Analysis: Senior pay - a fair price for good leadership?

How much do the top UK charities by income pay their senior staff - and can the higher salaries be justified to a sceptical public? Andy Hillier and Tom Kenning crunch the numbers

Surveys consistently show that the public does not approve of high salaries for senior staff in charities; indeed, last November's poll of 1,000 people by the consultancy nfpSynergy showed that 33 per cent of respondents thought charity chief executives should not be paid at all.

From time to time this theme is taken up by politicians, as when Jeremy Lefroy, Conservative MP for Stafford, proposed legislation in January to remove charitable status from any charity that paid senior staff more than £100,000 a year.

Gina MillerSome in the sector take a similar approach. Earlier this month, the philanthropist Gina Miller (right) fanned the flames by saying there were too many "careerists" in charities, driven by six-figure salaries rather than the cause. She said the nation would be shocked if it knew how much donated money was "being used on someone's wage package".

Lefroy's proposal for a pay cap was given short shrift in the Commons by the charities minister, Nick Hurd, and Miller was roundly criticised by sector organisations, including the chief executives body Acevo. But how much are leading charities paying their top staff, and are the sums justified?

Third Sector has looked at the annual accounts of the top 150 charities by income, as listed on the Charity Trends website run by the Charities Aid Foundation, and created a list of the 100 charities that paid their top earner the most in 2011 or 2012 (see results). The study covers all registered charities - including those that are not normally considered part of the charity mainstream, such as quangos, professional bodies and universities.

The results reveal a wide variety, ranging from the charitable independent hospital that paid about £1m a year in 2011 to more mainstream charities and professional bodies paying between £120,000 and £130,000 a year.

Thirty of the top 100 earners were paid more than £200,000 a year and nine were paid more than £300,000. The mean average pay across the top 100 was £208,000 to £216,000 a year (a median of £165,000).

The two highest-paying charities were the London Clinic, an independent hospital in Harley Street, which paid one senior executive (who has now left) between £990,000 and £1m in 2011, and Nuffield Health, which paid its current group chief executive between £850,000 and £859,000 in 2011 (see "The top 10 charity payers", below).

Charities in the medical, health and science sectors were the most generous in the top 100, paying their highest earners a mean of between £481,000 and £489,000 a year (a median of £335,000). Arts organisations were the second most generous, paying a mean of between £308,000 and £315,000 a year (a median of £180,000).

Quangos, government agencies and leisure trusts paid the least - a mean of between £156,000 and £159,000 a year (a median of £163,000). General charities, which accounted for 41 of the 100, paid their highest earner a mean of between £159,000 and £168,000 a year (a median of £155,000). The averages should be compared with caution because of the large variations in the size of each group.

Ian JosephIan Joseph (right), managing director for charities and not-for-profit at Russam GMS, a company that specialises in providing interim managers for charities, thinks some of the amounts paid by the charities in the study are unusually high. "Each charity needs to be looked at on its own merits, but I think in the examples of a private hospital and Nuffield we have to ask whether they are really charities," he says. "I'm not saying that they are or they're not, but it raises a question about how you apply the public benefit test."

That said, Joseph has no problem with major charities paying six-figure salaries in general. "Senior executives have myriad stakeholder groups that they have to satisfy," he says. "They often have to generate income without selling anything and they have to manage a large number of volunteers. Running a charity is often far more complex than running a private business."

Viv Copeland, head of business at Croner Reward, which advises charities and companies on pay and benefits, says that, far from being profligate with salaries, charities are paying significantly less than other sectors. "Over the past decade, pay in the sector has moved closer to that of the commercial sector, but our research shows it is still paying about 20 per cent less to senior managers," she says.

Even in the current financial climate, Copeland says, charities need to pay competitive rates to attract the right staff. "The days are gone when you can get someone who performs well at a range of tasks, such as lobbying politicians, and rely on them to take a small salary on top of their commercial pension," she says. "You can't get people with the right skills nowadays unless you pay, because we're in a commercial market."

Acevo's most recent annual pay survey showed a lower median chief executive salary of £58,139: it was completed by 576 charity heads and 159 chairs from among its members, most of whom work for charities with incomes of less than £5m a year.

Ralph MichellRalph Michell (right), Acevo's director of policy, believes that, rather than reduce executive pay, charities need to make a stronger case to the public and their donors for the salaries they do pay. "There needs to be an element of education," he says. "We need to be clear about why we pay chief executives as much as we do."

- See Editorial 


1. The London Clinic

Highest pay: £990,000-£1m

Independent charitable hospital. Declines to identify staffer paid nearly £1m in 2011. Believed to be the former chief executive, Malcolm Miller, who stood down in September 2011. The current chief executive is paid £350,000-£360,000.

2. Nuffield Health


Runs health services, including hospitals and gyms. Highest paid is group chief executive David Mobbs. A spokesman says senior managers are well paid because "no other UK healthcare charity comes close in size or complexity".

3. Royal Opera House


Highest paid in 2011 was its music director, Sir Antonio Pappano. Spokesman says Pappano's pay is comparable with other international opera houses.

Wellcome Trust4. Wellcome Trust (right)


Funds medical research. Declines to say who was paid more than £600,000. Believed to be Danny Truell, chief investment officer and previously a managing director of Goldman Sachs investment management division.

5. St Andrew's Healthcare


Provides specialist mental health and learning disability services. Highest paid is chief executive Philip Sugarman. Spokeswoman says the charity has more than doubled in size under his leadership.

6. City and Guilds of London Institute


Vocational education awards body's chief executive and director-general, Chris Jones, is highest paid. A spokesman says Jones's salary was £250,000 a year in 2011 - the total included annual bonus, benefits in kind and travel and accommodation expenses.

7. The College of Law


Gave legal training and bursaries until sold to private equity firm in April 2012 and split into the University of Law and the Legal Education Foundation. Nigel Savage, now chief executive of the University of Law, was highest paid. Spokesman for the Legal Education Foundation says that Savage's pay was in line with that of similar legal organisations.

The Royal Society8. The Royal Society (right)


Promotes excellence in science. Highest paid is Andrew Mackintosh, chief executive of the Royal Society Enterprise Fund, a subsidiary that invests in science companies. A spokesman says his pay includes accumulated bonus and accrual for a future bonus.

9. Consumers' Association


Publishes Which? magazine and campaigns on behalf of consumers. Chief executive Peter Vicary-Smith is highest paid. A spokeswoman says it offers "competitive remuneration to attract the best talent".

10. The Institution of Engineering and Technology


Highest paid at the professional body for engineers is chief executive Nigel Fine. A spokesman says pay reflects its competition with the private sector for the best people.

- Download the full results

- Read other stories on charity pay by visiting our Big Issue

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