Large charities should follow NCVO's example and become more transparent about executive pay, writes Andrew Hind.

In pushing for greater transparency on charity senior executive pay over the last 12 months, the National Council for Voluntary Organisations (NCVO) has shown admirable leadership.

First, last April, its inquiry panel produced a hard-hitting report recommending that charities with audited accounts should publish a remuneration statement explaining their pay strategy, and stating the individual remuneration of their highest-paid staff by position and name.

The panel said it believed that “giving trustees the tools and confidence to agree and explain the pay of their senior staff will improve public understanding and confidence in charities”.

To NCVO’s great credit it then had the courage of its convictions and followed its own panel’s advice.

The umbrella body’s annual report and accounts for 2013/14 contains a comprehensive three-page remuneration statement outlining its approach to pay, and listing the remuneration received by each individually-named member of its five-strong senior management team.

It also states the 3.8:1 ratio of the highest earner’s salary (CEO Sir Stuart Etherington, £128,069) to the charity’s median salary (£33,641).

NCVO’s annual report is a model of pay transparency, as is its website where the same details can be found only two clicks away from the home page, via a tab entitled ‘Our finances and pay’.

Writing in Charity Finance this month, about why NCVO has gone down this path, director of public policy Karl Wilding says: “If we would like to be better understood by the public then we will have to start by being open and honest with them.”

Responding to the view often expressed by opponents of pay transparency that sharing more information will only provide ammunition for those who wish to criticise charities, Wilding writes: “Curiously, I think there is an inverse relationship between the amount of information you disclose and the potential for mischief to be made with it.”

Common practice elsewhere

Explaining exactly what senior staff are paid, and why, is of course common practice already among leading organisations in virtually every other sector.

Whether you look at FTSE companies, government departments, universities, the NHS, or the BBC, comprehensive information about the pay of senior executive staff (and not just board members) is published routinely.

On the BBC’s website, to give just one example, details of the salaries and expenses of the top 100 managers are published every quarter.

It’s therefore hard to understand why the new Charities Sorps, effective from 1 January, still don’t require larger charities to disclose the pay of their most senior managers.

Sticking to the old formula of only disclosing the number of (annonymous) staff paid in £10,000 bands, above £60,000, makes charity accounting among the least transparent of all sectors.

Don’t we usually trumpet our commitment to transparency? Isn’t it supposed to be one of the core values of our wonderful sector?

Surely now it’s time for all larger charities to practise what they preach and follow NCVO’s excellent example on pay disclosure.