You heard it here first… the next charity scandal

In a world of inspiring frontline charities and extraordinary volunteers, we are having to talk again about… Kids Company.

I can’t guess when the next ‘charity scandal’ will hit, but it seems to me that in between we ought to have more of a grown up discussion about risk.

If Kids Company was a risky venture, which no one seems to dispute, one reason was that it was trying to tackle a rising toll of risks to children and to society. Many charities do this and we should celebrate what they do as loud and proudly as we do risk takers in enterprise and investment. Good governance is critical, yes, but we should also accept failure, accept that in a world of risk charities will try things and some will fail.

With Kids Company, what we have had are years of to and fro on whether the individuals in charge at the charity acted appropriately or not. Some is well founded, some is on the basis of hindsight and sometimes it strays into fantasy, such as, for me, the recent suggestion from the regulator that if charities grow their income and expenditure, they can simultaneously grow their reserves. That looks good on paper, but is very tough in practice, because there are rarely the margins or surplus to allow this in a non-profit context.

Why do we expect so much of charities, when the challenges that they are responding to are often growing in scale? There is some research that suggests that people who give to charity want to believe that their money is put to good use, so that they are less likely to question the effectiveness of charities. Or some charities themselves overclaim what can be done with a donation, in order to raise money. Either way, we can end up with inflated expectations.

The charity sector should be valued for how it reduces risks to society and judged by how effectively overall it does this. If so, then seeing some charities close could be a signal of the health of the wider sector and not one of its failing.

You heard it here first. It may seem unlikely, but the next charity scandal could be that, at a time when we most need them to take risks… no charities fail.

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