Kids Company: The truth behind the collapse of Camila Batmanghelidjh's charity

The sudden closure of the charity Kids Company this week has prompted a war of words between its charismatic boss Camila Batmanghelidjh and the Government, as well as within Whitehall corridors.

The charity has faced claims of financial mismanagement and even allegations of sexual abuse. It has hit back with charges of bullying by politicians and the media.

Here, we assess some of the defences given by Ms Batmanghelidjh in recent days and look at how accurate they appear to be, given the evidence available:

“What has brought us to this point are allegations that are completely invalid. The first one was of financial mismanagement. People confuse our lack of money with financial mismanagement.”

It is certainly true to say that Kids Company closed on Wednesday because of a lack of money. But it is not necessarily true to say that financial mismanagement did not contribute to that.

Most charities have to deal with uncertain funding streams, so it is good practice within the sector to keep money in reserve for a rainy day. Most established charities – of which Kids Company certainly was one – hold reserves of at least three months in hand.

Kids Company did not do that. Its latest accounts show it had reserves of less than £500,000, despite having annual staff costs of £15m. It also ran at a small loss for the year. The situation is believed to have deteriorated sharply since then.

“In the past 19 years, we have passed every audit without trouble.”

This is not completely true. In 2013, the trustees of the charity admitted that cash flow was a problem and wrote: “The charity’s history of delivering the maximum possible charitable objectives with the resources available has often put a strain on the charity’s cash flow. The trustees are confident sufficient funding will be secured and are monitoring the situation.”

This lack of cash reserves made Kids Company uniquely vulnerable to a downturn in donations – which ultimately led to its downfall.

“We are completely overwhelmed by the numbers of children arriving at our door.”

This statement is impossible to disprove – but does need to be questioned.

The charity routinely described itself as supporting “more than 36,000 children, young people and vulnerable adults”.

However, it has emerged that 8,264 of these received no support from the charity at all and were merely at the same school as children taking part in group or one-to-one therapy sessions or activities.

The charity defended their inclusion on the grounds that the children benefited from the knock-on effects of helping their classmates.

“We have been the victims of a malicious campaign [to discredit us]. Elements of Government wanted us to disappear off the patch.”

Ms Batmanghelidjh has claimed that parts of the Civil Service were opposed to Kids Company and wanted to stop funding it because she was “outspoken on child protection”. There is no evidence to support this.

However, it is certainly true that some officials – and indeed ministers including Michael Gove – long harboured suspicions about whether Kids Company was providing good value for the money which Government provided.

Others, including David Cameron, were much more supportive – possibly fearing the damage that cutting funding would do to the Conservatives’ reputation ahead of an election.

“I can tell you from what they [the police] have discussed with me that there is no basis to the sexual abuse allegations.”

Again, it is impossible to know at this stage. But the police are under obligation – especially in the light of historical abuse claims – to thoroughly and openly investigate all allegations and this is what is now happening.

What also appears to be true, though, is that the very fact of the allegations – along with the criticisms of financial mismanagement – made it almost impossible for Kids Company to continue to raise the funds that it needed to survive.

The charity says without these allegations it would have been able to continue and to successfully restructure its operations.