The remuneration of Charity Chief Executives

The charity sector enjoys enormous public trust and is held in great affection. The sector loses the confidence of the public at its peril. Charity boards, professional bodies and regulators need to demonstrate high standards of governance, educate the public and protect the reputation of the sector.

The revelations about the pay of Chief Executives of Northern Ireland charities in the press recently pose a risk to the reputation of the sector. This follows up similar revelations in the Republic of Ireland. Some public reaction has been very hostile to the notion of ‘fat cats’ and there is concern that this reaction will affect the ability of charities to attract funding for their work. Some months ago the BBC’s Panorama programme raised questions about Comic Relief who were allegedly investing in arms companies and some other campaigning charities allegedly ‘softening’ their campaigns under pressure from corporate funders. In the recent past public confidence in the press, parliament, banks and business has been rocked –charities are not exempt to this type of scrutiny.

The reaction to the pay of charity Chief Executives reveals a misunderstanding about what charities are in the UK and Ireland at present. The public likes charitable activity –the support to individuals in distress, volunteers coming together to selflessly create a community service or a person who while in extremis himself or herself shows a concern for others. The outstanding example of Stephen Sutton who has raised over £3 ½ million for the Teenage Cancer Trust before he succumbed to the disease is the essence of what charity appears to be.

The other version of charity is of a business world where organisations receive high levels of government income and have an industrial approach to fundraising. The public is not so keen on this and often reacts badly to chuggers and telephone fundraisers. This ‘industrial’ fundraising reflects the reality of multi-million pound organisations who employ professional staff as managers, finance professionals who look after investments and other qualified staff (such as social care staff). A whole salary structure exists in these organisations many of which employ hundreds of staff some of whom are on salaries at least equivalent to what they would receive if they worked in the state sector.

Many charities in Northern Ireland are providing social care services through contracts with Health and Social Care Trusts. Similar services are run by the Trusts themselves or contracted out to the private sector. These big service providing organisations typically have incomes in the millions of pounds; hundreds of staff and are responsible for the safety and welfare of staff and vulnerable people such as the elderly or disabled. It would be irresponsible if they did not have professional staff receiving appropriate levels of remuneration to lead these charities.

There are added demensions to this debate, when you consider wider remuneration issues, such as pensions, bonuses, cars, private health and other ‘perks’. Whether these charities are paying too much to their Chief Executives or if the salary details should be kept hidden are serious questions. Charity boards will come under increasing scrutiny to explain their actions and so they should. It is essential that the Board of a charity debates these issues, has a separate and transparent process for considering remuneration; and explains its approach to the public and supporters.

Alan Hanna, Strictly Boardroom Associate