The Charity Commission and the government were warned about mismanagement at failed charity Kids Company as early as 2002, according to a Newsnight programme aired last night.
According to letters obtained by Buzzfeed and broadcast on BBC’s Newsnight last night, Kids Company applied for a £60,000 grant from the Pilgrim Trust, a grant giving foundation, in 2002.
The Trust had originally awarded a £60,000 grant to Kids Company the previous year but became “increasingly frustrated” by the organisation’s inability to provide relevant paperwork and reported it to the Charity Commission in late 2002.
In its letter to the Charity Commission, the then chief executive of the Pilgrim Trust said that “in the absence of financial acumen from the director of Kids Company, my colleagues were not convinced that the staff in place at the organisation had sufficient experience or seniority to deal with such complex matters”.
The letter also said that civil servants in the Home Office had told the Pilgrim Trust they were “not at all happy” that Kids Company had received a £300,000 bail-out from the government and that “finance people had recommended [to ministers] that no financial assistance be given. This recommendation was overturned by ministers and a grant offered to stop the organisation becoming insolvent”.
Professor John Podmore, trustee at the Pilgrim Trust at the time, told Newsnight: “In 2000/01 we initially awarded a grant to Kids Company but after requiring and asking for various information around the projects and finances we withdrew it.
"They applied again for a grant in 2009 and again on examination of the book-keeping, the financials and the structure we were sufficiently concerned to not take the bid forward.”
A spokeswoman for the Charity Commission said: “We acted quickly as soon as specific concerns about Kids Company were brought to our attention in mid-July, including by meeting the trustees within days of hearing from former employees about their specific allegations of financial mismanagement”.
In response to both Buzzfeed and Newsnight, she also said: “Any relevant records from 2002 would have been destroyed under the records retention policy at the time and we therefore do not hold any record of the letter you say was sent to the Commission thirteen years ago. For this reason, we cannot comment on its content, or speculate about how the Commission responded to the letter at the time”.
‘Lack of any strategic planning’ said NPC report
It has also emerged that New Philanthropy Capital conducted research into Kids Company in 2006 and published a report of its findings which it presented to the organisation’s board of trustees.
The report warned trustees of the organisation’s: “weak finances, conflicting information about numbers of users, the absence of any internal attempt even to track and record results, over-reliance on one member of staff and lack of any strategic planning all threaten its long-run sustainability.”
It also said that while “many of the commendable aspects of Kids Company are attributable to Camila [Batmanghelidjh]. Many of the problems though are also attributable to Camila”.
According to Newsnight, NPC also warned that a £3m grant that had been awarded to the charity by the government was not being used for the reason that it had been originally granted.
In a statement, NPC said: “As reported in some parts of the media, NPC carried out research into the work of Kids Company in 2006. The research was done with the agreement of Kids Company. We produced a paper containing our findings, which was private and not for publication.
“As with all our charity analysis, we looked at how the organisation operated and made recommendations on how it might improve. We shared our conclusions with the chief executive and trustees at the charity, and it was for them to decide whether or not to act on them.”
Kids Company 'mafia protection agency gone wrong'
Tim Loughton, former minister for children, said that warnings from Alan Yentob, then chair of Kids Company, about violence in South London should the charity close, were not the actions of a “therapeutic” organisation but “a sort of mafia protection agency gone wrong”.
“We were forever getting warnings that if Kids Company didn’t exist, then all hell would break out in South London. When things came to a head, we had some quite severe warnings from the chair of trustees that there would be arson attacks, riots and, I think, ‘savagery’ in South London.”
“I’m not aware that that has come to pass, but that doesn’t sound like an organisation giving therapeutic care to troubled kids. It sounds more like a sort of mafia protection agency gone wrong.”
Loughton said he felt that those high up in the “hierarchy at Kids Company had special privileges to access ministers and the Prime Minister as well”.
Loughton also inferred that at times trustees from Kids Company would threaten him, saying: “now, you don’t not want to give us that grant, do you minister?”
Both Camila Batmanghelidjh and Alan Yentob were called to answer questions from the Public Administration and Constitutional Affairs Committee today. Read the story here.
