Charities go under every day, and we would argue that this isn’t always a bad thing. Nevertheless the demise of the children’s charity 4Children this week has come as a bit of a bolt from the blue.
There is often endless coverage and analysis that results from high-profile charity failures—such as the months of articles and discussions that followed the Kids Company collapse. This may appear to some to be just a way of commentators milking a story. Or perhaps just a bit of good old fashioned schadenfreude. But it’s really just the sector trying to make sense of what went wrong, and to learn from it.
So what do we know?
4Children was a high profile charity with a decent turnover—a lot of which seemed to come from sound contracts to run children’s centres and other services. It’s tough even if you’re just doing contracts, let alone if you’re also trying to influence policy, which 4Children focused on in its early days and continued to do so over the years. But it had a good track record, funding from government (not least as a strategic partner of the Education department) and social investment from Big Society Capital. It also benefited from a prominent, long-serving CEO who left only a year and a half ago to take the prestigious job of Children’s Commissioner for England.
The charity seems to have done what it could to close in a way that did minimal damage to its beneficiaries and staff. Another children’s charity, Action for Children has taken on a lot of the contracts and staff, with local authorities and other providers picking up some of the rest. But still, some of its services are closing without rescue—causing a lot of upset, judging by some comments from parents—suggesting not all planning was seamless.
And more importantly—what don’t we know?
We don’t know exactly what happened to cause 4Children to close, nor why. Rumour is naturally flying, not least because official announcements about the closure are rather Delphic. Some feel that if a decent-sized charity can’t survive in the public service markets, then who can? Maybe that is the lesson—but maybe not.
Chances are that the failure of 4Children was unavoidable and just one of those things—perhaps triggered by factors and events out of the charities’ control. But it may be that the demise of 4Children reflects poor decision making, or governance taking its eye off the ball, or a charity that expanded too fast, or technology failing, or a whole host of other things. It may also be a sign of the times as local authorities and other public sector bodies really feel the financial squeeze and are now putting out contracts that charities (and others, including private companies) just can’t deliver good services on while surviving financially.
We just don’t know.
What we need to help the charity sector learn from this type of failure is some kind of no-blame, post-demise inquiry and report. We need to be able to understand what happened and why so we can avoid making the same mistakes in future.
Of course there are always tricky legal issues lurking around a charity closure that make this difficult, and might circumscribe exactly what can be said and when it can be said.
But if we, commissioners and the voluntary sector alike, don’t learn from charities’ failures—as well as from their triumphs—then we are doing ourselves and our causes no favours whatsoever.