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Thursday, November 07, 2019

Why are we so passionate about high executive pay in the charity sector?


I took a call today from someone who had read one of our reports on what we perceive to be high pay in the charity sector dating back a few years. We had identified a number of charities that we felt we could not support via the Ten Percent Foundation with any charitable donations, because we felt that their executive pay was too high and inappropriate for the size of the charity.
The Ten Percent Foundation incidentally is our vehicle for donating profits generated by the Ten Percent Group, as we donate 10% of our profits to charity every year. We do this by distributing the funds to charities we deem worthy and fit in with our criteria for donations.
One of the key criteria is a demonstration by the charity that they are not overpaying their senior staff. There are a large number of charities in the UK who pay salaries to their senior executives that we feel is out of proportion for either the size of the charity or the very nature of the charity being undertaken. For example a charity paying more than £75,000 to anybody is, in our opinion, paying too much money, and should not be permitted in the sector.
One of our arguments for this is that a good number of charities are out on the streets fundraising off the general public, or telephoning to raise funds, but if a charity is generating income of say £1 million per year but paying their chief executive £200,000 to run the charity, then clearly there is something wrong here as individuals on the street are not paying to fund that particular senior executive’s lifestyle.
What makes us particularly passionate about executive pay in the charity sector is that we donate via other charities as we are not set up to distribute the funds directly to where they are needed ourselves. Because of this we give money to charities to support particular projects. When we first started donating money to charities we found that some charities were almost reluctant to take our money as they were suspicious as to why we were giving it to them. Others actually wanted to charge us money on top of the donation we were making for things such as using their logos or for mentioning them on our website. Others, when we asked for information as to where the money was going, were more than a little bit shirty about telling us.
We started to look at the various accounts for the larger charities which are available at the charity commission website, and soon discovered a bit of a pattern emerging. There are charities out there who seem to solely exist to generate an income for the staff who work for them but don’t actually appear to do a particularly large amount of work with the money they are given. There are other charities out there that seem to have high levels of administrative costs that seem to outweigh the size of the income and expenditure that the charity is dealing with.
This particularly annoyed us because there we are earning the money to pay to charity, and discovering that the money we are earning and then donating to charity is actually going to pay someone else’s earnings. Whilst I have no qualms at all about supporting the earnings of say a youth worker in a deprived area, or a specialist nurse working in a particular type of cancer, we do object to paying considerable sums of money to a business development executive or marketing manager in a charity. Some of the charity accounts actually refer to the charity’s performance over a year, and the targets they have for fundraising, linking pay of their executives and staff to their performance over the year, and talking about improving the amount of money they have raised or received in donations.
We feel that all of this is dreadfully wrong and at some point we suspect the charity sector is going to be closely examined. It is not often the small charities that are the issue, but rather the big multi-nationals that have grown in time into huge organisations and fundraising vehicles.
It is not that long ago that charity fundraising was in the spotlight, and being examined for the shocking amount of sales that was going on, and the exploitation of people’s generosity. Whilst this seems to have calmed down a little bit, we still feel that the sector is regularly overlooked, and the government have not undertaken any investigations into the structure of charities for some time.
Senior executive pay in some organisations is set by committees or linked to external bodies that have prepared reports, which are always written by people at a similar level working in the same sectors, and therefore quite easily justifying the salaries they are receiving. We know of one charity that a few years ago was paying a chief executive almost as much as it was giving out in funds to worthy recipients, and that was not a lot of money for the size of the charity that it was.
We maintain a list of a selection of the largest charities and their salary spend - the most recent is taken from their 2018 accounts. For details please visit:
https://www.ten-percent.co.uk/10-percent-campaign/




Jonathan Fagan is Managing Director of Ten-Percent Legal Recruitment and a non-practising Solicitor. Ten-Percent Legal Recruitment provides online Legal Recruitment for Solicitors, Legal Executives, Fee Earners, Support Staff, Managers and Paralegals. Visit our Website to search our Vacancy Database.

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