Reports have swirled over the past week that the UK Insolvency Service has earmarked Kids Company founder Camila Batmanghelidjh – along with her board colleague at the failed charity, Alan Yentob – for disqualification from directorships. The watchdog is also said to be mulling the same sanctions for the charity’s former trustees.

Kids Company’s 2015 collapse raised broader questions among management experts about the quality of governance at charitable and third-sector organisations, and these latest reports indicate that those questions are unlikely to fade anytime soon.

The former trustees have mounted a staunch defence of their work, saying in a statement: “There is no suggestion that we acted dishonestly or in bad faith. As far as we are aware, there has never been a case where trustees of a charity have been disqualified by a court in circumstances such as these.

“We acted diligently throughout, and if any proceedings are brought [we] will defend ourselves vigorously. What happens to us could have serious implications for the thousands of other trustees who want to do charitable work in this country.”

These are undeniably high stakes – so what does the long, rumbling aftermath of Kids Company’s failure say about the governance challenges at large in the charity sector? And under what circumstances should it become absolutely necessary to disqualify a director?

“Rather like those head teachers who suddenly became principals or CEOs of multi-academy trusts, I think that many people who become trustees or directors of a charity do so because they’re passionate about the sector it’s working in,” says The Institute of Leadership & Management's head of research, policy and standards, Kate Cooper. “They then find themselves in a position where they’re no longer doing the charity work, and where that’s not really their remit anymore. Their remit is now to ensure that the organisation is governed correctly. And I think that people who take up these posts for entirely positive reasons – as I believe was the case for those who worked at Kids Company – go on to face a huge training gap, because the job they end up doing is not the one they signed up for.”

Cooper explains: “Management training provides people who find themselves in accidental leadership roles with the ability to look after themselves. It’s not just about protecting the assets of the charity, or the vulnerable people that it’s seeking to support and help. It’s about protecting the people who give up their time – often without pay – to be trustees, and to do good. The last thing a charity wants is for those individuals to be totally compromised, because they weren’t sufficiently prepared for the complexity of their roles to execute them properly.”

She adds: “You disqualify a director certainly if they’re fraudulent or if they thieve – but also if their actions, whether financially motivated or otherwise, damage the reputation of the organisation they’re representing. That’s increasingly understood in the job market, because while there may be demands for greater transparency and accountability in public-sector organisations, apps such as Glassdoor are also doing a very good job of ensuring those values prevail at for-profit organisations.

“The key to sweeping away clouds of suspicion is for charity chiefs and their management staff to have a full understanding of the responsibility and the burden of leadership. That’s not something you’re born with – it’s something that you have to study and acquire, and give energy, time and commitment to.”

For thoughts on how to manage your team’s wellbeing in high-workload situations, check out this learning item from the Institute

Image of Camila Batmanghelidjh courtesy of Twocoms, via Shutterstock