The financial problems, by way of insufficient reserves and a very high risk operating model, went back many years. The committee was very critical of the auditors for not sufficiently flagging the risk to the charity as a going concern. Other professional services firms who conducted reviews (at least one review was commissioned by a government department) were also criticised for failing to identify the risks inherent in the KC model, having applied heavy caveats to the ‘assurance’ they were willing to provide.
Unless you have worked at a community charity the above ^^ will seem surprising but it is honestly how most coal face charities operate.
It’s very rare nowadays for a charity to receive regular funding year on year. Most don’t know how they are going to fund the next six months. Well maybe the glossy ones do, but not those working with traumatised children, the homeless or the mentally ill. That may seem unprofessional but it is how it works if all of your funds are going to help people in need in the here and now. I’m always quite suspicious of charities that have reserves tbh!
The general public think that cheques and offers of business sponsorship roll in every month without much effort but that’s about as far from reality as it gets. Small charities are forced to apply for bid after bid and each of them have major strings attached. Honestly the process is tortuous and time wasting as most are turned down. It’s also a very precarious way to run a busy organisation and you spend more time stressing about finances and raising money and wondering where the next cheque is coming from, rather then spending that time with your clients!
I would say overall it’s a good sign that KC did not have a lot of reserves because it shows money was being directed to the end user as it should have been, and I think the official investigation revealed that the charity would have survived financially had the totally rigged and false allegations about sexual abuse not been publicised by dodgy journalists.