“Fury as charity boss says: donors don’t mind paying for our six-figure salaries”

I thought I’d throw my thoughts on this down pretty sharpish as I’m in the middle of an assignment that is due in tomorrow and really should be writing that, but this headline caught my eye this morning as I was flicking through the Daily Fail so I thought I might respond in a timely manner with my opinion.

The figures I have given below as examples are really from a cursory internet search and I may be out a little bit here or there but generally they are pretty close to the mark, and are intended to be used as a guide rather than to intentionally deceive.

If you haven’t seen it on the news today there is a report that has been released this week by the Charity Commission highlighting the salaries of the Chief Executive officers (CEO’s) of many charities in the UK. This has brought about an awful kerfuffle in the popular press about some of the “six-figure” salaries being paid to them.

The general consensus in the press is that the CEO’s and top managers in charities such as Save the Children, Oxfam, Plan, World Vision etc. shouldn’t be earning the amounts of money that they do, due to the fact that they work for organisations that are funded by donations and tax-payers money, and therefore this money is being wasted and would be better spent in direct aid.

Incidentally, according to the most up-to-date information I can find on the internet; in 2012 approximately 600 thousand people in the UK earned over £100,000 per year, and nearly 50 thousand of them work for the government. So why are the press getting so worked up about these 30 individuals?

Well mainly because the word charity seems to indicate a level of volunteerism, or a degree of unprofessionalism.  Images of lovely old ladies running second hand shops and drinking tea and the like spring to mind at the word charity; when in reality many charities are multi-million pound operations, and very complex ones at that. I’ll give Oxfam as an example, mainly because the information is easier to find in a rush.

Oxfam is a multi-national organisation that has an approximate annual turnover of £360 million, employs over 5000 staff and over 20,000 volunteers in 98 countries around the world. According to the survey, the CEO of Oxfam earns approximately £120,000.

I think the point that the newspapers miss is that in order to be able to hire an individual who has the skills, knowledge, and experience to perform this difficult role at this level you have to pay a fairly reasonable amount, or certainly a realistic wage that is commensurable with that level of position and responsibility. Where these CEO’s working for a non-charity organisation in the private sector they could be pulling in a salary two/three/four times and many more than the one they are earning.

So therefore the benefits to an international charity of paying such salaries to hire such skilled CEO’s and top level managers are in theory the repayment of that investment many times over in terms of the efficiency and effectiveness, fund raising and performance of the organisation as a whole using the money that has been provided to it through individual donations and other funding sources such as DfiD and the EU etc. If you employed a lesser CEO on a lesser wage (and used that saving in direct delivery of aid) then you would increase the amount of aid spent by a fraction and in return see a hugely reduced return in terms of developmental aid for your donation, a reduction in size and ability to reach the areas and people that need the most support and a very notable decline in the level and quality of that aid and development work in general.

If you look at the numbers: with an annual turnover of £360 million, from every pound put into Oxfam £0.0003 of that goes towards the salary of the CEO; and although funding is complex and not entirely from individual donations you would have to give Oxfam about £30* per year to contribute one penny of that donation toward the CEO’s salary. The return on that penny is the continued smooth running of the organisation, and the confidence that your money was well spent and going to the right recipients.  In short if you spend considerably less on the salary of the CEO, you basically get considerably less value.

In comparison (and only for interests sake), Manchester United has a similar turnover of about £360 million per year and their CEO gets paid over sixteen times as much (£2 million) for his services. Their current (soon to be no more) highest paid player gets around eighty-three times as much at £10 million per year (£180,000 per week, not including endorsements) for kicking a ball about.

After a quick search of some of the top private sector companies and banking and financial institutions I can see CEO’s are earning as much (and more in some cases) as £5 million per year (which includes bonuses) and this week the new CEO of the Royal Bank of Scotland agreed to a waive his first fifteen months bonus worth  £1 million (that is not salary but bonus) to avoid (as he puts it) ‘any drama’.

I do think this report on the charities and their expenditure is important, transparency is vital in the charity world and every donor should know exactly where his or her money is being spent. Perhaps this article will shake things up a little bit and force the charities to provide easier to access information on their expenditure. But what this report somehow also manages to do is belittle the work and value for money work of many of these well-run and well-supported charities, and knee-jerk reactions to inflammatory headlines like the one above do harm these charities as a number of people withdraw their support based on limited information.

These charity bashing articles always seem to aim to reinforce the attitude that charities are duty-bound to pay their key staff low wages simply because they are charities. Missing the point completely there little or no consideration for the fact that these ‘key staff’ can earn much larger salaries doing the same job elsewhere, and to employ someone on a lesser wage would reduce the efficiency and effectiveness of that organisation, with only a small fraction of a percentage increase in actual aid in return.

Perhaps the charities in question, those targeted by this report and these articles should respond and give their donors the information they need to make informed decisions about who to give their hard-earned money to, and why.  That’s my thoughts anyway for what they are worth.

My advice, if you want to donate money to a charity, don’t just go off information from the newspapers, do some homework, find out how much money they spend on administration and other expenditure and work out how much of your donation is going to where you want it to, if you are unhappy with the way they are set up then don’t give money to them, find a better run and more efficient charity.

My final example – for every one pound that is donated to Oxfam they spend it in the following ways:

84p is spent on emergency responses, campaigning for change and development work.

(That’s made up of 36p on emergency responses, 5p on campaigning for change, and 43p on development work)

9p is spent on admin and support costs.

(Of which 0.033p* contributes to the CEO’s salary)

7p is spent on fundraising.

(Of which for every 7p spent on fundraising 35p is brought back in, i,e a return of 500%. £1 to £5 and so on.

Which in my opinion is value for money, six-figure salary or not.

What do you think?

Cliff

*the original figures I used in these two places were slightly wrong and I have amended them to the correct amounts. Apologies, it was very early in the morning when I wrote this!

2 thoughts on ““Fury as charity boss says: donors don’t mind paying for our six-figure salaries”

Add yours

  1. Apparently you are not aware of charity salaries and benefits and the way their accounts are presented. To give you an example (from my over 20 years of charity work in 15 countries, I probably know more than most people), an expat staff in one country where I worked got a salary of 4,000$US (tax free) plus a monthly rent for the house of 3000$US plus children’s school fees of another 3300$US plus free medical insurance, living allowance, a lumpsum amount of over 10,000$US to buy a car every 5 years plus pension and annual flight to return home with family that costed the organisation another 8000$US. I have also seen INGO country director’s living in houses with swimming pools. Incidentally, the salary of 120000 GBP you mention for OXFAM is the same as the Director General at DFID. If charities were to advertise the CEO position with salary, I am sure they will get better people taking the job for a lesser salary. The problem is that they are ashamed to do that lest the public is aware of how their money is spent. And oh.. by the wa, they benefits of the expat staff I just described were part of the 43 p on dsevelopment work you have just calculated…

    1. Hi Sam, thanks for the comment, and I agree absolutely with you. In the blog I tried to get across the opinion that this ‘kerfuffle’ and press coverage should drive the NGO’s to become not only more transparent with their finances but also donors should be more questioning as to where their money is actually going. Though I still stick with my original point that the value of someone’s skills, knowledge, experience and quality of work shouldn’t be solely determined by the type of work, or type organisation they work with. Thanks. Cliff

All comments, and feedback welcome...

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: