Are senior charity leaders paid too much?

This article was first published in the Yorkshire Post on 27 August 2013.

A response by Judy Robinson to the current debate around charity leaders’ pay: 

“The current debate, especially in the national press, about charity leaders’ pay seems to create more confusion than clear thinking. It veers between a view that charities have to compete in the market place so pay has to reflect this fact and an idea that they are all fat cats taking money away from good causes.

In many cases, the big charities provide services commissioned by Government and local authorities and with complex contractual requirements. You need people with high levels of skills and experience – and that has to be paid for. After all, if something goes wrong it will be no good saying it was the fault of incompetent amateurs if that’s all you’ve been willing to pay for!

And yet I still worry because it’s more than an argument about money; it’s about what’s at the heart of charities and society too. It’s more than what some of the large charities are saying – we  have a remuneration committee of trustees to decide pay rates, it’s all done independently so it’s all above board and transparent.

There are two particular worries. First, we do need the right people with the right experience to run social businesses and this has to be properly rewarded. But they are still charities, so their senior leaders need a strong connection to people, for example, in charity shops, the fund raisers and the local branches. They need to really get the sense of freely given commitment and, sometimes, the personal experience of suffering or loss that can drive this activity and often is the origin and life blood of the charity. This understanding and empathy is critical. The young-ish, highly business qualified, professional charity exec and the old-ish, highly life experienced volunteer must relate to each other positively.

I guess though that one of the causes of this potential distance is that some big charities can look more to contracts or commercial sponsorship than to their members and supporters at the grass roots.

Second, I think attention needs to be paid to another gap-that between the pay of the person at the top and the lowest paid employee.  Important questions need to be considered:  Is the charity paying the Living Wage?  Is it using zero-hours contracts, and yet paying big top salaries? It seems to me that if you say you want to make the world a better place, you must make sure what you demand outside is not contradicted by practises inside.

It can be done. In one local authority, they have increased the pay of their minimum wage employees to the Living Wage by top slicing the pay of the people at the higher end. At the Joseph Rowntree Foundation here in Yorkshire, close attention is paid to that all important ratio between top and bottom (1:11, whereas FTSE private sector companies average 1:262). In addition, all staff, including care workers, are paid at least the Living Wage.

But this argument goes beyond the detail of pay rates and structures-as important as they are. When the BBC was criticised for its high salaries and severance packages it was argued that working for the BBC was not the same as working for a commercial channel; it was a unique position and offered an opportunity for public service, a reward in itself. Now, some of this criticism was using pay as a cover to make a more general case against the BBC – and I don’t rule this out in terms of the criticism of charities too, but there is something in the idea that service and vocation are still important.

The founders of many of our best known charities were people of faith-they had a sense that there was a moral demand on them to take action. Of course what you do as a philanthropist is not the same as running a multi-million pound organisation, but founding principles still matter.

It is important to point out that the vast majority of charities, especially at the local level, are modest in their pay rates-indeed many have reduced staff working hours and pay so they can survive and continue to provide their services.

I welcome the announcement that the Charity Commission and NCVO are going to look at these issues. I think it will need to go beyond the pay issue alone. Come to think of it, maybe other sectors could also look seriously at the growing gap between top pay and low pay because that impact is just as worrying for our society’s well being.

What do you think? Are senior executives paid too much or are the payments justified?

Which is more important – actual wages or wage ratios within organisations?

Please do share your comments and thoughts below.