Charity CEOs: are they worth it?

9 Aug 13

Charity chief executives have been criticised for ‘fat-cat’ salaries in an age of austerity. But it’s down to trustees – not the Charity Commission – to determine whether CEO pay is fair

Splashed across the front page of the Daily Telegraph this week was the story that 30 charities’ chief executives are paid over £100,000, despite many of their organisations facing a drop in donations. The story was also discussed at length on the Today programme, and a lot of people –including many on Twitter – expressed shock and disgust that charity chiefs get paid this much.

Of course CEO pay is an issue in the third sector, just as it is in any other sector – think how many news stories we’ve seen on how much those at the top of banking take home.

The key question that always needs to be asked is, quite simply, is the individual worth it? Do they help deliver for beneficiaries, the people their organisation exists to support? Do they drive their charity to improve its effectiveness and impact? Are they a good figurehead, do they manage stakeholders well, are they engaging for fundraisers?

Arguably being the head of a charity is a tougher job than being head of any other organisation, especially in a period when funding is under pressure and support from government has declined. Charities must be accountable, and there needs to be transparency around these issues.

The subject of how much a chief executive is ‘worth’ is ultimately the responsibility of trustees, who must consider CEO pay carefully and keep it under constant review. There is certainly a question mark over whether all charity boards do this as well as they could.

The piece in the Telegraph includes extensive comments from William Shawcross, head of the Charity Commission. In terms of public support for charities, a more worrying development is the fear that some charities are simply a vehicle for tax avoidance, an issue that is firmly the responsibility of the Charity Commission – unlike CEO remuneration.

The example that springs to mind is that of the Cup Trust tax avoidance scam. Many suspect there are other ‘Cup Trusts’ out there, and their existence and the scandal surrounding their uncovering does untold levels of damage to the charity sector and its reputation.

Perhaps the Charity Commission would do better to focus its efforts on solving problems in the sector that it can address, rather than fanning the flames around those it can’t.

This post first appeared on the New Philanthropy Capital Blog

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