Funding issues more of a challenge for children’s charities than most

More charities supporting some of the most vulnerable children in society are on the verge of closure following the high-profile collapse of Kids Company.

An analysis of the income streams of children’s charities shows they are bearing a disproportionate share of the cuts as central and local government rein in grants and contracts to voluntary groups.

Figures supplied by the National Council for Voluntary Organisations (NCVO) reveal that between 2010 and 2013, the latest data available for analysis, government contracts and grants to all charities fell by 11 per cent, from £15.03bn to £13.317bn.

But for children’s and young people’s charities it fell by 18 per cent, from £2.860bn to £2.348bn.

Karl Wilding, director of public policy at the NCVO, said children’s charities were being hit hard because many offered services which councils were not obliged to fund.

“Because local authorities have been under so much pressure, they are cutting anything that they don’t have a statutory duty to provide,” he said.

Last month, Kids Company said it had “been forced to close as a result of the fact that it is unable to pay its debts as they fall due”. It stated: “Despite the heroic efforts of a group of philanthropists, and the promise of restructuring support from the government, there was not enough income from other sources for the charity to continue.”

But Nick Mason, who was recently responsible for fundraising strategy at RNIB, said it wasn’t just lack of government funding that was making charities vulnerable.

He said: “According to NCVO, £19 billion – nearly half of the sector income – comes from individuals.

“In the commercial sector, we see shareholder activism, and similarly there is a growing movement from individuals to want to be able to see what their donation is spent on. Implicit in that is the threat that the donor would stop the funding if they are not happy with the charity’s activity. The Kids Company story serves to highlight how quickly things can go wrong.”

In the past month, a number of other children’s charities have been forced to take emergency measures amid a mounting funding crisis.

Just for Kids Law, which provides legal representation for children, and the Children’s Rights Alliance for England, which campaigns for children’s rights, announced a merger to save money.

The British Association for Adoption and Fostering, which has been supporting vulnerable children for more than 30 years, closed saying “significant changes and economic conditions” had made it impossible to continue offering its services.

For more information on any aspect of charity finance, please contact Nicklin’s charity specialists.