Kids Company and fundraising regulation are still rumbling on

It will be some time before the sector can assess how much damage has been done by these two upheavals, writes Stephen Cook

Stephen Cook
Stephen Cook

The events of the past week suggest that the sector’s two biggest upheavals of 2015 – the fundraising crisis and the collapse of Kids Company – are still a long way from settling down. In some ways they might get worse before they get better, and it remains in the balance how much harm they will do in the long term to the various protagonists and to the sector itself.

At the moment, the main damage being done by Kids Company is to politicians and the charity’s former chief executive, Camila Batmanghelidjh. This is happening in the forum of the inquiry into the affair by the MPs on the Public Administration and Constitutional Affairs Committee, where witness after witness comes up with fresh revelations that confirm rather than allay everyone’s worst fears.

Batmanghelidjh intimidated people with talk of her friends in high places, according to one witness; she used veiled threats and a bullying attitude to secure funding, according to another. Worryingly, the limitations of the auditing process in ringing alarm bells about charities were touched upon. Most surprising was the attitude of the Cabinet Office minister, Oliver Letwin, who saw "no basis for assuming that the financial governance was anything other than reasonably OK". All one can say, given the history of doubts and questions about Whitehall grants to Kids Company over the years, is that he can’t have looked very far.

The question for the sector generally is whether to assert that Kids Company is atypical and other charities aren’t like that, or to be more circumspect and take a long, hard look at itself. Founder’s syndrome, incautious financial management, inadequate governance – experience suggests that these are common problems, although rarely exhibited in such a florid form as in Batmanghelidjh’s fiefdom. To say that Kids Company is an exception could be a hostage to fortune, but a general mea culpa would also be unwise. At the moment it’s hard to gauge how this is playing in the public mind: will the saga increase cynicism about charities, or be seen as a one-off, with minimal general repercussions?

Meanwhile, fresh pieces are being put on the board as the new regime for fundraising regulation takes shape. It has been announced that Baron Grade of Yarmouth, a Tory peer and one-time big beast in the television world, will spend one day a week chairing the new Fundraising Regulator. Michael Grade has had a colourful, up-and-down sort of career and it is not immediately clear what qualifies him for the job: the world of charity does not feature noticeably in his CV.

The pendulum thus appears to have swung from having a sector insider conduct the review of fundraising regulation in the form of Sir Stuart Etherington of the National Council for Voluntary Organisations, to having an outsider in charge of implementing the plan. The hope must be that a fresh pair of eyes and some independent judgement will be an advantage. The chief executive of the new regulator will be another key appointment.

Perhaps the biggest question mark is over the proposed Fundraising Preference Service, which would allow people to opt out of all contact from all charities at a stroke – what Etherington called the "reset button". It was noticeable that the charities minister, Rob Wilson, said when announcing Grade’s appointment that his brief was to implement the Etherington recommendations in full, which implies that there is no flexibility over the FPS or how it will work.

At the same time, however, Etherington is calling together a working group of fundraising practitioners and other experts to look at the FPS in detail. Reactions from the sector so far imply that the practitioners will be arguing for the service to be less of a blunt instrument than is currently envisaged. Surely some sort of selective opt-out would be a preferable model, to donors as well as to charities. Being fed up with one charity doesn't necessarily mean that you're fed up with them all.

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