What Happens to the Kids as Kids Company Collapses?

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August 7, 2015; The Guardian

The collapse of UK children’s charity Kids Company has depressing similarities to other cases where UK Prime Minister David Cameron has personally intervened in supporting a high-profile nonprofit in defense of his Big Society. However, this latest collapse is also a story that illustrates one of the key challenges that many nonprofits wrestle with: the disconnect between the demand for the organization’s services and the “market” on which it depended for its revenue.

In a conventional business model the demand and revenue come from customers, the consumers of the company’s product or services. In the case of Kids Company, the demand and the consumers are the vulnerable young people in London, Bristol, and Liverpool who it supported. None of these contribute a cent to the charity. The market from which income came was the government, and contributions from celebrities like the rock band Coldplay, who even now are rallying to its support.

Not surprising then, that Kids Company’s founder and CEO, Camila Batmanghelidjh, devoted much of her time and energy to the limelight. She became famous for her frequent appearances on television talk shows with politicians and other public figures, always passionately arguing the case for support of vulnerable young people.

For 19 years, this model appeared to work. Substantial donations were made by individuals and corporate such as Richard Branson, J.K. Rowling, Jemima Khan, Credit Suisse, Morgan Stanley, and the John Lewis Partnership, a UK retailer. Government funding increased by a substantial 77 percent between 2009 and 2013, going from £13 million ($20 million) to £23m ($35 million). In at least one instance, funding was given at Cameron’s insistence despite objections by government officials and Cameron’s own Minister for Children.

Government officials weren’t the only ones to have misgivings. According to the Guardian, two finance directors resigned from the Kids Company, concerned that it was headed for collapse. One Guardian source described it as a “house of cards.” Yet Batmanghelidjh and her high profile chair, TV producer Alan Yentob, ploughed on, wooing the famous and the powerful. Kids Company launched a new initiative, “See the Child,” as recently as June of last year to pressure government further to fund the support of vulnerable young people. In a sign that the wheels were perhaps beginning to wobble, this initiative collapsed because it failed to attract funding, according to Civil Society UK.

Cameron found £3m for an “emergency restructuring grant” only last week. A condition was that Batmanghelidjh step aside from her CEO role. Now, however, the accountants have been called in and it seems likely the charity’s door will be closed despite the protests of celebrities and the young people it supported themselves.

And the sadness, despite all the heat, light, color, and movement that the Kids Company has generated throughout its nearly two decades and its collapse, is that the vulnerable young people it once supported will be left to fade away.—John Godfrey