Kids Company has been criticised in a report for a “mismanagement in the administration of the charity” – a year after the high court cleared it of wrongdoing.
The Camberwell based charity, set up by Camilla Batmanghelidjh, was accused of operating a “high-risk business model” and “mismanagement in the administration,” by the Charity Commission this week.
Yet, the long-awaited report confirmed there was “no dishonesty, bad faith, or inappropriate gain in the operation of the charity,” and said there was no basis for regulatory action against Batmanghelidjh.
Other problems with Kids Company named by the Commission were a heavy dependence on grants and donations, repeated failure to pay creditors, including its own workers and HMRC, alongside low cash reserves.
It added that more cash reserves could have allowed the charity to avoid liquidation or wind up in a more orderly fashion.
Kids Company collapsed in 2015 amid allegations of mismanagement – just weeks after it was handed a £3 million grant by David Cameron’s government.
The charity was well known for its high-profile work providing practical and emotional support for children affected by trauma, violence and poverty.
Kids Company supported 36,000 vulnerable children and families across London and Bristol at its peak, although it was giving £1,700 a month to 25 children before its collapse, despite receiving a reported £42 million in grants from the UK taxpayer.
The board of trustees at Kids Company were also criticised in the report for failing to properly oversee the children’s charity
Helen Stephenson, the chief executive of the Charity Commission, said Kids Company’s sudden closure was a “significant event”, not just for those involved with the charity, but wider society.
Batmanghelidjh immediately contested the report’s findings, threatening to take legal action to overturn what she called a “travesty” of a report and an attempt by the commission to “rewrite history.”
She claimed the report was based on allegations that had been comprehensively dismissed by a court ruling more than a year ago, which found no evidence of mismanagement or wrongdoing and praised them as a “group of highly impressive and dedicated individuals.”
Kids Company was also accused of child abuse in 2015, but a six-month investigation by the Met found no evidence of abuse, criminality or safeguarding failures.
The court concluded the charity would have survived had it not been for the unfounded abuse allegations.
The prospect of another legal challenge by Batmanghelidjh might mean that this long-running saga has further to go.
So far it has generated millions in legal costs, thousands of media articles and hundreds of hours of parliamentary and Whitehall time.
In 2017, legal proceedings were launched in an attempt to ban Batmanghelidjh and seven trustees from holding senior board roles in companies or charities, culminating in a 10-week court case in autumn 2020, and the judge’s ruling a year ago.
The failed attempt is said to have cost the taxpayer £9.5m in legal costs.