Between the desperate needs of her clients, the demands of her donors and the difficulty of raising sustainable funding, it's no surprise Kids Co suffered, says Becky Slack
The first time I met Camila Batmanghelidjh was several years ago at a conference for public service delivery professionals, including commissioners. She was the first presenter of the afternoon, following a morning of conversation about measuring impact and outcomes.
In her usual colourful, passionate style, she explained how the children she cares for have complex needs, years of neglect and abuse having caused considerable (and sometimes irreparable) damage to their brain function.
As a result, these children suffered from emotional difficulties, including aggression, paranoia and a lack of empathy. There was no quick fix and the outcomes of the intensive psychotherapy she provided may not be realised for many years.
After she had finished, the room was silent. Healing the many children affected by neglect and abuse clearly wasn't going to fit neatly into a box that local government could understand. Many of the commissioners in the room were left scratching their heads, wondering what to make of Camila and her approach.
The problems faced by Kids Company were plenty. Government funding was restricted to supporting children who were referred by the authorities, not those numerous kids who found their own way to the charity.
To cover the cost of these children, the charity had to fundraise from the public. Fundraising is hard work, time- and resource-intensive, and unreliable. It is certainly not the 'sustainable' source of income that so many people have said Camila should have provided.
Kids Company is not unique. The problems it has experienced – unsustainable funding, little or no reserves, increasing demand for services – are the same problems experienced by many other charities.
More than three quarters of charities have seen an increase in the number of people accessing their services over the last year, and demand is expected to rise further, according to research by the Charities Aid Foundation and the Association of Chief Executives of Voluntary Organisations. At the same time, charities are struggling to generate the income they need.
NCVO analysis shows that on current projections, this sector will be faced with a ’4.6 billion shortfall in income by 2018/19, the result of government cuts, tepid growth in donations from the public and inflation. To cover the shortfall, many charities are dipping into their reserves – just as Camila was forced to do.
One of the ways in which charities can address this is to invest more in fundraising, but do that and they will potentially face a media storm accusing them of using money meant for good causes to line the pockets of fat-cat marketing agencies – stories that would have a very damaging effect on charities' ability to raise the money they need.
Donors are fickle creatures. Government priorities change and are subject to cuts; philanthropists tend to place onerous restrictions on how their money is to be spent (they also change their minds and withdraw funding pledges without any prior notice); the public like to see that all their money is being spent on the beneficiary and are quick to stop giving to those organisations they perceive as wasteful. All of this makes creating a sustainable funding base very difficult indeed.
Charities have a responsibility to deliver the best possible service for their beneficiaries. These services cost money. It costs money to hire skilled staff, to pay for office rent, transport costs, utilities bills, research and development, monitoring and evaluation…
And yet when they spend this money they face criticism for being wasteful. There is little recognition from the media or the public that if charities are to make a real and lasting difference to the world then their success is wholly connected to their ability to administer their organisations effectively.
Investors who pump money into businesses want to see that the companies are being well run, have access to the necessary skills and resources, invest in R&D and advertise their products and services so they can compete in the market place.
Donors should be looking for the same qualities in the charities they support, rather than placing draconian and unrealistic expectations on them – something that will ultimately serve no one, least of all the beneficiaries.
Becky Slack is a social affairs journalist, fundraiser and founder of Slack Communications, a communications agency that works with organisations that deliver social value.