Charity CEOs' pay: what did we learn?

21 Oct 2014 Nick Garbutt    Last updated: 7 Jul 2015

Charity CEOs' pay: what did we learn?

The media storm that erupted earlier this year around the issue of the pay packages of chief executive salaries may have subsided for now, but the issue has not gone away.

It should act both as a lesson and a warning for the sector, it raises some deep concerns about governance of charities, points to a fundamental lack of understanding of their work by the general public and the media, and poses questions about whether managers of charities should get similar packages to their equivalents in private sector businesses.

There is a general acceptance that people who do a good job should be paid accordingly, although there is a widely held anger and resentment at extremely high pay packages, especially when there appears to be no correlation between the performance and the reward.

There is nothing new about anger at “fat cat” bosses. It is one of the oldest of all the tabloid staple stories. But it acquired a new edge when a series of revelations appeared in the press and media about the millions that wholesale bankers were getting paid before, after and during the great recession which they themselves did so much to create.

And now, as austerity bites and cynicism grows about all sorts of organisations that used to command trust and respect, people are questioning the pay packages of politicians, civil servants, and, inevitably, charity staff as well.

When the Belfast Telegraph came knocking, not everyone in the sector responded as they should. There was too much defensiveness, too much hiding and dodging and not enough of what was really required: complete transparency.

Most charities are funded either through public donation, the award of government contracts or funding from government and sometimes through all these means.

It therefore does not seem unreasonable for charities to disclose how much their senior employees get paid.  It is not as if there is any kind of scandal in the remuneration which is generally being provided.

The fact that the press and some members of the public think otherwise demonstrates a lack of understanding of what it takes to run a successful modern day charity: underpinning this is an assumption that somehow people who do “good deeds” should do so without pay.

So what is required is for charities to publish the pay of their CEOs and to explain why that represents value. When you compare what they get to the packages available to private sector bodies of similar scale, in the vast majority of cases, it most certainly does.

Which leads us on to the governance question. When the controversy broke out trustees were conspicuous by their absence in the debate. Why? It is not as if chief executives set their own salaries, they are fixed by boards, and so it is for the boards to defend them, not the individual employee.

This needs to be addressed: boards should have a remuneration committee that oversees employees’ pay and conditions. The CEO’s performance and package should be properly and professionally scrutinised and the people who determine salary levels should be prepared to justify and explain them.

Unless and until these elements are systematically addressed across the sector: proper governance, transparency around packages and a clear rationale for them, the controversy will continue to smoulder.

At present some organisations appear to be adopting an “After you Claude” approach to this highly sensitive issue: we will let you know what we pay when everyone else does the same; and in the meantime so long as the focus is on others we will sit tight and do and say nothing. That, quite frankly, is not smart, it is cowardly.

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