Kids Company: Shouldn't charity give money to the poor?

It might seem redundant to ask and yet there are many organisations, registered as charities, who don't

Clearly in the current economic climate, there is such a need. So what did Kids Company do wrong?

It was a "malicious discrediting campaign" according to their founder. I tuned into this because it had happened to us too. Our antagonist had even gloated at the death of our founder who refused to give up on those most vulnerable.

The primary focus of our own work as a social enterprise had been children in need, albeit mostly overseas and there have been times when the immediacy of a charitable contribution has been necessary in the face of an urgent need. A child needing cancer treatment, for example.

Yet as we argued in the 1996 paper describing a social purpose business, communities where poverty is endemic can create sustainable wealth flows by creating a business which uses profit to help stimulate the local economy.  

"In Chapel Hill, North Carolina, for example -- where P-CED was born in 1997 -- multi-millions of dollars are donated each year to charities, after which the money is typically given away, spent, and gone. Two churches adjacent to the university campus recently raised in excess of four million dollars to improve their buildings. (As a counterbalance, a third church chose to forego its own plans for a building and donated its entire building fund to a badly-needed support program for the elderly.) If twenty percent were set aside to fund a "P-CED enterprise", that money would never go away, but would instead grow as it should in business."

"With an initial P-CED business enterprise set up in a given community, it becomes possible to bring people into the fold, so to speak, of the Information Age. No existing company need change anything whatsoever about how it does business. New web development, software development and information management enterprises, for example, can be set up quickly for extremely low seed capital outlays. Existing businesses who need web/software development and management services can have their business readily enhanced for costs that are relatively insignificant compared to increased viability and long-term profitability of entering into a much broader marketplace--without a brick being laid. The design firm wins, the existing business wins. Most importantly, the community-at-large wins by way of decreased poverty and unemployment, since the design firm's profits for the most part go back into the community--for adult education or retraining, high-tech head start programs for underprivileged children, seeding new small businesses, and social relief. Along the way, the design firm's employees benefit from good wages, profit sharing, and normal benefit packages. Well paid employees in effect produce, inevitably, highly desirable social and community outcomes. In short, everyone benefits. In that this new enterprise effectively becomes a primary node and locus of much-needed information for the community, it is appropriate to seek seed capital to start the enterprise from traditional development and aid funding sources. The result is a self-sustaining and self-perpetuating enterprise that feeds on the very need, or demand, for resources that hampered the community and its people to begin with."

On the other hand I chair the board of a small charity and know that business can't or perhaps won't serve the needs of thos who fall between to cracks.  

There are criticisms levelled at the extravagance of some donations. Yet we saw far greater generosity  in the use of government funds when it came to bailing out the banking system.

Could it be that Kids Company embarasses government by highlighting the extent of poverty, due to inept govenrment policies.

It was a Labour government in 2004, who were warned of the risks:

"While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. "

It  came of course, in 2011 as did the 'Arab Spring'.

In 2003, prior to our focus on poverty in the UK we'd been in Crimea where we'd argued the case for stimulating wealth in a disenfranchised community:

"It is not enough to merely give people the things they need to survive. This will work for a short time, but is not a long-term solution. There is an old saying: give a man a fish and he can eat for one day. Teach him to fish and he can eat for a lifetime. Giving people enough to live today may be enough for today, but it is not enough for tomorrow. Helping and teaching people to make a living, sustain themselves and their families, is in fact the only long-term solution to the problem of poverty. Further, for the first phase of economic development or economic recovery of any location, it is also possible to create an ongoing source of the critical funding needed to get the job done. Capitalism and market economy comprise the best economic engine ever invented. Assisting poor communities in developing their own markets is now meeting growing acceptance as the best way to go to alleviate poverty. The profit motive, integral to capitalism and market economics, is the driving force for successful economies around the world."

This however, was business where community came before shareholders. 

"In all cases, a certain amount of outside funding is needed to get things started. I proposed a strategy for this starting phase: at least one enterprise in a community, the function of which is to provide profit to be used in the community to grow more businesses. Most of the net profit from this community-funding enterprise would be placed into a community development fund such as a credit union. The balance of profit is invested into the business for growth. The community fund is then used by people who have most need, rather than the conventional practice of returning the money to the pockets of only a few people. Those few people tend to become wealthy to the point that they do not actually need more money, while many people in any given community probably do need the money. In this regard, this strategy of directing profits for use by people who have the greatest need might be called 'social capitalism.'"

Bringing this model to the UK in 2004 as a company Limited by Guarantee, we'd argued:

"Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case."

The response from politicians , government departments and third sector support organisations was all too often "not invented here" or no response at all. The APPG on social enterprise simply didn't respond, for example. I later wrote to their chair, who by then sat comfortably at the head of the Social Enterprise Coalition.

"Dear Baroness Thornton,

I write having entered into discussion with Jerr Boschee who responded with some advice regarding the difficulties I have encountered in attempting to promote a Social Enterprise initiative within the UK. He mentioned your name as a possible contact."

"Having approached many organs of government with out aims in the last few months, the response has ranged from indifference to open hostility. This includes the Social Enterprise Unit, The APPG on Ukraine, APPG on Microfinance, DfID in Ukraine and not least my own MP Tom Cox who serves as secretary on the APPG for Ukraine."

After a decade, that letter to a member of the House of Lords remains unanswered. Yet the cooperative movement which she represents have recently embraced people-centred business wholeheartedly.

Inclusive Capitalism: A New Bottom Line

According to Oxfam CEO Mark Goldring, speaking of Inclusive Capitalism, people should replace profit as the bottom line in business. 

"We have somehow constructed a sphere of public debate where people are secondary to numbers; where the well-being of millions is too often secondary to the economic indicators.

Tackling inequality requires that people, not profit constitute the bottom line. We need everyone who is in a position of influence - business leaders, financiers, politicians, civil servants - to put the interests of ordinary citizens back at the heart of every decision he or she makes."

It's difficult to disagree with that because that's precisely what I publised several years ago on Mixmarket with the title "Re-imagining Capitalism: The New Bottom Line"

It included paragraphs from the work we'd given to the government of Ukraine, There was no fee, just one condition, that they do someting to tackle the issue of  children in 'Death Camps'. 

'This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '

It was only last year that I wrote an open letter to the City of London Mayor, pointing out that what she was writing about Inclusive Capitalism had in fact been published 10 years earlier as a business plan to tackle poverty in the UK.  

"If too many people remain or become marginalised, they are less likely to be enfranchised, empowered and effective as workers and citizens, rendering them unable to make an economic contribution at best, and resulting in civil unrest at worst. Everything a firm does from the very top to the very bottom should demonstrate on a daily basis our desire to see a stronger, better evolution of capitalism. "

Really? So why aren't they engaging with practitioners?

Civil unrest was well and truly underway, as I made one last effort to leverage support for our work in Ukraine, passing a letter from Maidan friends to our own MEPs.