[8][9][10] In February 2021, after a three-year case, Mrs Justice Falk in the High Court rejected the Official Receiver's assertion that Batmanghelidjh and the other trustees were unfit to be directors of a charity.
According to Batmanghelidjh, environmental factors can, ultimately, influence how children develop into adulthood through a type of re-wiring of the brain (neuroplasticity), for more positive outcomes in encouraging and caring environments.
[14] Writing in The Guardian, Peter Beresford, professor of social policy at Brunel University, suggested that Batmanghelidjh's belief that "parenting at an early age hard-wires children’s brains for success or failure, deviance or conformity" was "pseudoscience".
[18][19][20] Kids Company depended on the financial support of charitable trusts and businesses, as well as grants from central and local government, including the City of London.
[21] It received significant donations from businesses such as Credit Suisse, Morgan Stanley, and John Lewis as well as celebrities such as JK Rowling, Jemima Khan, and the band Coldplay (the latter giving £8 million).
[28][29][30] By 2015, Kids Company had expanded and had eleven centres, not only within Greater London, but also minor operational presence in both Bristol and in Liverpool, employing a total of 650 people.
[31] It provided a range of services to children, who in many cases were not being looked after by their parents, including counselling, hot meals at drop-in centres, and assistance with healthcare and housing.
[citation needed] The Independent has reported that 8,264 of the 36,000 did not receive any support from the charity but were included because they attended the same school as children taking part in Kids Company therapy sessions or activities.
[38] On 30 July 2015, the Metropolitan Police announced an investigation into the charity by the complex case team of its sexual offences, exploitation, and child abuse command.
[44] In 2013, a research study by the London School of Economics identified "limited and unstable funding" as a major source of stress and anxiety for staff and "a massive challenge for the sustainability" of the charity.
It also found that an increase in bureaucracy and excessive management could jeopardise the charity's effectiveness, and presented a challenge to its ability to sustain focus on the needs of its clients.
During his tenure as Parliamentary Under Secretary of State for Children and Families in the Department of Education between 2010 and 2012, Tim Loughton raised "serious concerns" about the grants being given to the charity.
[21] In 2011 the government seconded two civil servants to the charity for a year to assist its management team in apparent recognition of concerns about Kids Company's financial position.
[45] In July 2015, it was reported that the government had decided to cease providing £5 million in annual funding and, as a result, Kids Company would have to undergo restructuring.
[47] The government had written to the charity the previous month offering a final emergency grant of £3 million provided a number of conditions were met.
[5][55] The government grant was to have been matched by a private donation of £3 million, however, according to Batmanghelidjh, when the donor became aware of a police investigation into sexual abuse allegations at Kids Company it was withdrawn.
[6][7] Its inadequate cash reserves, compared to other established charities, left it uniquely vulnerable to a shortfall in donations and was the ultimate cause of its collapse.
[41][62][63] A NAO official said it was "unbelievable" that the money was handed over to Kids Company with "little focus on what it was actually achieving", Public Accounts Committee chairwoman Meg Hillier said.
[41][63] The NAO had reported in 2015 that Kids Company received public funding for at least fifteen years, with at least £42m provided in government grants, including £28m from the Department for Education and its predecessors.
[64] Civil servants had noted that other organisations "appeared to offer better value for money" than Kids Company, which had "a consistent pattern of behaviour" of writing to ministers to express fears of redundancies and the impact of service closures, while raising the same concerns in the media in a way that tarnished the reputation of the government of the time.