Regulator 'stood to one side' as Kids Company collapsed, Acevo claims

In a written submission to the Public Administration and Constitutional Reform Committee, the charity chief executives body says the Charity Commission should re-evaluate its role in cases such as this

Kids Company: appearing before committee today
Kids Company: appearing before committee today

The charity chief executives body Acevo has accused the Charity Commission of "standing to one side and watching events unfold" during the collapse of Kids Company.

In a written submission to the House of Commons Public Administration and Constitutional Reform Committee before it began its evidence session this morning about the relationship between successive governments and Kids Company, Acevo says the defunct charity suffered from "serious and systematic failures of governance and leadership".

The evidence, which has been published on the committee’s website, calls on the commission to re-evaluate its role in cases such as that of Kids Company and "learn the lessons of its performance in this case".

Acevo’s submission says Kids Company’s accounts, which it was required to file annually with the commission, would have raised concerns about the levels of reserves it held. The committee might want to inquire whether the regulator noted these concerns and, if so, whether it took any action as a result, it says.

"On this occasion, during the collapse of a major national charity, the Charity Commission felt it proper to stand to one side and watch events unfold," the submission says.

"The committee may wish to consider whether anything more could have been done by the regulator to avoid this point being reached.

"It is our view that, in order to best support the sector, and the public, the Charity Commission needs to re-evaluate its role in such circumstances and learn the lessons of its performance in this case.

"The Charity Commission is currently carrying out a statutory inquiry into the failure of Kids Company. We would suggest that it should also address questions which have been raised around its own role in the handling of situation, and any lessons it has learnt from the process."

According to the submission, the commission has said it is not its place to ensure that charities remain solvent. "That is only partly the case," says Acevo’s evidence. "It is certainly not there to bail charities out, but it is there to ensure that charities, government and the public have the tools to best work together for the public benefit."

The submission questions whether the commission’s decision to focus more on its role "as an enforcer" has "taken it into difficult waters".

It says that charity governance breakdowns are "becoming an all too common feature of the charity sector".

It says: "It is our view that the Charity Commission is not merely a policeman; it should look to support charities to adhere to its standards. By providing support alongside regulation, it should work to ensure that the sector operates to the best of its potential and the public is protected thereby."

The Charity Commission was unable to comment before publication of this story.

More generally, the submission says there should be greater investment in charity governance and leadership and calls for the reinstatement of the former strategic partners programme, which gave funding to charity bodies to advise the government and was ended in 2013.

It says that cutting the programme was a false economy.

"We strongly advocate for a reprise of a strategic partners programme which can advise government departments on who should receive government funding and how funding decisions should happen," it says.

"They would also be able to flag problems that may arise with any of the organisations selected for funding. Through this process, government funding of the voluntary sector could be better targeted, and beneficiaries would be best supported thereby."

Most of the national newspapers carried stories on Kids Company this morning.

Among a number of claims, The Times said the charity encouraged a client who was pregnant with the child of a Premier League footballer to sell her "kiss-and-tell" story to a tabloid, that the children of some of the charity’s employees were registered as clients and had free places on adventure holidays, and that one client was given funds to buy a car.

The BBC and the news website Buzzfeed claimed that concerns about the way Kids Company was operating were raised as long ago as 2002, and that a further report by the think tank NPC flagged up serious concerns in 2006.

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