In our most recent Viewpoint magazine our Director CEO Kieran wrote a piece about the current climate and suggests a pay cap in the third sector.
Time for charities to lead the way
Many things have changed since the banking crisis and austerity has impacted on all areas of society, not least charities and disabled people. Few good things have come out of this, but they do say it is an ill wind that does no good. We are certainly less complacent as a society and adversity has focused more people on working together, recognising and removing barriers and perhaps, a more honest approach to how we run things.
Along with business and public services, charities have seen more scrutiny about how they operate and how they use funds for worthy causes. Big Lottery and other benefactors now demand focused outcomes and stringent governance. Public services are under constant pressure to work within decreasing budgets. In answer to widespread public criticism, shareholders of private companies have demanded scrutiny of top salaries. Talks of caps and ratios have become major topics at AGMs.
Salaries of top earners have also been questioned amongst major charities and for many, the argument for and against is the same as in commerce and the public sector. I believe it is time for charities to stand up and be counted regarding salaries and how they raise and use funds. I also believe it is not realistic to rely on either government or the Charities Commission to provide the necessary leadership and guidance. Instead we should call on charity leaders and governors to set an example for all charities and later perhaps public services and others.
I cannot accept the widening gap between salaries at the top and bottom and have never been convinced that it is necessary or true that it is simply down to ‘market forces’. For me it is too often a self–serving cartel that operates in a corrupting and controlling manner to ensure it protects the lifestyle of the few and the continuation of privilege.
There are not many people I will meet in my lifetime that think it is equitable for someone to have billions when there are so many with little or nothing. Likewise, in public life for someone to have salaries in millions, tax breaks and bonuses on top is simply unjustifiable however talented they are. So, what about those that earn a million or a hundred thousand or fifty thousand?
Fifty thousand is barely seen as a living wage for someone residing in London, but to the clear majority across the country who work in charities it is still an unattainable sum. Are the CEOs really so much better than those who actually deliver the services? Are they not mutually dependent? How many of them could swap roles equally well or better? Maybe not everyone. Certainly, many bosses would struggle to do some of the jobs many charity workers perform daily. I suspect there are more workers who could do the bosses job.
There are many examples of good leaders who are invaluable to the success of their organisation. Equally there are many poor CEOs who still go on to repeat the trick of obtaining new positions even after the worst of failures. It seems they are often rewarded for failure!
I would like to call on other charities to think seriously about how we connect with the people we are here to serve. We need to re–examine the main motivations driving them. Are they self–serving and introspective with high earners simply justifying high salaries/expenditure? Or are they about passion and commitment to delivering a mandate shaped by the people we serve? I guess there are good arguments for and against both.
My suggestion would be for the sector to cap all pay at the salary level of the Prime Minister, around £150,000 to 2020. I am not convinced anyone should be worth more as a charity worker or public servant. The gap between the lowest paid and the highest earners should never exceed 10x. In addition, subject to the limits above – because there are some charities who pay their top earners so generously they could be deemed shareholders; an earnings ratio of no more than 10% of turnover. The exception to this will be the smaller, individual projects where most or all the funding supports a single post.
This would work best if it was agreed as a code of practice throughout the whole of the Third Sector with information made visible in the same way annual reports are seen. The Charity Commission would be well placed to provide advice and oversight as well as disseminate information to donors, beneficiaries and the public in general.
If this seems to be a good idea – how about we start today? If you disagree or have different suggestions – let me know. If you agree – send this to others for a response so we can actually make this happen.
Contact: Kieran McMahon
23 High Street
Telephone: 0161 480 7248
Our organisation is in agreement that this would instil a better level of trust and support between staff, clients & the public. Many people felt trust was lost when the public saw that their support was in some cases benefiting the few at the top of the tree at the expense of those at the bottom.
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