In an examination of the closure of the charity, the Public Administration and Constitutional Affairs Committee found the board of trustees failed to protect the long-term needs of its beneficiaries.
Throughout Kids Company’s 19-year existence, the board ignored repeated warnings about the charity's financial health, the report concluded. It also failed to provide robust evidence of the charity's outcomes, and did not adequately address increasing concerns about the suitability of programmes and behaviours.
However, committee chair Bernard Jenkin said it was clear that lessons also had to be learned by regulators and by government, which had provided at least £46m in public funding to the charity over its life.
“Despite lacking robust evidence about the quality of the charity's outcomes, value for money or governance, Kids Company attracted high profile support from senior ministers throughout successive governments, and tens of millions of pounds of public money have been handed to the charity over the course of its existence,” he said.
“Government and regulators must learn from this. Proper mechanisms must be put in place to allow dispassionate, transparent, accountable decisions to be made about charity funding and regulation in the future.”
There was a “catastrophic confluence of factors” that conspired to allow this charity to operate as it did, he added.
“I fear the repercussions of this episode are far from played out, but one of them must be a radical change in our approach to charity regulation at every level.
“When this level of public funding is involved, government must have the skills and expertise to assess and hold funding recipients to account itself, and the Charity Commission must have the powers and resources to visibly, proactively investigate and tackle mismanagement.”
Today’s The collapse of Kids Company report acknowledged that MPs had heard many positive accounts of the work Kids Company did, and of employees who were inspired and motivated by the quality of support they could deliver to young people.
However, there were also what Jenkin called a “litany” of allegations of lavish spending and abuse of power within the organisation.
Responding to the report, Cabinet Office minister Oliver Letwin reiterated that he had believed the right thing to do to give the charity one last chance to restructure. This led to the charity being given an additional £3m to fund a restructuring programme. It was later requested some of this money be repaid as the government terminated its grant agreement with the charity.
Following this, the Cabinet Office is now undertaking a review of how it makes grants, Letwin said.
“We will of course pay careful attention to this report and in light of what we now know about Kids Company we will be reviewing our grant-giving process,” Letwin said.
