Kids Company received at least £4m from local authorities and lottery bodies, according to a Public Accounts Committee (PAC) paper.
Published today, the report into the Government’s funding of the recently closed charity also revealed that 1,900 case files have been passed to local authorities, with £200,000 being paid by the cabinet office to help councils deal with the extra burden.
The children’s charity was founded in 1996 and has, according to the PAC, received £42m from central government departments.
The funding was overseen by the department of education until 2013, when it was passed on to the cabinet office.
After March 2013, the report found, government funding was through non-competitive, direct grant awards as Kids Company no longer met the criteria and quality standards for competitive grant funding schemes.
In 2015, despite warnings from the cabinet office that further funding of the charity would not provide value for money, ministers still paid £3m to support the restructuring of Kids Company and secure its long-term sustainability.
This was on top of an earlier grant of £4.3m for 2015-16, and was paid just a week before Kids Company closed on 5 August.
The report describes as "staggering" the fact that the Government paid so much money over 13 years "and still has no idea what it was getting for taxpayers' money".
The committee concludes there was insufficient scrutiny of what Kids Company was delivering and, in treating the charity as a special case, government missed opportunities to help other children.
It also claimed funding decisions were not based on evidence and accounting officers across government failed to stand up to ministers.
The PAC report lays out a number of recommendations for the Government:
• The government should conduct a fundamental review of how it makes direct and non-competitive grants to the voluntary sector, and develop a register of such grants.
• It should improve the way it monitors and evaluates the performance of grant-funded organisations, and ensure they have robust and transparent mechanisms for measuring their own performance.
• It should not provide or appear to provide funding commitments without referring the funding request to the appropriate funding department.
• If the government decides to use special powers to grant funding, it should provide a transparent case for its decision and report regularly on the use of these powers.
Meg Hillier MP, chair of the PAC, said:
‘The case of Kids Company will anger many people. The charity was passed around Whitehall like a hot potato, with no one willing to call time on spending millions of tax pounds for uncertain outcomes.
‘The lack of scrutiny over its funding was staggering. Fairness and value for money - fundamental values when considering public spending - appear to have been forgotten in repeated and ultimately doomed attempts to keep Kids Company afloat.
‘Even after civil servants finally refused to agree additional funding, ministers 'took a punt'. The final £3 million of public money was handed over just a week before Kids Company closed. Payments during the charity's final months alone totalled more than £7 million.'
‘The faith that things would improve when they didn't was naïve. So many other charities did not get the same support and it is clear that Kids Company received special treatment - to the detriment of other deserving charities around the country’, she added.
