There has been a lot of media coverage about Kids Company, the innovative children’s charity that has recently had to close its doors. Whilst its charismatic chief executive, Camila Batmanghelidjh has taken most of the flak, so have supporters like David Cameron, Boris Johnson, a host of celebrities and other politicians.
Where does the buck stop when a charity folds?
Ultimately it is the Board of Trustees. Trustees are volunteers who govern the charity and hold paid staff (like me) to account. It is astonishing that they did not act sooner to save the charity. The chairman was BBC executive, Alan Yentob.
The sad anorak in me looked at Kids Company accounts on the Charity Commission website when they hit the news. Each year for at least the last three years, auditors have warned Trustees about the need to build reserves. Reserves are a sort of savings account that forms a financial buffer to protect a charity from bad financial times.
Sometimes charities put too much in the reserves and you start to wonder why they are still appealing for money. Kids Company operated with virtually no reserves and just kept hoping donations and government grants would save them from going bust.
The moral of this story is to urge people to check out the charities they support. It is easy to find a charity’s annual report and accounts on the Charity Commission website. A well-run charity should have between 3 to 6 months operating costs i.e. if no money came in they could still continue to stay open for this time period.
Needless to say Headway Worcestershire has a sound reserves policy as do the vast majority of charities in the UK. This is because most Trustees do a good job… and guess what! We are about to recruit some new Trustees…so please apply if you are interested in this role and be assured: we have reserves.
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