The British charity sector is a huge industry, taking in £60 billion a year in revenue. So on one level it’s not surprising that, in a survey this week of the top 150 charities, 32 executives were found to have had salaries last year of over £200,000, up from 30 in 2013. And 12 people were paid more than £300,000 a year, up from nine the year before.
Someone has to run them, and with such huge revenues — far bigger than many small businesses — it’s no wonder that charity CEOs can take home more than private-sector bosses.
The glass-half-full way of looking at these figures is that the sector has grown so large that it must, by definition, be well run — and that these executives clearly deserve every penny. But what if the glass is really half empty? Who says that they’re well run, and that the CEOs merit such huge salaries?
Certainly not the chairman of the Charity Commission, William Shawcross, who has made clear that some charity CEOs don’t seem to realise that they’re not the same as private sector bosses. As he put it in 2013: “In difficult times, when many charities are experiencing shortfalls, trustees should consider whether very high salaries are really appropriate and fair to both the donors and the taxpayers who fund charities.”
Charities are different from other businesses. They don’t, for one thing, have shareholders or owners to justify their spending and remuneration to. They have trustees, who are often voluntary and may not keep executives on their toes.
Whenever it’s revealed that charities have been handing over these small fortunes to their employees, up pops Sir Stephen Bubb, CEO of the Association of Chief Executives of Voluntary Organisations, to trot out the line that large salaries are needed to attract the necessary calibre of CEO.
Well, they might be. But it might also mean — as it does when the same line is trotted out to justify exorbitant BBC, local government and quango salaries — that corporate governance has broken down.
The charity sector has welcomed the call by a cross-party committee of parliamentarians for government to address the difficulties posed by current terrorism legislation on charities delivering overseas aid.
The report says there are two main difficulties for charities working in overseas aid. The first is that the law does not give aid charities confidence in how much interaction they can have with proscribed terrorist group without falling foul of the legislation, especially if that group operates as a so-called “gatekeeper” without whose consent a charity cannot access a certain area. The second is that banks are taking “a risk-averse approach” to charities they thought might fall foul of such rules, making it difficult to finance aid operations.
Speaking to Third Sector, Lord Hope of Craighead, the crossbench peer who chaired the bill committee, said he was aware this issue was beyond the scope of the bill, but said: “This is something that goes right across the whole business of the legislation on terrorism, but we’re trying to open the door, as it were, to some kind of consideration as to whether or not this should be addressed.”
Ben Jackson, chief executive of Bond, welcomed the recommendations.
“Our members have to negotiate with gatekeepers in places such as Syria and Somalia to alleviate suffering, but we cannot do this with our hands tied behind our backs,” he said.
“A dialogue is developing between Bond members and the government on the impact of anti-terrorism legislation and we look forward to discussing the committee’s recommendations as part of this.”
The charity leaders group Acevo, the National Council for Voluntary Organisations, and Jo Coleman, a partner at IBB Solicitors, who chaired the Charity Law Association’s working group on the draft bill, also welcomed the recommendation. Sir Stephen Bubb, chief executive of Acevo, said the Charity Commission should provide guidance on charity work in warzones.
The launch of Navca’s report on the future of infrastructure was a chance to observe the chemistry, if any, between the former charities minister Nick Hurd and the incumbent, Rob Wilson.
The two stood far apart, exchanging barely a word, and Wilson’s speech opened with a reference to his predecessor that had a generous if somewhat exasperated note: “Everywhere I go, people tell me what a fantastic Minister for Civil Society he was.” On the theme of former ministers, Brooks Newmark was spied in parliament that day, taking a break from battling demons by giving local schoolchildren a tour before he stands down as an MP in May. No selfies please, kids.
Much righteous huffing and puffing, vigorous nodding and spontaneous applause at the launch of the final report of the Panel on the Independence of the Voluntary Sector, where derision was of course heaped on the lobbying act. Lord Hodgson, recently tasked by the government to review the new law, took it in his lengthy stride. “I’ll invite you to kick me later,” he quipped. There was also some baffling advice from Sir Stephen Bubb, chief executive of the sector leaders groupAcevo: “We need to avoid too much navel-gazing, and we need to avoid showing our navel to the public.” What can he mean?
In January, the department announced that Shawcross had been reappointed for a further three years to the post he has occupied since October 2012. That same day Sir Stephen Bubb, chief executive of Acevo, wrote to the Cabinet Office expressing concern that the reappointment had been done “on the quiet” and asking whether the correct procedures were followed.
Bubb asked five questions about the process, including whether it was conducted in accordance with the Code of Practice for Ministerial Appointments to Public Bodies and whether any other candidates were considered.
Sir Jeremy Heywood, Secretary of the Cabinet and head of the civil service, responded to Bubb on 4 February, saying that due process had been followed.
It is inappropriate for charities to declare information such as chief executive pay and political affiliations in their annual accounts, according to Sir Stephen Bubb, head of the charity chief executives body Acevo. Speaking at an Institute of Fundraising event, Bubb said the sector was at risk of getting stuck in the “transparency trap” and was becoming timid in the face of its enemy. On chief executive pay, he said, the sector should be “robust around what we do and not adopt the accountancy approach”.
Commenting on ThirdSector.co.uk, Catherine Demetriadi said: “After charities have met their statutory obligations, what they should then reveal must be like good journalism: decide what information is important, tell the unvarnished truth about it and then say why it is important. Information alone is never of any use unless it is placed in context.”
James Kirkland said: “Self-interested bodies like Acevo aren’t well placed to make the case; it must be made by vocal trustees who genuinely understand why they pay the salaries they do.”
Angus304 said: “Transparency is essential in the third sector, because many charities are operating in a not dissimilar way to large businesses. I am not against charities as a whole, but I think the third sector has got out of hand.”
CAF Bank have announced that members of Acevo, the charity leader’s network, can enjoy special loan discounts for their organisations as part of a new partnership.
Acevo members’ charities will receive a discount of 0.25% on CAF Bank loan rates for the initial 12 months from the commencement of the loan. Loan rates are negotiated individually for each proposal submitted and subject to accepted application and credit assessment.