Charity Finance SORP Survey 2021

Is the SORP fit for purpose? What would you like to see added to the next version of the SORP? Should it focus more on how a charity achieves charitable impact rather than on presenting financial information? Fill in our short questionnaire and you could win a £100 John Lewis voucher.

Tania Mason: Is 2020 the year claws will come out over charity fat cat pay?

16 Jan 2020 Voices

Here’s a prediction: 2020 will be the year when charity chief executive pay levels really get a grilling. (Disclaimer: I’m hardly sticking my neck out here – the Charity Commission has already announced it will publish a report on senior pay). It’s not a new issue – tabloid newspapers have been highlighting the “scandal” of “charity fat cats” for at least as long as I’ve been covering the sector – but this year it seems the Charity Commission too is getting in on the act.

It will be instructive to see what angle the regulator takes with its report. Its chief executive’s comments on the Marie Stopes International (MSI) remuneration case late last year provide some insight. Helen Stephenson said: “We understand why the public care about how charities pay their staff and why this undermines the reputation of charities as a whole. It’s because issues like chief executive pay help the public see how a charity is stewarding its resources, and whether it is behaving in an authentically charitable way, distinct from the attitudes that might prevail in a commercial organisation.”

It seems likely from those remarks that the Commission will again play to the court of public expectation, regardless of whether public opinion on the matter is fair and informed. Yes, there will be charities that haven’t yet caught up with the guidance on how to set their CEO’s salary, and those charities ought to be soundly and publicly rapped over the knuckles, as Marie Stopes was. But let’s hope the Commission also uses its report to point out that most sector remuneration is great value for money. Let’s not forget that nine in ten registered charities have no paid staff at all, and pay ratios – the distance between the highest and lowest wage in an organisation – are consistently lower in charities than in other sectors.

The regulator is keen to stress that charities are different animals from commercial ones and are held to different standards. But this shouldn’t prevent it from also using its report to explain that charities are highly complex beasts to run, with many unique and difficult challenges. It could also dispel the myth that a chief executive is an “overhead”. If a charity is to make impact at any scale, it needs to employ people, and the work that its staff do is core to achieving its aims. Perhaps the report could even arm the sector with some communication tactics to defend itself against unfair criticism and explain to the public why they pay the salaries they do.

MSI is a case in point. Yes, a £434,500 pay packet is probably unpalatable for a charity helping the world’s poorest people, and you have to wonder where the trustees’ minds were at when they failed to make any notes from their apparently robust discussions about the CEO’s bonus. MSI has to realise that it must be much more transparent and accountable about such matters. But, when you consider that the work carried out by the charity in 2018 averted 6.4 million unsafe abortions and 32,000 maternal deaths, prevented 12.3 million unwanted pregnancies and saved £451m in healthcare costs, suddenly £434,000 doesn’t look like bad value. Especially as all those figures have at least doubled since Simon Cooke joined MSI six years earlier.

At the end of the day, the value of a charity’s chief executive should be measured by the outcomes the charity produces, not the zeroes on its CEO’s salary. Return on investment is a much better measure of effectiveness. And, as others have already pointed out, charity law requires the Charity Commission to regulate charities according to public benefit, not public expectation.

Tania Mason 

For more news, interviews, opinion and analysis about charities and the voluntary sector sign up to receive the Civil Society News daily bulletin here



More on