Andrew Holt reports on the governance scandal at Kids Company
The collapse of the charity ‘Kids Company’ in August has meant some serious lessons need to be learned for the third sector, but most importantly the government and relevant government departments, from a quality management perspective.
Last week the House of Commons Public Accounts Committee (PAC) said, in its report on the relationship between the government and the charity, there was a ‘staggering’ lack of scrutiny by ‘naive’ civil servants, allowing Kids Company to consume more than £40m of taxpayers’ money – a significant sum. Ministers, the PAC noted, had no idea what the expenditure had delivered. This was breathtakingly poor.
The PAC said the charity, run by Camila Batmanghelidjh, had received special treatment, to the detriment of other organisations and parts of the country that were dealing with equally needy children. Kids Company had, in turn, lobbied government for funding for many years.
The committee was highly critical of the Cabinet Office’s ‘ill judged and gullible move’ to give the charity its entire £4.3m annual grant in April this year. Most damning, fairness and value for money, key principles when considering public spending, ‘appear to have been forgotten in repeated and ultimately doomed attempts to keep Kids Company afloat’.
The MPs said: ‘We object to the obvious unfairness of central government directly funding a charity which operated in only two London boroughs for most of its existence, with around £4m a year, at the expense of other charities and young people across the country.”
Even though the first warning to civil servants about the charity’s financial situation had been delivered by one of its senior managers as far back as 2005, ‘funding to the charity continued and was never seriously questioned, let alone stopped. Instead responsibilities were passed between departments like a hot potato’, said the PAC.
The committee also criticised a lack of knowledge-sharing across government about the charity’s performance and expressed disappointment that Whitehall departments had not spoken to local authorities to discover why, in general, they had opted not to fund the charity.
The committee has recommended the government conduct a fundamental review of how it makes direct and non-competitive grants to the voluntary sector, improve the way it monitors and evaluates grant-funded organisations.
Indeed, based on this evidence, it is axiomatic to say that effective transparency was clearly lacking. But the PAC is correct, the Cabinet Office should be fully transparent about its grant funding, explaining fully why it is giving what to whom, and have a list of criteria from which a relationship with a charity can work and be checked against on a regular basis.
All involved should embrace this. There seemed to be no proper quality management and an implementation of Deming’s quality management approach would be the place to start.
Deming’s management approach consists of three tiers. In tier one, senior management is responsible for the quality of aims, objectives and fundamental strategy. In tier two, middle management is responsible for the implementation of those aims and objectives in accordance with the overall policy towards quality, and in tier three, a ‘work group’ is responsible for results within a continuous programme of improvements to the processes.
These quality management principles would dramatically improve the government’s approach to charity funding and establish greater trust in the process.
Andrew Holt is Technical Executive at the CQI and writes for Quality World magazine.