly done all they can to present it in a very negative light.

That’s what the Mail do, so I am not surprised they’ve got their hatchet out. To my mind what started as a solid piece of investigative journalism – exposing the nasty politicking going on between Government and the Charity’s senior leadership – has become something more sinister: a concerted attack on the charity sector.

Employing relatives or – to use the formal term – ‘related parties’ by charities is governed by clear guidelines, in much the same way as public bodies are governed. It is not illegal but it must be fully disclosed, there should (clearly) be no preferential treatment given – for example awarding a contract to a family member just because they are family. In short they should be the right person for the job and the beneficiaries interests best served by their appointment.

Looking at the Mail’s report, it appears to me – at least on the face of it – that Miss Handover is suitably qualified for the role, has done a good job fundraising and organising events and her salary seems entirely consistent with that sort of work.

There doesn’t seem to be any suggestion that the employment hasn’t been properly disclosed – indeed it was from the accounts that the Mail has drawn the facts for their article.

The language of ‘expensive foreign trips’ and ‘taxpayer subsidised charity’ suggests jaunts paid for at the public’s expense, rather than someone travelling as part of their job to raise funds for the charity.

This is becoming an attack on charities, how they operate and what they stand for.

Kids Company and its flamboyant chief executive has long divided opinion within the sector. The marmite effect. Their ability to raise huge amounts of money from high profile supporters, to schmooze successive Prime Ministers (I remember first meeting Camila at a reception that Gordon Brown hosted in Downing Street when he was Chancellor in the late 90s) has raised an eyebrow or two. Coupled with a suggestion that their claims of impact went some way beyond the reality – something many other successful fundraising charities are complicit in. Kids Company did good work. But they did not make many friends in the sector by overstating their impact.

Now, when they fell out with their Ministerial supporters and the bottom fell out of their over-extended business model, the sector has not been rallying round in their defence in quite the way it might.

We need to put aside our concerns about the rights and wrongs of Kids Company and recognise the credibility and reputation of the charity sector as a whole is under attack. The Mail – which is merely the vanguard of charity sector attacker – has charities and not for profit groups in its sights. I suspect they are happily playing ‘bad cop’ to the government’s agenda of cutting any and every state supported charity back to the bone.

This is a politically and philosophically motivated attack. Like the public sector cuts that have decimated our public services since 2010, now the charity sector – which has picked up much of the slack arising from public service cuts – is under attack.

Those in the charity sector and all concerned with social justice would do well to remember Martin Niemöller’s famous quote reminding us of the importance of solidarity.

First they came for the Kids Company, and I did not speak out—
Because I was not Kids Company.

Thankfully we are not facing genocide – and I do not wish to compare the attacks on the charity sector with the Holocaust, but I think that Niemöller’s words are equally applicable to a less horrific attack that is now underway.

 

UPDATE

I thought it was bad. I just realised it’s worse.

If you don’t believe the attack on charities that is underway, have a look at this petition calling for an end to government funding of all charities: https://petition.parliament.uk/petitions/105732

and this article in the Financial Times calling for charity tax reliefs to be abolished: http://www.ft.com/cms/s/0/01c7a2b0-3ce3-11e5-bbd1-b37bc06f590c.html?siteedition=uk#axzz3iW80OUjh

Don’t say I didn’t warn you

Al-Madinah inadequacies highlight wider weaknesses

The Ofsted report into the Al-Madinah school in Derby is damning. Extremely damning. Inspectors highlighted a catalogue of shortcomings that have resulted in the school being taken into special measures. Every single category that Ofsted examine was rated ‘inadequate’ and the school, which only opened last year, was described as ‘dysfunctional’. This is not good. Not good for the Al-Madinah Educational Trust who run the school, not good for Michael Gove and his flagship free schools programme and most of all not good for the children who go there.

Of particular interest (and concern) to me, as a founder of another free school that opened a year later, the report singled out the weaknesses and ineffectiveness of the school’s governing body.

Whilst I do not believe that this incident proves one way or another whether free schools are a good or a bad idea, it does highlight inadequacies of the current process. I find it simply incomprehensible that a free school applicant’s governing body can be so obviously lacking and still pass through the process in being allowed to open. Having been through the process myself, I do not know how this could have gone unnoticed. Whilst I would not necessarily say that the interrogation of governor capabilities was as rigorous as I had expected it to be, I still wonder how they could have actually managed to get the school opened without being more competent.

It may have something to do with who is actually doing the setting up. In our experience, as a group of parents, we had not organisational backing or resources to draw on. We had to do everything ourselves. This did make it hard and it could well mean that areas with less resources and capabilities are not able to establish their own schools. But the upside, I suppose, is that it meant we had to be sufficiently competent and capable to set up a school – which stood us in good stead to actually oversee the running of the school. [Quick health-warning: we haven’t had our first Ofsted inspection…so we’ll see what happens then! And if I have to eat humble pie, I will happily do so!]

However, I have to say that from my experience of governance in other schools (maintained and academies), I wonder whether the standard of governance is sufficiently high. I have attended a number of training sessions for governors and been deeply unimpressed by the level of knowledge and expertise among many school governors. They were unaware of the basic fundamentals of good governance and the ‘Nolan principles’ of public office. The did not understand how they should hold their headteacher and senior leadership team to account and provide a balance of support and challenge.

My (far greater) experience of charity governance is of a generally higher standard, with trustees on boards I have worked with and sat on, overall far better informed. I am aware that this is by no means a definitive sample or scientific survey. But it does make me wonder whether we have to address the school governance – not just in free schools but across the board.

I believe this incident highlights weaknesses in the free school process but also issues with governance more widely. It does not, to me, demonstrate that free schools are right, or wrong. But rather that we need to support parents and local people who are prepared to put themselves forward to act in the interests of their community, so that they can fulfil their role adequately and effectively.