The government has promised that there will be greater scrutiny before awarding grants to charities, as it rolls out a raft of measures as a result of the collapse of Kids Company.
Last year the Public Administration and Constitutional Affairs Committee launched an investigation into government funding of Kids Company, particularly the £3m Cabinet Office ministers gave the charity – against the advice of civil servants – shortly before it imploded.
PACAC published its report in February which blamed trustees, ministers and the Charity Commission for an “extraordinary catalogue of failures”, and the government yesterday published a response which accepts most of the recommendations of the committee.
The response outlines government plans to introduce a grants register and increase transparency about which charities it is funding.
Part of this will include “publishing an annual report to Parliament” outlining what grant-giving has taken place, the response said.
The Cabinet Office has launched a Grants Efficiency Programme, which is consulting with departments on new standards. The standards will be available from this summer, and will include clear guidance about how to make sure grant “represents value for money”.
From this spring departments will have access to a grants information system so they can find out if other departments are funding an organisation before making a grant. Account managers will be appointed where grants are “individually or collectively significant”.
The government will also “move toward a requirement for comprehensive annual reviews on all grants”.
Early findings from the minister for civil society’s review
Rob Wilson, the minister for civil society, has been carrying out a detailed review of non-competitive grants made under section 70 of the Charities Act 2006 – grants made by ministers without an competitive process.
The government’s said its conclusions were that there should be a “presumption that grants should be competed”.
Where grants are made without competition here should be “more prior scrutiny”.
The Cabinet Office will work with voluntary sector representatives to “implement standards for evaluation that strengthen accountability”.
The review is also considering whether government should impose a minimum reserves level for large charities that are “dependent on government funding”.
Further checks to ensure a charity is well-run that are being considered include sight of the management letters, further assurance from the charity’s auditor and asking for specific relevant financial information.
John Williams, vice-chair of the Association of Chairs, blogs on what trustees should learn from the collapse of Kids Company.