Friday, 28 March 2014

The smokescreen of charity CEO pay

What charities pay their Chief Executives continues to be a topic grabbing headlines in sector and mainstream media alike here in the UK.

I have to admit, I remain slightly perplexed about the issue. 

Perhaps it’s because my career has been spent mainly dealing with the vast majority of the charity ‘workforce’, the volunteers who get paid nothing; without whom most charities, large and small, would be nothing; and without whom almost nobody who draws a salary in a charity - CEOs included - would have a job. 

Perhaps its because those who do the complex and challenging role of leading and managing volunteers get paid so poorly compared to their peers in, say, fundraising. In fact many are volunteers themselves and their work is essential to the delivery of important services to people across the country.

Either way the charity CEO pay debate rumbles on. And on. And on.

I was struck recently by a piece in Civil Society which reported the shadow charities minister, Lisa Nandy MP, “has warned that charity leadership needs to tackle the problem of unfair pay ratios in charities”.

Once I got over the shock of an MP preaching about pay to a group of charities I read on to discover that this warning was issued in the context of a debate about the future of charities. 

Is this really the most important strategic issue facing the charity world at the moment? I’m not saying it may not be important at all but I can think of many other issues much more worth of attention.

Nandy also apparently criticised charities for taking on an increasing number of unpaid interns, sometimes “with connections to established staff”. Another issue MPs are uniquely qualified to lecture charities on because, as we know, involving unpaid interns, sometimes people with connections to the MP themselves, NEVER happens does it? 

Regardless, if this is happening in the charity sector (and nobody is producing evidence to prove it), then it warrants a better debate that unpaid = bad, paid = good, as I have blogged before.

The debate then seems to have moved into discussion of the ratio between what a charity CEO is paid and what frontline workers are paid. Again, no recognition that the vast majority of frontline workers in charities get no pay at all and so such ratios are totally meaningless! 

But let’s just go with it and assume that frontline workers in charities are all paid.

Cath Bavage, CEO of Volunteer Centre Tower Hamlets, is quoted by Civil Society as saying:

“NCVO sounds pleased with itself that its own ratio of senior executive to lowest-paid staff member is 8:1. Is its chief executive really worth eight times more than an administrator? Does he work hard? Yes, probably. Does he work eight times harder, or does he have eight times more impact? I very much doubt it.”

"Why isn’t NCVO arguing for flatter pay structures and a more even distribution of wages in the voluntary sector? Surely a ratio of 2:1 or 3:1 would be a far better thing in charities with limited funds? It would help reassure donors that their money is being spent prudently and would better reward frontline staff who often work in emotionally demanding jobs. "

To which I would respond:

No, the CEO of NCVO probably doesn’t work eight times harder or have eight times more impact. No CEO does. But pay is not a measure of how hard someone works or how much impact they have. On that basis the volunteer lifeboat crew member would be paid a small fortune for each life they save and we’d have every Samaritan in the country in the top tax bracket. 

[Interestingly, research seems to suggest its not what we pay people but how we pay people that makes a difference.]

Surely what would reassure donors that their money is being spent prudently is whether the organisation makes best use of all the resources at its disposal and, in that broader context, whether salaries are being paid for the right kind of roles and then (finally) at the right kind of levels.

Assume for a minute that we have two organisations doing similar work with similar budgets. As a donor, I would be wanting to ask questions if organisation A was paying someone £20,000 to do a role that Organisation B fulfilled just as well through volunteers. That suggests that rather than exploring all the options for fulfilling its mission, organisation A just paid someone whereas organisation B created a volunteer programme to achieve that goal and used £18,000 (because volunteering may be freely given but it is not cost free) for something else, perhaps paying for someone to do a role that organisation A can’t do because it doesn’t have enough money.

Maybe the reason I feel perplexed about the charity CEO debate is that it appears to be a smokescreen for any kind of real debate about far more important issues. Issues like whether charities are really doing the best with what they have available for the most vulnerable in society, or whether all this talk of charities actually ignores the majority of charities in favour of the minority who receive the biggest slice of charitable income. Surely they are far more important topics to consider when thinking about the future of the sector than government, the sector’s infrastructure bodies and CEOs remaining inwardly focused on what they earn and whether they should earn it?

For some intelligent and informed exploration of the charity CEO pay debate, check out these two pieces from nfpSynergy: