Tuesday, August 6, 2013

Defending £100k charity salaries

William Shawcross, the chairman of the Charity Commission (which regulates charities in the UK), has today come out and criticised executives in large charities earning £100,000.

This to me seems a foolish criticism.

But, before I address that, lets deal with a few of the criticisms I often see in discussions about charities.

"I refuse to donate money to charities that cant guarantee that 100% of my donation will arrives at its destination."

No charity can do that unless it's entirely run by volunteers for a start. This isn't easy to do, because those volunteers will still need to eat and have a roof over their heads. This is all well and good if they have someone else who can pay those things for them, which means they will have lots of time. But for those that don't, this means their time must fit around their job.

Even for a charity like the Samaritans, whose centres are run by volunteers, they still have to have wages for central office staff who help to run the charity nationally.

When I worked for the Meningitis Trust, I did, on a few occasions, have to defend my wage to some people I met (though this wasn't as I was working for them, more conversations in a pub kinda thing). They (initially) couldn't understand that for me to work nine to five, five days a week for the charity, I would need some form of remuneration.

It's great if a charity can be run without any staff costs, but, even if that is the case, there will still be other costs. If the charity wants an office, and not just someone's kitchen table, then that office space needs paying for etc. etc.

"I no longer donate to the big name charities who already get the lion's share of money via their ability to pay for big campaigns and advertising which keeps their cause visible. I also dislike paying fat salaries for those at the top of these organisations.

Donate to the smaller charities who are crying out for funding - much more satisfying."

Why is charitable spending on ads bad? Take Macmillan's ads - they let people know about the services avaialble to you, should you be affected by cancer. Likewise, if a charity spend £10 direct on a cause, great. But what if that £10 went on advertising, and generated £50 to go to the cause. Surely that's a better thing? Again, ads from charities aren't bad in and of themselves. It all depends on the individual ad campaign. Some charities run ads. Get over it.

"One very good thing to come out of this report is the fact that people are waking up to the fact that big charities have become a cash cow to some rich bosses who do not deserve it 
We all should support our local hospice, youth centre , and many other local support groups who are doing a fantastic job with little reward.
I would never ever give to any mainstream charity organisation again."

But what happens if your small charity becomes successful? Just as an easy example, the Meningitis Trust started with concerned parents around a kitchen table. Now it makes over £3 million a year to help in the fight against meningitis. Does this make them mainstream? They're a national charity, and the largest one in the country fighting meningitis.

As for hospices, my local hospice, St Wilfrid's, makes over £6 million, and one of their employers earns over £110,000.

What is a mainstream charity?

People don't seem to realise the scale of charities and what's involved.

And this is why I dont give to big charaties, too much goes on admin and wages.

I now only give to small charities run by volunteers in my local area. At least that way you can be fairly confident that it will be spent on what you expect.

Let's take the cause of cancer. 1 in 3 of us will get cancer in our lifetimes. There are many causes of cancer (environmental, viral, genetic etc), and so if anything's going to get done, it will need to have a lot more money; to pay for the research, treatment, and care.

Cancer Research UK is the largest charity in the country, making over £492 million, and at least 80p of every pound donated goes on their work to beat cancer.

Compare this to KidsCan, a local Salford cancer research centre. It made £270,000 odd, but spends a much higher proportion on salaries etc.

Using Facebook/Twitter I asked for people to name the first cancer charity that came into their heads: Cancer Research UK, Marie Curie and Movember were the first three. They make £492M, £138M and £22M respectively. Not Lyndale Cancer Support for example, which makes £84k (or KidsCan, which many of my friends have fundraised for). In fact, so far, all charities named make over £10M.

People are more likely to give to these charities. If someone they know gets cancer, and they want to do something for a cancer charity, these large ones will likely be the first port of call. Consequently, people will more likely give them cash, and the more money you receive over and above your operating costs, the more efficient you are.

All charities are different - what they do, how they run, and where their money goes.

But if you want to, you can find these things out. Just simply go to the Charity Commission website - you can get a charity's latest accounts from there. You can always ask the charity your concerned about these things as well.

