NOT-FOR-PROFIT ORGANISATIONS
29
No kidding?
Senior directors at the charity Kids Company repeatedly warned
trustees of the need to
build up financial reserves or face going to the wall, the
Guardian
can reveal, as an analysis
of the accounts show that its funding increased by more than 75% in five years.
Two finance directors at Kids Company left in less than three
years because of their
frustrations that no one – from the board of trustees, led by the BBC’s Alan Yentob, to the
chief executive, Camila Batmanghelidjh – heeded warnings of the need to build a financial
cushion to protect the charity from catastrophe, the
Guardian
understands.
‘If you keep building an organisation without building reserves, then it’s a house of cards
and it will fall down,’ said one source who worked in a senior role at the charity for several
years.
A
Guardian
analysis of five years of accounts show how the charity got itself into dire
financial straits. Despite receiving millions of pounds in government funding, it lived hand to
mouth, never built up any reserves, and spent almost all its income each year.
Analysis of the charity’s accounts from 2009 to 2013 shows the organisation was receiv-
ing
huge injections of funding, which included millions of pounds in government grants.
Between 2009 and 2013, its income increased by 77% from £13m to £23m, but the charity
was spending almost every penny it brought in. In the same period, its outgoings increased
by 72%.
Despite repeated warnings on the accounts seen by trustees and presented to the Char-
ity Commission, no consistent reserve was built up.
In March 2014, an audit of the charity was commissioned by the Cabinet Office and car-
ried out by accountancy firm PKF Littlejohn. It noted that the charity was facing a ‘serious
cashflow’ issue.
Historical note: The charity collapsed in August 2015.
Source
: Laville S., Barr C. and Slawson, N. (2015)
Kids Company trustees accused of ignoring finance warnings
,
www.theguardian.com, 6 August.
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