Report if the inquiry into charity senior executive pay and guidance for trustees on setting remuneration report

What NCVO’s new report says, and what it doesn’t

By Russell Hargrave 30 April 2014 3 minute read

NCVO’s push for greater transparency among charities is welcome. But there is also a risk that we’ll end up focusing on the wrong bit of the process entirely–the relatively small number of people who run and fund charities, rather than the millions who use and rely on them.

NCVO’s new report into charity senior executive pay, published yesterday, will inevitably raise a few eyebrows. Its headline recommendation that all charities bringing in more than half a million pounds a year should publish ‘the precise remuneration, job titles and the names of their highest-paid people’ somewhere prominent on their websites would represent a serious change to the way charities currently present their work.

Whether or not charities sign-up to what NCVO calls this “two clicks to clarity” arrangement, charities would be daft to imagine that they are immune from the public past-time of gossiping about salaries. They aren’t. As the NCVO report acknowledges, a dizzying array of organisations come under the heading ”charity”—from multi-million pound international aid distributors to village hall groups, with a smattering of private schools and faith groups thrown in for good measure. If we can say anything with confidence, it is that amid such variety some people will be paid too much, and some too little.

The important thing is that trustees should be able to justify their decisions on pay—and here, NCVO’s call to support trustees in doing this is very important.

The broader demand for greater transparency is sensible and right, too. It is plain good practice to make sure that charities, entrusted with so much money, show clearly how they are using their cash. This also answers a demand from the public, whose donations keep so many charities afloat. When NPC polled public opinion on charities back in February, as part of our Mind the gap report, more than a third were concerned about transparency. Public trust in charities remains high, but this trust is largely contingent on charities being open about how they operate.

But it is worth pausing over the audience for whom the report is written. NCVO explains that it follows a “twin track”: firstly to guide trustees on making the best decisions on pay, and secondly to encourage transparency ‘to easily and speedily inform those existing and would-be donors’.

We have an idea what the general public thinks about charities. And here we have a detailed focus on those who govern, fund and work for them. So what about the beneficiaries of charity work?

Beneficiaries are barely mentioned in the report, but where they are we get a very different perspective on how much executive pay matters. The report, NCVO explains, ‘has not found any evidence to show that beneficiaries have a particular view on pay. Instead, the quality of service appears to be the crucial factor when beneficiaries decide whether or not their needs have been met’. To put this another way: the people who need charities care about its impact on the ground to the exclusion of nearly everything else. Remuneration doesn’t matter. Low pay won’t excuse poor service any more than great pay detracts from its importance to the user.

And this is where charities would do well to focus. NPC has written before about the risk of an “anti-social sector” emerging, where a charity operates not for those it’s supposed to help, but in fact for those who work in it, volunteer in it, and give money to it’. A debate about executive pay ought to be linked to finding and recruiting the sorts of leaders who can guarantee a positive impact on the lives of the people who turn to the charity. Anything else risks being noise and not much else.