Something that seems to have escaped Priti Patel, a Conservative MP

“Hard-pressed taxpayers deserve to know how their money is being spent and will be shocked to see so many highly paid executives in charities that are dependent on public funds.
“This money should be focused on delivering frontline services rather than lining the pockets of unaccountable charity executives.
“As more public money is being given to charities to run services, they need to become more accountable to the public and subject to greater scrutiny and transparency.”

Charities have to pay people wages. They are competing with the private and public sectors - they have to have comparable wages, as most people aren't altruistic enough to earn well below their potential to help a charity. Working for a charity doesn't instantly make you a Saint. And, if one charity is paying their staff too much, that is the fault of the individual charity, not charities as a whole.

Most people might be shocked to see highly paid executives, but most people (judging by the comments above, and others at the BBC news article) don't seem to have a clue about how charities work.

In a time when money is tight, and donations to charities are down, Shawcross' comments are not helpful. People will be disinclined to give to charities if it is news to them that charity execs earn over £100k. Not that this is news though, as this information has been publicly available for years and years.

For those who this is news though:

Donating to charity does not mean you're just lining someone's pockets. True, part of your donation will go to staff wages - but don't forget those wages are being paid to individuals to help that charity operate and do its thing.

Don't let Shawcross and Patel put you off donating to a charity. I think charities are one of the best ways to help improve the world. Taxes are always going to be a finite pot which we have little say over once we have elected a Government it. I can't chose where my taxes go. But I can choose to help causes that matter to me through charity. And so can you.


  1. I don't think anyone is saying people don't need to be paid. Don't you agree that 100,000 is quite a large salary? I mean I'm sure people could fill the role for 60k which is still a very high salary. To the average person (who earns 24k per/year) it seem strange asking them for £5 per month when the guy running the charity is on 5x there wage.

    Do you think it would be acceptable to offer these guys bonuses based off results like the private sector does? I mean thats the only way to keep top talent right?

  2. Thanks for your feedback. Maybe people could fill the role at £60k, but, as I said "most people aren't altruistic enough to earn well below their potential to help a charity." You limit the field of candidates, and thus you have narrowed your options. True, high wage doesn't always mean a good performer, but having a wider field of applicants increases your chances of getting someone good.

    As for bonuses. I don't know. My instinct is to say no - but that's a poor barometer. The case could be made for it: What if the bonuses were linked to an exceptional fundraising income? For every £1,000,000 on top of the most optimistic fundraising target, you get, say £10,000. That's a big return on an investment. I can't see it happening though - firstly, the trustees would need to approve it, and as today's news has shown, a lot of people are uncomfortable with the wages, let alone the bonuses. So it may not be wise.

    Raising money for charity comes at a cost - the key thing is to try to maximise the return on that investment.

  3. My view isn't so much that the people at the top and those in the middle of charitable organisations are getting high salaries, although to be honest I do have a problem with it, but that the people at the bottom, usually Working class people are asked to volunteer their time standing on the street rattling tins in people's faces or going door to door and so on. It seems to me that people who are already affluent anyway seem to get high paid jobs whatever field or sphere of business they are in, and the rest of us without affluence or connections or Middle class privileges have to accept far lower wages or have to volunteer. Why can't some of these very high wages be lowered and be given to people at the bottom? Surely charity is about helping poor people anyway, not keeping Middle class people in big houses in the stockbroker belt, a 4-wheel drive and 2 foreign holidays a year?

  4. Street collectors are essential to charities but they are willing volunteers who believe in the cause. The CEO also believes in the cause but has massive responsibility across a huge range of different and complicated areas. How have we decided that we don't value the expertise and huge time investment required by such a person.

    Charity is about people who want something beneficial to happen. That may be for poor people or it can be cures and treatments for cancer that affect the whole spectrum.

    I'm glad CEOs are well paid because they do a bloody difficult job. All I want is that they perform that job effectively. Reducing pay will reduce the quality of candidates. Which will restrict charities from achieving more.

    Why do we want to be counterproductive??


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