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Children Are Our Future July 12, 2015

Posted by Audit Monkey in The Joy & Pain of Internal Audit.
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I thought I would make an effort to keep the blog alive. One item which has reignited my interest has been the recent Press articles regarding the Kids Company Charity. The Charity was founded by the colourful Camila Batmanghelidjh and provides support to disadvantaged children. The Charity has featured in the media during the past week as the government has decided to stop supporting the Charity to the tune of £3m unless Camila Batmanghelidjh steps down as Chief Executive due to concerns over how donated monies are spent and governance issues.

I’ve performed a few audits at several different Charities in the past year and unsurprisingly, the same old control weaknesses tend to crop up. The Charities in question tend to be laxed with regard to spending; large amounts of money are given to the beneficiaries without much concern over the cost or impact; achieving value for money is often a secondary concern. Let’s face it, when someone else is picking up the tab, who cares? More alarmingly, different treatment pathways to alleviate pain or suffering are all justifiable whether or not they work. Thus any hair brained scheme, of which there are usually many, is perfectly acceptable.

It is frequently difficult to judge how much work is actually being done by the staff but the administrative apparatus tends to be bloated. It doesn’t help that there is little management information detailing the number of beneficiaries (service users) of the Charity are and the cost of delivery. It doesn’t help that the staff tend to be misted eyed about people and their motives, which extends to contractors, especially their inflated invoices for goods and services and the lack of value for money.

The CEO is often driving a very nice car on expenses and is grossing upwards of £100,000 per annum. A salary of £100,000 may not seem high to some but given the average salary in the UK is around £26,000, it’s a good payday.

The details of the misdemeanours at the Kids Company have been filtering out. Here are some:

* The Charity has helped some 36,000 children. Surprisingly the definition of children is rather board and includes young adults, parents and school staff, so the numbers don’t stack up.

* The Charity has been giving cash to beneficiaries to supplement their existing State social security payments. Batmanghelidjh justified this by saying middle class children receive pocket money. In the Charity world this is usually a bit of a no-no as the beneficial usually has to perform a task, e.g. attend a rehab session, to be rewarded.

* One of the day centres was providing lunch to children but the cost of provision bore no relation to the actual number of children catered for, i.e. huge costs were being incurred to provide for very few.

* It is thought that Batmanghelidjh was paid £90,000 per annum.

According to the Sunday Times (05/07/15), the Charity employed an awful lot of twenty somethings who appeared to be swanning about. This seems to be borne out by the 2013 accounts; from income of £23m some £15.4m (some 67% of income) was spent on staff. Very little was spent on governance.

So what can we conclude? One has only the facts as presented by the media to go on but it seems the Kids Company fits the mode of modern charities; a top heavy organisation with few beneficiaries except the staff who are being paid handsomely for doing very little. No wonder the government is withholding funding, it wants bigger bang for its buck.


1. ITauditSecurity - July 12, 2015

Leave it to the government to call the kettle blackened. Hypocrites.

2. itmonkey101 - July 14, 2015

I know next to nothing about Kids Company but Ms Batmanghelidjh seems to have her heart in the right place whenever I see her interviewed on TV. When organisations get this big though you need to get professionals involved to oversee things at which point the question needs to be asked as to whether this work should be carried out by a charity or an official government body.

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