Will charities follow the NCVO recommendation on executive pay?

Some have said they will publish names and salaries of senior staff on their websites, but others are more hesitant. Ian Griggs reports

NCVO chair Martyn Lewis, who led the inquiry into senior executive pay
NCVO chair Martyn Lewis, who led the inquiry into senior executive pay

Last week, the National Council for Voluntary Organisations published the findings of its inquiry into executive pay, led by its chair, Martyn Lewis, and made two key recommendations.

The first was that charities with gross annual incomes in excess of £500,000 should publish the names, job titles and salaries of their highest-paid staff as a matter of policy. Even charities below this threshold with paid staff should consider adopting the proposal, the inquiry recommended.

The second was that pay details should be accompanied by a statement from trustees to justify them and explain how they help the charity meet its objectives. All of this should be available within two clicks of a charity's home page, the report said.

Another proposal called for senior pay restraint by creating a formula based on a multiple of the median pay in an organisation.

The proposals represent a significant change. Until now, the only stipulation in the Statement of Recommended Practice on charity accounting has been for larger charities to give details of staff earning more than £60,000 in broad salary bands of £10,000.

This information is usually buried in the depths of a charity's annual report, which does not make easy reading for the public if they want to find out more about a charity before supporting it.

The NCVO inquiry heard some "vigorously expressed" opinions, which ranged from the notion that nobody who works for a charity should be paid to the idea that charities should be run along business lines with similarly high levels of top pay. The question now is how widely the recommendation will be acted on and whether it will achieve critical mass leading to universal adoption. Third Sector asked some of the largest charitable organisations for their plans.

The British Red Cross, a member of the Disasters Emergency Committee, said it aimed to act next year. Its outgoing chairman sat on the inquiry panel.

"We welcome the recommendations," a spokeswoman said. "Our senior staff salaries are set by our board of trustees and benchmarked against other agencies in the sector of similar complexity. In the future, we will publish the names and salaries of our senior management team."

Christian Aid said it had replaced a 6:1 pay ratio between the highest and lowest paid at the charity with a ratio of 4:1 between the highest and the median salary.

"We will look at the recommendations and consider carefully how we could build further transparency into our reporting to the public and donors alike in order to strengthen the information we already disclose," a spokeswoman said.

The charity said it was considering redesigning its 78-page annual report to make key information on pay more accessible.

Nuffield Health said the salaries of all its senior executives were already published in its annual report. Executive pay was benchmarked against the UK's largest companies and then set at 75 per cent of the market median to reflect its charitable status.

"We will be looking in detail at the recommendations made by the inquiry to consider how we can best use the findings to provide even greater transparency," a spokeswoman told Third Sector.

At Cancer Research UK, a spokeswoman said: "We are currently studying the NCVO report on charity pay and are considering its recommendations."

The sexual healthcare charity Marie Stopes International said it supported the NCVO's efforts to address the issue and that it would "review the report's recommendations with interest".

The Peabody Trust, the major housing charity, said it published the salary bands of its top employees but that "a uniform approach may not be the best way forward".

The Wellcome Trust, which supports global health research, declined to comment.

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