Peter Stanford: Decent wages can be vital, but try telling donors

Without investing in a good chief executive, a trustee board is building on sand, writes our columnist

Peter Stanford
Peter Stanford

Executive pay is never straightforward for trustee boards. How do you balance making sure you have the best person for the job - which means paying the market rate - while doing that mental calculation about how many small donations it is going to take to foot the annual wage bill?

I was once, happily, a trustee of a charity where the chief executive - although she eschewed titles - didn't want to be paid. She had no need for the money, she said. She was exceptionally good at her job, so we all smiled and said "yes please".

But, even then, there were downsides. It was hard, when it came to tough strategic decisions, for the trustees to go against her wishes. There was the sense - irrational I know - that we should be grateful she was bothering to follow our instructions at all, plus the fear that, if we were too critical of her chosen line, she would vote with her feet and leave us in the lurch.

Which, in fairness, she didn't, but what a shock it was when we came to replace her and ended up paying what felt like a king's ransom for someone who was so inferior that within months we were busy looking again. Some of our founding supporters started to ask us why we were suddenly spending so much money on wages.

Tearful ending

I'm not sure if we followed the good advice given by the researcher Georgie Whiteley from the consultancy Britain Thinks to the recent National Council for Voluntary Organisations conference in London: be transparent on executive pay, but don't go out of your way to try to justify yourself - it will end in tears.

There is a practical wisdom in her words. On executive pay, trustees are always on the back foot. If I was a donor with £10,000 a year to give to a charity, the very last thing I would want to hear is that my money was going to pay a fraction of the chief executive's wages.

Again, this is utterly irrational, because I know from long experience that, without investing in a good chief executive, a trustee board is building on sand.

Doubtful donors

Yet I have, in the past, tried and failed to get that message over to doubtful donors. The truth is that they just don't want to hear it. And so, too often, charities dissemble. Either they come over all coy when executive pay is raised and change the subject, or they attempt to bury the figures in accounts under a variety of headings - "governance" is a favourite.

Meanwhile, those that are honest in their annual reports end up providing evidence that can be used against them in those articles that regularly appear about how a number of charity chief executives are earning more than the Prime Minister.

One option - especially for smaller charities - is to find a more streetwise donor (usually a grant-giving trust) that appreciates the need to pay a market rate to get an able leader and will underwrite the sum required over a number of years, leaving the charity free to approach other potential givers on the basis that every penny you give will be spent on projects, not admin. But such white knights can be hard to locate, and often want their gifts to be stepping-stones for growing organisations on the road to ringfence-free viability.

So there is no easy solution to what remains one of the trickiest calls trustees are ever asked to make. For my money, Georgie Whiteley's formula is about as good as it gets.

Peter Stanford is a writer and broadcaster, and was a charity chair for more than 20 years

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