Charity leaders’ pay

ACEVO head of policy Kristiana Wrixon responds to the article published in the Daily Mail on the pay of CEO and senior leaders in the charity sector. 

On Saturday the Daily Mail ran an article on the pay of CEO and senior leaders’ who work in the charity sector. While I think the article is unbalanced and misleading, I do not disagree that the topic itself should be discussed publicly.

Charities are accountable to their donors, to the people they serve and those they work alongside. In 2013 ACEVO published the Good Pay Guide, which outlined the five principles of good pay. The first principle is transparency, followed by proportionality, performance, recruitment and retention, and process.

However, transparency is more than just publishing a list of numbers. As ACEVO said in its 2017 response to the Charity Commission’s consultation on changes to information collected for the Annual Return 2018: “Publishing senior pay could aid accountability and transparency if there is contextual information to go alongside it and the opportunity for charities to explain how they reached their decision. Without this, we do not believe it will aid transparency or trust.”

And the Daily Mail article lacks context. The writing and quotes selected are largely (unsurprisingly) sensationalised. I have picked out a few particular lines and quotes to go into more detail.

“Many charity executives earn more than the Prime Minister’s salary of £150,000”

There are over 168,000 charities on the Charity Commission register.  Of those, 82% have an income of below £100,000. 91% of charities are volunteer-run and of those charities which do have paid staff, the average CEO salary is £52,000 per year.

According to the NCVO Almanac, there are 657 charities with an income of between £10m and £100m and 51 charities with an income of over £100m. The charities that have the capacity to pay salaries of over £150,000 make up less than 0.5% of registered charities.  This matters when the comments section of the Mail’s website  is filling up with people saying “This is why I do not pay into charities.” If you disagree with large charity pay, at the very least be clear about how many people you are referring to.

“When we put money in a box for a good cause, it is without realising how much of the money is being used to fund the enormous, eye-watering pay rises for bosses of these organisations.” David Davies MP

There is an assumption in this quote that charities are trying to mislead the public about senior pay. Charities are legally obligated to submit their annual accounts to the Charity Commission, which then publishes it on the Charity Commission register. For some time charities with an income of over £250,000 a year have had to disclose a breakdown of employees paid above £60,000 in bands of £10,000. At no point does the Daily Mail article link to the Charity Commission register or acknowledge that information about senior pay (in £10,000 bands) is freely available.

Many charities also go beyond their legal obligations, making information about their senior leaders’ pay available on their own website.  For example, the salary of Simon Gillespie, CEO of British Heart Foundation, who was referenced in the article is published on BHF’s own website alongside its executive pay policy.

“I would like to see at the point of giving, whether that’s in the street or online, every charity clearly display the percentage of every pound which goes to the good cause and what goes to administration.” Andrew Bridgen, MP for North West Leicestershire

As Clic Sargent CEO Kate Lee eloquently laid out in a blog earlier this year, judging charities by comparing pennies-in-the-pound spent on frontline is not helpful.

The general assumption that CEO pay is not part of the ‘good cause’ is incorrect. Charities exist for the public benefit, our money has to spent on achieving that public benefit, and this means staff costs, including CEO salary. Would any large charity be able to operate more efficiently, achieve greater public benefit without a CEO or senior leadership team? If the answer is no then we must accept that CEOs are not ‘administrative,’ they are part of delivering public benefit.

The public expect all charities… to demonstrate they are spending every penny wisely. We are now looking closely at senior pay in charities.” Helen Stephenson, CEO, Charity Commission

Third Sector and Civil Society have subsequently both reported that the Charity Commission plans to publish a report on senior pay in charities after it has received data from most organisations by October 2019. The Commission has also reportedly said that where necessary, it would take regulatory action against individual charities. We were not aware of plans for this report but will be seeking a meeting with the Charity Commission to discuss it.

In the 2017 consultation document on changes to the Annual Return 2018 the Charity Commission said:

“The Commission wishes to make clear that it does not have the intention of intervening in a charity simply because a salary is within a certain band. It will continue to operate in accordance with its risk framework and look at all the circumstances of a charity before considering whether or not any other steps should be taken.”

I hope that the Charity Commission has not changed this approach. As well as contacting the Charity Commission, ACEVO will also contact the office of the two MPs quoted in the article to request a meeting to discuss their concerns, and make contact with the journalist who wrote the piece.

While I believe it is unhelpful to use the 0.5% to make statements about the 99.5%, I also believe the salaries of the 0.5% are neither something the sector should automatically feel ashamed of nor hide behind the 99.5% to justify.

Charity is a broad term used to describe charities of all sizes and scopes. It is for the board and executive team to ensure pay is set ethically, in line with the charity’s values and with consideration of the five good pay principles, transparency, proportionality, performance, recruitment and retention, process. In the rare case of misuse of funding or inappropriate pay then regulatory action should be an option.

Charities need the support of our regulator and of funders, especially those with a particularly high profile like Children in Need and Comic Relief, to dismantle the intertwined assumptions that staff costs are administrative costs, and that high salaries are synonymous with inefficient use of funding. One of the reasons I think this argument keeps occurring is that the sector defending staff costs inevitably looks like self-interest. This is a complex issue but one all those connected to civil society must be able to articulate clearly if want to see more accurate reporting on issues affecting charities in the national press.

Photo by AbsolutVision on Unsplash

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