Charity Commission statutory inquiry into Kids Company – learning points

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On 21 August 2015, the Charity Commission opened a statutory inquiry into the charity Kids Company (registered as Keeping Kids Company). The charity was set up in 1996 to enhance the emotional health of young people through counselling, support and art therapy; and to help schools, and other educational institutions address the emotional needs of young people.

The Charity Commission had been investigating the charity since 17 July 2015 after allegations were made against it relating to financial management and governance issues. Many of these allegations came from staff and employees of the charity, who highlighted concerns around inappropriate spending, breaches of financial controls and the viability of the organisation.  

Over the course of the charity's 13 year lifespan, it consistently received large grants of funding from the Government without ever needing to follow the correct channels for applications. Large awards were also made to the charity despite the fact that Kids Company had previously shown a poor record of managing their finances and controlling their costs. The Government faces extreme criticism in the media for its failure to monitor the use of their funding within the charity, in addition to their failure to follow correct procedures when assessing the charity's eligibility for funding.

Despite the charity's closure on 5 August 2015, the Charity Commission continues its investigations and deemed it necessary to open a formal statutory inquiry in light of the increase in allegations and the intense public scrutiny surrounding the charity's activities. A report will be published with their findings once the investigations are complete.

Key action points for trustees: -

  • Trustees should ensure that their organisation has suitable mechanisms in place for measuring its performance and impact against their primary objectives.
  • Trustees should be transparent around how their funding is being used to further their aims.
  • Adequate procedures should be in place to assist with financial management and cost control.
  • Keep detailed records of all spending and funding moving in and out of the charity, including descriptions of the activities being undertaken with the funds.
  • Ensure that all trustees regularly review and comply with the guidance around their duties, in particular the duty to manage your charity's resources responsibly. This guidance can be accessed here.

For further information on how this could affect your organisation, please contact our charities team.