Sector umbrella bodies have reiterated the complexities of chief executive pay, in response to a former minister’s calls for charities to have a “significant justification” for paying bosses more than £80,000.
In a recent report by The Telegraph into charity executive salaries, Rob Wilson, the former minister for civil society, argued that overpaying charity chief executives could “severely erode” public trust.
"The implications of paying the chief executive too much is that it severely erodes public trust in charities as a whole and is very detrimental to the many thousands of small charities who are working hard on behalf of communities day in, day out, up and down the country,” he said.
Wilson added that charities should be “very, very careful” about their chief executive’s salary, and be able to justify it to the public.
Charity Commission chief executive Helen Stephenson also said that charities needed to get better at explaining senior pay packages.
“All charities should be able to look donors and volunteers in the eye and say how their decisions about pay impacts on the cause they pursue or the people they help. How it helps them be a better charity,” Stephenson told The Telegraph.
Responding to the comments, Danny Curtin, chair of the Association of Chairs, said that high salaries in the sector are the exception, pointing out that 80 per cent of charities employ no paid staff at all.
“Charities do important and varied work, including running life-saving services, operating in dangerous places or leading cutting-edge research to cure disease. It is essential that they have the right people to operate well,” Curtin said.
“The key role of the chair, and the other unpaid volunteers who lead the charity, is to balance setting a fair salary to attract someone who will be effective with achieving the most they can with the charity’s money.”
Sarah Vibert, interim chief executive of the National Council for Voluntary Organisations, agreed that the extent of high chief executive pay in the sector is relatively small.
“Among over 160,000 voluntary organisations in the UK, there are a tiny number of outliers that pay higher salaries, with the vast majority relying on the dedication of volunteers to deliver their work,” she said.
However, Vibert stressed that transparency was important, adding: “At NCVO we encourage all trustees to make sure they have a clear process for working out a fair salary and are transparent about the reasons behind their decisions.”
A working group set up by the NCVO in 2014 recommended that charities should publish the pay details of their highest-paid employees.
However, Third Sector’s 2021 charity pay study, which found the highest salaries paid by the largest UK charities had grown steadily in recent years, found almost two-thirds of the biggest-paying charities were not publishing the details in their annual reports.
Responding to Wilson’s comments, Ben Wittenberg, director of development and delivery at the Directory of Social Change, told Third Sector that isolated examples comparing the pay of individual chief executives to the number of staff they oversee, or the income of their organisation, are simplistic, and rarely the sole factor in determining what the organisation’s chief executive is paid.
“The complexity of a particular organisation, or the technical skills and expertise required to lead it, are often the more important factor – especially for some of the ultra-specialised or multinational charities, where the pool of potential candidates with the requisite skills and expertise is small.
"Unless you have a lot more information about a specific role, it’s impossible to form a sensible opinion on what level of salary is too much, or not enough,” Wittenberg said.
“Rather than 'justify their pay to the public', I think trustees need to be able to justify their processes, and demonstrate to their donors, beneficiaries and the wider public that they came to the decision they did in an open, clear and justifiable way – and stand by it publicly.”
Caron Bradshaw, chief executive of the Charity Finance Group, said trustees should enable others to ask questions through annual reports and financial disclosures.
However, she said: “I challenge the notion and narrative that those leading charities – who bring the same skills, time and value to their roles as their counterparts in the private sector – should be paid significantly less or impoverished, simply because they are trying to deliver public good.”
“Ultimately, it is up to trustees to be clear about the value that charity leaders bring and what level of remuneration is reasonable. And based on open discussions, it’s up to the stakeholders and supporters of those charities to decide whether those justifications are reasonable or not.”
The Charity Commission shelved plans to publish a report into executive pay in the voluntary sector in January.