To obtain a copy of the full report, call Charity Rewards on 01785 813566 or visit www.reward group.co.uk. The report costs £295.
The latest survey of voluntary-sector pay shows organisations are still failing to keep pace with the public and private sectors. But the wider the gap grows, the harder it will be to attract and retain the best staff.
Charity employees may work for love as well as money but a salary survey published this week suggests the pay gap between them and people in similar jobs in the public and private sectors is in danger of becoming a chasm.
Voluntary-sector staff can now expect to earn up to 25 per cent less than the national averages for similar jobs. In London, where many charities are based, the figure rises to 29 per cent.
The statistics, compiled for the 13th consecutive year by The Reward Group, suggest the voluntary sector is losing the battle to compete with the public and private sectors in attracting high-calibre staff and that the rhetoric of charity professionalism isn't being backed on the bargaining table.
Vivienne Copeland, director of The Reward Group, admits the figures are a cause for concern particularly at a time of low unemployment and therefore fierce labour market competition.
"I was quite surprised by the results, particularly since the charities we talk to often say 'we have to be run more like a professional business and pay salaries that reflect this',
she says. "They might be trying to close the pay gap but they aren't managing to do it."
Following a 3 per cent average pay rise in the year to June 2002, the average sector wage is now £22,660. While 3 per cent is in line with basic increases in the private sector, charities are falling behind because in general they fail to match additional awards such as performance-related pay or above-the-rate salaries for exceptional new recruits. "Charities find it difficult to say one person is worth more than another, whereas in the private sector they tend to pay what they think an individual is worth, even if it means breaking the wage structure,
Perhaps the most worrying aspect of this year's survey is that the pay gap has widened at all levels of the workforce. Chief executives, who on average earn 25.3 per cent less in the not-for-profit sector, fare the worst. A chief executive considering a move to the voluntary sector in London has to factor in a near £23,000 hit in salary (£80,448 compared with £57,783) and expect to earn less than directors. There are other startling discrepancies: a senior manager of a charity earns barely £220 more than a middle manager elsewhere (£30,000 to £29,782); a senior manager in London contemplating a switch to the not-for-profit sector has to budget for a shortfall of almost £10,000 (£40,424 to £30,775).
The negative impact of these inequalities is already being felt, according to Clare Smith, director of human resources at the Leonard Cheshire Foundation, the UK's largest care provider for people with disabilities. "The recruitment market is exceedingly difficult and has deteriorated over the past year,
she says. "Trying to attract care staff is particularly difficult. There just aren't enough good people out there. We're also beginning to find it very difficult to recruit at senior director level and I know others are too."
Olga Johnson, chief executive of Charity Recruitment, agrees the voluntary-sector job market is tough but added it wasn't entirely due to market forces. "Some of our charity clients simply aren't willing to pay the going rate,
But according to Janet Cummins, chief executive of recruitment specialists Charity and Fundraising Appointments, which co-publishes the survey with the Reward Group, the picture isn't as bleak as it might first appear.
"For very senior people we don't see any signs of the market diminishing and we never have any problem recruiting top level chief executives,
she says. "There is a large pool of talented people for whom money is not the driver."
Neither does Cummins accept lower wages means poor voluntary-sector leadership.
"In many ways, the management of the voluntary sector is probably better than other sectors. And if you could employ good people without having to pay 28 per cent more what would you do?
Perhaps it reflects well on charities that top salaries average a modest £52,929. "I don't think there's such a thing as a fat cat salary in the sector,
While the picture is muddied at the top end of the salary scale there is a consensus that middle and junior management recruitment is feeling the pinch. "There is a problem in lower levels when you have high employment, such as now, combined with a skill shortage,
admits Cummins. "Whether it would be solved by higher salaries is a moot point."
Charities do score favourably on wages in lower earning positions. Trainee managers/supervisors employed by charities actually get paid more than the national average (£19,250 compared with £19,049). "At this level charities are competing for receptionists so they simply have to pay the going rate,
Gillian Gurner, human resources manager at Jewish Care, agrees the pool for care staff is small and the competition hot but says it benchmarks pay against the private sector to avoid inequalities.
