Charity CEOs’ Remuneration

An old chestnut re-appeared in the national press last month: charity CEOs’ remuneration. It is a time-honoured subject which receives a regular airing, usually about once every 5 years!

But it is no trivial subject; and it is arguably more relevant today than in the past.

At a time when charities are being pared to the bone, many are making staff redundant, and others are closing altogether, it is difficult to justify the 6-figure salaries being paid to some charity leaders. The CEOs of Macmillan, Age Concern and Cancer Research UK – the latter earning £276,000 p.a. – have been singled out in the media for particular criticism. But they are not alone. Some charities have been paying 6-figure sums since the beginning of the last decade, if not before.

The old arguments are trotted out, a principal one being that head of a large charity is a demanding job and Trustee Boards needed to pay super-high salaries if they are to recruit the best people. Those who put forward this argument fail to grasp a salient point, namely that not everyone in our country – happily – works just for money or places a high salary as their aim in life. I know many heads of small charities who could double their present earnings if they worked in the private or public sectors – but they choose instead to accept lower remuneration in exchange for leading their charities in supporting the most disadvantaged and marginalised in our society.

But there is another, perhaps more critical, reason for limiting charity executives’ pay packets. In the private sector, shareholders by and large accept the payment of large salaries to private company CEOs. Likewise, taxpayers (often reluctantly) acknowledge the need for senior civil servants to receive substantial remuneration in the hope that they will manage the country’s affairs effectively in return.

But charities are funded by individual and corporate donors, by trusts and foundations and, in some cases, by local authorities. These people and organisations give money to improve the services provided for the charities’ beneficiaries, not the lifestyles of their senior executives. Donors accept that charity staff must be paid – but they want to ensure that senior salaries are not at the expense of more junior staff, nor that they cause redundancies and closure of vital facilities.

At the end of the day, charities of all sizes depend on public support and public donations. Excessive senior staff salaries erode that support excessively.