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Kids Company: Practical lessons for charity trustees

The demise of Kids Company and its aftermath has unfortunately overshadowed the pioneering work that charity did for nearly twenty years with some of the most damaged children and young people in our society.

In the words of its founder “making a commitment to help maltreated children heal through unrelenting love by being resolute and kind, and over the years understanding how to help children acquire mastery over their traumas.”

There have been lots of press headlines, a parliamentary committee inquiry and report, High Court proceedings resulting in a seven-week trial, a postponed Charity Commission inquiry that spanned over six years and now, possibly, judicial review of the decision reached by that inquiry finding mismanagement by the charity for failures to make payments to HMRC, workers and other creditors on time.

In our two webinars, we considered the wider lessons for charities and their trustees - starting with the headline issues the Charity Commission highlighted:

  • The importance of checks and balances and the right blend of skills and knowledge on charity boards.
  • Identifying and balancing the risks associated with innovative operating models and evidencing the benefits.
  • The role of financial planning and reserves policies.
  • Considerations when charities grow.

While on release of a 220-page judgment following the Official Receiver’s unsuccessful claim to have the former trustees and founder of Kids Company disqualified from acting as company directors, the charity sector breathed a collective sigh of relief when Mrs Justice Falk recognised the public policy importance of not deterring public-spirited and capable individuals from continuing to give of their time and expertise to serve charities. They stated “the public need no protection from these Trustees. On the contrary, this is a group of highlight impressive and dedicated individuals who selflessly gave enormous amounts of their time to what was clearly a highly challenging trusteeship”. We considered the practical implications for the wider sector of some of the issues highlighted by the Charity Commission, in particular the importance of:

  • boards creating and maintaining a healthy culture, where trustees can discuss matters openly and challenge each other and their executive teams in a positive fashion, in the best interests of their charity’s purposes;
  • ensuring there is a continually replenished talent pool providing one possible source of future trustees, as a result of carefully considered engagement of people – including of those a charity serves – at all levels of its governance, as well as a strategy to retain all the corporate knowledge, networks and advocacy of those who have already served their time on the trustee board;
  • documenting board decision-making, to justify which path a board may have chosen to go down in leading its charity through a tangled wood of various ways forward, and so to protect trustees from the wisdom of others exercised with the benefit of hindsight;
  • to collect data , qualitative as well as quantitative, to evidence impact of a charity’s activities and to use this to tell its story in the trustees’ annual report – ‘what would happen if we didn’t exist?’ and to maintain and enhance a charity’s constituency of support – from funders, individual donors and commissioning bodies, to the media and the general public;
  • challenging unhelpful narratives around charities – they are not miracle workers feeding the five thousand with five loaves and two fish, but need proper resourcing which means covering their core costs: for example, corporate partners should contribute to those costs when asking charities to enable their people to volunteer because it takes time and effort to organise a group of well-meaning employees on ‘day release’ from their desks;
  • collaboration between charities to share practice as well as to learn lessons in addressing big problems that are beyond the capabilities of one organisation to solve, mindful that the task of charity trustees is to fulfil their charitable purposes, not to preserve any particular institution. There are examples of excellence in the sector demonstrated by those who, like Kids Company, are effectively supporting young people with complex needs, for example: About Us - Shine Project & Home - End Youth Homelessness (eyh.org.uk).

We ended the second webinar with our own thoughts on how a charity really excels – when all those working within it complement each other for the benefit of those they serve.

It is not easy to implement simple steps to improve the governance of your charity but here are some useful resources:

Charity reserves: building resilience - GOV.UK (www.gov.uk)
It's your decision: charity trustees and decision making - GOV.UK (www.gov.uk)
Charity Digital - Topics - A charity guide to using big data

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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