The survey also notes changes in pay differentials according to the type of job. A few years ago, IT staff secured favourable increases because they were in short supply, particularly amid fears of the millennium bug. "IT has eased off enormously,
says Smith. "We are successfully recruiting them at a rate we can afford. There are now a lot more IT people going through colleges and employers have placed a great emphasis on IT training.
It's similar in finance where the pressure has also eased.
Scientists are the new must-have staff and consequently are able to secure the best pay increases.
But while fundraisers are also in short supply, they are not reaping scientist-level increases. No-one seems quite sure why fundraising salaries aren't taking off but Johnson suggests a new breed of more commercially aware fundraiser has started to reap the benefit. "We have certainly noticed an increase in salaries for strategic fundraising positions,
"Fundraising these days is being done much more in partnership with the commercial sector and those who can work this way are in big demand."
Until recently there was a chronic shortage of care staff but, according to Smith, the situation is easing at Leonard Cheshire. "The action taken by the government three years ago to increase the number of nursing places has started to take effect,
she explains. But she adds that charities are still struggling to attract junior field staff.
Smith is less concerned, however, about resentment among the increasing number of charity employees who are taking on public-sector contracts on lower salaries. "It is a surprisingly small issue,
she says. "If people think they are getting a fair deal when they join then they're OK about it. In addition we give them good holiday entitlements, good pensions and training."
Better perks appear to be an increasingly popular way of trying to bridge the pay gap. The survey reveals 40 per cent of charities offer maternity pay above the statutory minimum and pay sick pay as soon as employment commences; nearly a quarter provide senior staff with free private health insurance.
But whatever the sweeteners, most people agree the main course needs improving. Cummins suggests trustees' old-fashioned values may have to change. "There remains a residue of opinion that charities should be run voluntarily,
she says. "More people are realising that paid staff can make a difference but there's still a reluctance to pay higher salaries.
"It may be that charities are trying to hold salaries down, particularly in the light of the falling value of assets."
If that is the case, Smith insists it cannot continue. "I don't think it's something we can put up with,
she says. "If we are going to attract good people we must find ways of paying the market rate."
SCIENTISTS REAP THE REWARDS
Scientists are the new big winners in voluntary-sector pay deals, according to this year's Charity Rewards survey. Over the past year they have secured average year-on-year earnings increases of between 9 and 34 per cent.
Vivienne Copeland, director of The Reward Group, said: "There were some hefty pay rises last year in scientific jobs but I wondered then whether this was just a blip. This year's figures reveal that it wasn't."
Just as IT, finance and accounting staff have benefited financially from being in short supply in the recent past, it is now the scientists' turn to enjoy the extra bargaining power.
The seeds of the salary upgrade can be traced back two years when some of the top institutions such as the Wellcome Trust and the Medical Research Council introduced financial incentives to make them more attractive in the tightening labour market.
No-one has been immune from the effects of this, including giant charities such as Cancer Research UK. It supports 1,300 scientists at a range of research institutions, each of which has its own pay structure. They and everyone else face a simple choice: pay the rate or don't get the scientists.
Fiona Hemsley, Cancer Research's head of institute and awards personal funding, has noticed an increase in pressure on scientists' salaries over the past year. "There is a shortage of good scientists at the moment so if one is offered two or three jobs, market forces inevitably come into effect and we have to match the salaries that are being offered,
"We operate a swathe of different pay rates according to whatever is set by the host institution in which the research is being carried out.
"It all boils down to a basic shortage of good people and a growing recognition that scientists can get good jobs in industry if they aren't adequately rewarded.
"There isn't a well-defined career path for scientists in academia. Their PhDs are seen as useful commodities by many employers who are willing to pay good money to attract them."
HOW THE CHARITY REWARDS DATA WAS COLLECTED
Nearly 250 charities, representing 52,000 staff or 10 per cent of the voluntary-sector workforce, participated in the Charity Rewards survey.
The data was collected in June 2002, with the questionnaire being completed by heads of personnel or finance at the charities.
Published by the Reward Group in association with Charity and Fundraising Appointments, the survey has been conducted to a similar formula each year since 1990. This means it is possible to analyse pay trends within charities as well as how they compare to other sectors. The Reward Group conducts similar pay surveys of more than 90 sectors and industries each year.