CEO pay pie chart

Looks like a charity, but does it quack like one?

By Sue Wixley 27 February 2015

Recent coverage of charity sector pay brought to mind the duck test parodied by Douglas Adams: ‘If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family Anatidae on our hands.’

The Third Sector’s charity pay study, picked up in yesterday’s Telegraph, quoted pay packets that would not be out of place in the private sector:

  • London Clinic, an independent hospital, paid an unnamed staff member between £850,000 and £860,000 a year (some of which included notice payment) and was the highest payer.
  • Nuffield Health, the hospital and fitness centre provider was the second highest-paying charity, rewarding its staff with between £770,000 and £780,000 a year (including redundancy payments).
  • The medical charity, St Andrew’s Healthcare, paid its outgoing chief exec £750,000-£760,000 and came in third.

These top paying charities might walk like charities—they’re all registered with the Charity Commission—but do they quack like charities?

Our polling with Ipsos MORI last year showed that the vast majority of the public (77%) mostly see charities as either national or international organisations and most people (67%) imagine large organisations when they think of charities. In reality only 16% of charities are large organisations with an income of more than £100k. Leaving that aside, the big national or international charities in the public’s imagination are probably household names like Oxfam, Christian Aid, Sightsavers and RSPB, rather than London Clinic or St Andrew’s.

The likes of Oxfam and Sightsavers didn’t make Third Sector’s top 100 this year because they paid their top people less than £125,000. The study reveals that the median pay among general charities has fallen by 6 per cent. As journalist Andy Hillier notes, these well-known charities ‘pay their highest-paid executives the least, yet have attracted the most criticism—perhaps because they are recognised as charities, with all the connotations of voluntarism that the word entails’. And therein lies the rub.

In duck terms, the charity sector spans the organisational equivalent of the 10.5 inch cotton pygmy goose, the powerful 6ft trumpeter swan, and everything in between.

The recent coverage might amplify the argument that the current classification systems for charities is too broad and needs to be reconsidered. Some commentators have long criticised the regulator for upholding this status, arguing that organisations like Nuffield ‘appear to have few or in some cases, none of what most of us would consider to be the usual characteristics of a charity’.

In the meantime, individual charities and initiatives like the Understanding Charities Group have a job to do in helping the public to see how diverse the sector is and in responding to questions, including how much they pay their staff and how these decisions are made.

For NPC, value for money and the impact a charity makes are central to the discussion.

  • Look out for our final paper on NPC’s public polling on charities, out next month.