Could Kids Company have protected themselves against closure?

Thursday 6th August 2015

Could Kids Company have protected themselves against closure? If this is about funding then it’s a warning to all other charities …

The closure of Kids Company is certainly devastating for those vulnerable and disadvantaged children – whose situation is likely to get worse under the current government – to whom the service was vital for their care, well being and aspirations for a life better than the one they know. However, it appears – if you put allegations and police investigations to one side – that Kids Company have made a fatal error.

They have failed to protect themselves from the bodies that they are reliant on for their funding. In this case it’s the government grant that is being blamed – It could have easily been another grant giving funder though. There is an overwhelming concern in the housing sector that many organisations will face closure if they don’t diversify their funding sources to rely less on grants.

At Trinity we believe in practising what we preach: we don’t want the people we work with to rely on handouts to fund their lives so why should we rely on them to fund our services? Charities need to be bullet proof against cuts to funding. This isn’t 1999, there aren’t pots of money sitting unused – waiting for someone with a noble idea to come along and spend them.

It is now not just preferable for charities to act as profit making businesses – creating profit to reinvest for social gain – but vital. We need to be looking to social entrepreneurs who want to invest in realistic and well reasoned business plans which will bear a tangible social return as well as a profitable financial return on their investment.

If charities like ours don’t take steps now to be completely sustainable, in a responsible way, then they will collapse under the pressure of funding cuts and grant restrictions. We have a responsibility to the people who use our services to make sure we can keep on being there for them.

The lesson from Kids Company is brutal but needs to be learned: there is no such thing as a free lunch. From media reports it seems that the straw that broke the camel’s back in this case was a cash-flow problem which meant that funds meant for one thing needed to spent on something else … surely this is a problem that businesses come across from time to time and manage to temper because they are masters of their own destiny?

Funding grants to charities come with restrictions though, imposed by the grant-giver, which must be complied with.

Had Kids Company taken bold steps to be innovative and generate their own funding would the situation for the 36,000 children they help be different today?

Could Kids Company have protected themselves against closure?