Bearing in mind what we know about boardroom pay, what would you expect to be the annual salary for the chief executive officer of an organisation with a famous brand name, about 4,000 paid employees and an annual turnover of about half a billion pounds?
Let’s assume, for good measure, that this chief executive has a first-class degree in chemical engineering from Cambridge and an MBA from Harvard. What is she or he worth? Are you thinking half a million? A million? More?
In fact the details above describe Harpal Kumar, chief executive of Cancer Research UK, who earns less than £220,000 per year. I will be the first to agree that this is a far from a miserly sum. It is what is commonly known as shitloads of dosh. On the other hand, it is less than the take-home pay of at least 40 local authority chief executives, and about a 20th of the pay of the equivalent boss in the private sector.
This week, Sir Stephen Bubb, head of Acevo, which represents chief executives from the charity and non-profit sector, was subjected to a ritual grilling by the parliamentary select committee on public administrationover the issue of charity executive pay. He was in bullish mood, telling journalists: “There are all sorts of inequities in pay, but while nobody gets worked up about footballers, the chief executive of the Red Cross is pilloried.”
He has a point. The truth is that for all but a handful of huge charities, this is a non-issue. There are 163,000 registered charities in the UK, give or take. More than 95% of them have a total annual income of less than £500,000. Only around 1% of charities employ 1,000 people or more, and of those the median salary of their chief executive is £60,000. British charities handle about £60bn per year and employ about 750,000 people, and a few hundred of those earn six-figure salaries. Now I have absolutely no idea what the chief executive of the Royal Opera House does to justify a salary of £741k; I find it obscene. I am also aware that it is freakishly unusual.
Most people have little understanding of charity law, or indeed the day-to-day practice of charity management. Few realise that a charity’s job is to make as much money as it can, and then spend that money on its aims and objectives. The law cares little as to how the money is made.
Yes, some charities will rattle cans and pull at heartstrings. Others will invest, often with a shocking lack of concern as to the ethics of their investments. Others operate as service delivery companies in their area of expertise. For about 30 years, politicians of all stripes have been actively pressing charities in this direction, making the so-called third sector a significant player in the dismantling of centralised state provision, and the tendering out of health and social care services.
In the past decade, national and local government grants to charities and the voluntary sector fell by a third to £3bn. Over the same period, the amount received in the form of service delivery contracts went up from £4.5bn to £11.2bn. A small number of the largest charities are, wittingly or not, actively complicit in the ideological dismantling of the NHS and statutory social care services, for their own gain, while simultaneously sacrificing their independence and ability to advocate on behalf of the vulnerable.
I find it faintly depressing that Bubb is hauled over the coals on the issue of chief executive pay. The plain truth is that almost everyone who works for a charity, at any level, from a minimum wage shop worker to a glittering blue-chip CEO, could be making more money, often for less work, in the private or public sectors. The vast majority of charities serve vital functions, and the vast majority of those who work for them, just like those who support them, do it because they care deeply for the cause and would prefer to work for something other than their own bank balances.
But the sector also has its problems, and many of them can be traced back to that urge to behave ever more like private companies in the cut and thrust of the free market. That is a process that Bubb has done more than anyone to champion and accelerate. Charity executives should have some difficult questions to answer. As the issues go, their pay barely registers.
Read the article here.