We learn from recent news reports that William Shawcross, Chairman of the Charity Commission, has warned that inappropriately high levels of pay for charity chief executives may bring the sector into disrepute.
We have also learned that over the past three years the pay of top executives in large foreign aid charities has been rising while income from donations is falling, and that it is the big, international charities that offer the biggest salaries and salary increases. (The chief executive of one major international charity now earns £184,000.) In the past three years the number of charity executives on six figure salaries in the country’s 14 largest foreign aid charities has risen by 60 per cent.
Granted, these pay packets are considerably less than those offered to chief executive salaries in the private sector, but while income from charitable donations is falling, are these salaries acceptable?
Comparisons are odious, or so goes a popular saying. But how else does one evaluate?
The Charity Commission publishes concise summaries of every charity along with their accounts and I regularly check World Land Trust’s (WLT) accounts against those of other conservation NGOs. Occasionally I compare WLT with NGOs in completely different sectors.
Compared to other charities, a large proportion of WLT’s income comes from the corporate sector. In the last set of accounts listed on the Commission’s website, 47 per cent of WLT’s income was corporate. This year, WLT’s income from the corporate sector is running at more than 60 per cent.
There are also huge differences in our costs compared to other charities, and therein lies a dilemma.
To illustrate the difference between WLT and other charities, take the example of another (large) conservation charity. According to its last set of accounts, this other charity raised nearly £32 million from its membership and supporters, of which 12 per cent was from the corporate sector. But, they spent nearly £11 million (40 per cent of total spending) doing so.
WLT, on the other hand, raised just £3.1 million, but direct costs were £248,000 (less than 8 per cent of total spending).
The question is: should WLT spend a larger proportion of its income on fundraising? The charity quoted above was able to fund conservation projects to the tune of £33.2 million, while WLT spent only £2.3 million.
What is the answer? I am genuinely not sure, and WLT’s Trustees are also somewhat divided about it.
Everyone wants an organisation to run on low overheads, but it is clear from these comparisons, that WLT raising another £30 million would be very difficult working within the current margins.
While WLT only has the equivalent of 3 or 4 people directly involved in generating funds (out of 25), the charity quoted above has 68 (out of 312), which is not a dissimilar percentage of total staff.
However the other charity has a total wage bill of £13.8 million (average £44,000 per head), while WLT’s wage bill was less than £570,000 (average £22,000 per head, ie half the average wage of staff in the larger charity). And so the comparisons go on.
As percentages go, WLT looks more efficient, with more than 75 per cent of income going on project funding compared with 50 per cent in the case of the other charity. But in terms of actual money the large charity was able to spend nearly £31 million more than WLT.
So is it really right for WLT to stay lean and mean, and only achieve a limited amount, or should we put on a bit of weight? Let me know your views!