The damage to fundraising caused by the Daily Telegraph's stories on charity salaries was highlighted yesterday by Martyn Lewis, chair of NCVO, who said five British Red Cross donors withdrew their standing orders as a result.

Lewis was speaking at the Christmas reception for the All-Party Parliamentary Group for Civil Society and Volunteering, for which NCVO is the secretariat.  He mentioned the NCVO pay inquiry, which has been prompted by a string of negative stories in the press about charity executive pay.

He said the pay inquiry, which will produce guidance for trustees on setting pay levels in charities, had identified four attitudes from donors to the subject.

There were donors who believed that no member of staff should be paid in a charity, and donors who believed a charity should have a strong, paid executive at the top, with the rest of the organisation comprising volunteers.

Another class of donors thought people who did good jobs in charities should be paid, but at a substantial discount compared with the public and private sector. And finally, there was a fourth class of donors - usually large companies and foundations - who, before donating, usually analysed the charity’s work and its executive pay and were “more than happy to accept the pay level in most of the voluntary sector”.

Lewis admitted that with such a wide range of views it will be difficult for the inquiry panel to find a “one-size-fits-all” approach, but said he believed the proposals the panel will devise will not offend most sensibilities.

Commenting on the make-up of the panel, which mainly comprises charity chairs, Lewis said they were chosen carefully to represent the broad spread of views and opinions in the sector, including the large and small charity sector, human resources sector, and even the commercial sector.

He added that Sir John Baker, who sat on the panel, had been involved in a review of MPs' pay and John Stewart, who is chair of Guide Dogs of the Blind and also of Legal & General, which last year challenged the remuneration levels at 175 companies.

“The strength of the panel will hopefully mean that we will reach sensible conclusions,” Lewis said.

Lewis also said that the pay inquiry had spoken to a range of charity donors who had complained about high salaries after the Telegraph coverage. Lewis said five donors from the British Red Cross had withdrawn their standing order after the stories appeared.

He said by the time the inquiry was finished he hoped it would have reached a sensible conclusion and “stop this repetitive issue of charity executive pay which comes round again and again in the media. The name of the game is to get a conclusion to stop it being a media football.”

Patel and Elphicke 'get it now'

Speaking to civilsociety.co.uk after his speech, Lewis said he had been in touch with MPs Priti Patel and Charlie Elphicke, who have been publicly vocal about levels of charity executive pay. “I think they get it now,” he said.

He added that to “lance the boil” it was necessary to explain to donors the “what and the why” – what the salary levels are, along with how the remuneration committee makes its decisions.

Rosie Chapman, secretariat to the pay inquiry, added that many donors had submitted evidence. “Some are still donating, some are not in reaction to the summer’s press,” she said.

She added that there was some evidence of a difference in reaction between small and large donors, with small donors being more likely to stop donating.