Camila Batmanghelidjh, the founder and former chief executive of Kids Company, could be seen as a victim of her trustee board’s failure to put the right management and structures in place to support her, according to a former chief executive of the Charity Commission.
Andrew Hind was speaking yesterday at an Honorary Treasurers Forum event about the lessons of Kids Company, hosted by Cass Business School. Hind, who led the Charity Commission between 2004 and 2010 and is now chair of the Fundraising Standards Board, said Kids Company’s accounts and annual reports, especially its final accounts for the year ending 31 December 2013, contained plenty of warning signs for trustees that the charity was in a precarious situation.
The accounts showed that the charity had free reserves of £434,282, while cash at bank and in hand was £90,054 – Hind said this was equivalent to about one week’s and one day’s expenditure respectively.
"You don’t have to be Sherlock Holmes to spend 15 minutes or so looking at the accounts and realise that this was an accident waiting to happen," he said.
Referring to the charity’s reliance on government funding to cover expenses, Hind said the charity was "a bit like a crack addict – completely addicted to emergency funding from central government".
He said that the accounts’ lack of content about the senior management team, except for the chief executive and finance director, led him to the conclusion that "this was a chief executive that wanted to exercise very significant control" and that posts such as directors of fundraising, HR and children’s services "did not exist". He said the trustees should have ensured a strong support team was in place around Batmanghelidjh.
"We do need challenging, charismatic CEOs who can argue for change and attract supporters, but they have got to be surrounded by a rounded, experienced team of fellow senior executives and a carefully chosen board that operates to high standards of best practice," Hind said.
"You could argue that rather than being the cause of all these problems, Camila was a victim of the failure of the board to put that structure around her."
Kids Company collapsed in August last year and the circumstances of its demise have been the subject of reports from the National Audit Office, the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee.
The PACAC report, which was released last week, heavily criticised the charity’s trustees for failing to act on warnings about the charity’s financial health. It also criticised senior government ministers, who handed Kids Company a combined £42m in central government funding between 2002 and August 2015.
Kids Company’s accounts show the total expenditure for 2013 was almost £23m.
Hind cited statements in the annual report that emphasised the charity’s business model was focused on spending money "according to need, which is consistently growing".
He also highlighted "routine cutting and pasting of bits from one annual report to the next annual report", citing examples of the reuse of London School of Economics research about staff job satisfaction and even pictures of children.