Capping charity chiefs' pay would do 'irreparable damage' to the sector, evidence to MPs' inquiry says

Charities and sector figures give their views in advance of a hearing on the subject by the Public Administration Select Committee next week

Commons select committee hearing next week
Commons select committee hearing next week

Capping the pay of charity chief executives would do "irreparable damage to the sector" and risks further disadvantaging already underpaid women, according to written evidence submitted to the Public Administration Select Committee.

PASC is holding an inquiry into charity chief executive pay and will hear oral evidence from charity representatives next Tuesday. Sector representative bodies and a number of charities have shared wide-ranging views in their written evidence to the committee, which was published yesterday.

Jeremy Lefroy, the Conservative MP for Stafford, said in January that a salary of up to £100,000 should be sufficient to attract good candidates to senior roles in charities.

In written evidence to the committee, Simon Gerry, chief executive of Newcastle University Students’ Union, urged the committee to leave it up to boards to determine chief executive pay. "They are the best informed and best placed to make informed decisions, and have legal responsibilities to act prudently and in the interests of the charity," he said.

"Introducing artificial caps of any kind would do irreparable damage to the sector and the contribution it makes to social good and the wider society."

His evidence says there has been an improvement across the sector in terms of governance, leadership and charities behaving in a much "more business-like fashion" because leaders with the right skills, values and attitudes are attracted to charities.

Gerry, who joined the sector after working in the military and the Ministry of Defence, says the sector is too diverse to apply consistent rules to in terms of pay. He says from his experience politicians in Whitehall do not seem to recognise the complexities involved.

The Royal Town Planning Institute’s evidence says that chief executive salaries should remain within the control of trustees.

"It is increasingly being relied on to deliver core services on behalf of the public sector, is very active in research and is commissioned by the private sector to do work for it," the submission says. "Although they operate within charity law, charities are not these nice fluffy organisations like they maybe once were – they are multi-million pound businesses operating in the charity sector that are massively important to the nation emotionally and to the economy."

In its evidence, the Directory of Social Change points to what it calls "the same contradictory narratives" coming from government and MPs: "On the one hand the government has launched its drive towards pluralised and more localised forms of public service provision and has said that it wants charities to participate in this.

"Yet at the same time statements from some politicians, as part of this debate over chief executive pay, suggest that large and complex charitable organisations should (and could) be run for free, or that somehow charities should be able to attract the skilled leadership they need on a purely voluntary basis."

Women on Boards UK, an organisation for women seeking to leverage their professional skills and experience into board and leadership roles, says it does not support a statutory cap on salaries in the charity sector.

"We believe reducing the pay of chief executives in this sector would further disadvantage already underpaid women working in this sector, and would lead to a reduction in the calibre of the women seeking the chief executive roles with obvious knock-on implications," it says. 

WoB quotes the 2011/12 annual pay survey by the chief executives body Acevo, which reports a pay gap of 16 per cent between male and female chief executives in voluntary bodies, rising to almost 30 per cent for some roles.

Ian Jones, chief executive of Volunteer Cornwall, says in his submission that not all charity chief executives are on large salaries. He says he runs a charity with an annual turnover of £2m on a salary of £36,206. The ratio between his salary and the lowest paid member of staff is 2:5, he says.

"I do the job because I am a values-driven person," he says. "With qualifications including an MBA and experience in business in the UK and overseas, I could obtain income in a higher remunerated position but believe my time is better spent making people’s lives better and improving the communities in which they live," he says.

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