Bankers are, by now, accustomed to being painted as the villains of the commercial world. But the much-maligned City culture of greed, bonuses and supersized pay packets has infected the voluntary sector, according to Britain’s largest union, Unite.
Excessive salaries paid to charity chief executives are “corrupting the ethos of the voluntary sector” and causing charities to become detached from the people they help, says Rachael Maskell, the national officer for the not-for-profit sector at Unite who is campaigning for charities to reassess the salaries paid to their leaders.
At Nuffield Health, a private hospital group which describes itself as ‘the UK’s leading health charity’, the chief executive took home more than £800,000 in salary and bonuses in 2007, although the charity claimed that this was an exceptional year.
John Belcher, the former chief executive of Anchor Trust, a social housing charity, received £391,000 in 2008-09 before resigning last week while the chief executive of Riverside Group, a social housing trust, was on £231,000 last year. The chief executive of Barnardo’s took home £166,500.
Senior directors at Remploy, a grant-funded organisation that finds employment for disabled people earning about £10,000 a year, each took home thousands in bonuses last year.
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Fifty non-profit organisations pay their leaders more than £100,000 a year and chief executive pay is rising by 6 per cent annually. Last year the median salary for UK workers was £25,428.
“I think the public, who are having to make tough decisions in the recession, would be horrified to know that their direct debit is contributing to six figure salaries,” Ms Maskell said.
“These charities are trying to resonate with the most vulnerable and poorest people in society. How can you claim to be their advocate when you have become so detached?”
By allowing their culture to blend with that of business, charities were unable to act in their traditional role of working to change society and providing “moral leadership”, she said.
Vast pay differentials exist between people at the top of organisations and frontline staff, Unite, which has 60,000 members in not-for-profit organisations, said. Many charity workers earn just above the national minimum wage of £5.80 per hour.
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Ms Maskell rejected the suggestion that charities would miss out on professional talent by lowering their salaries. “I would disagree that you need to attract people from the City or big business to run your organisation.
“There is a lot of talent and skill out there. They don’t need to remunerate to those levels.”
Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations (Acevo), which campaigns for professionalisation in charities, said that the union’s accusations smacked of “gross hypocrisy”.
“Unite’s general secretaries took home a combined £308,000 last year and many of its members earned comparable salaries,” Mr Bubb said.
Very large charities are complex businesses employing thousands of people and overseeing millions of pounds in turnover, he argued.
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“If you are running a big business — which these charities are — you need people at the top who are talented and experienced. People in our sector do an incredible job and are worth every penny. They come with tremendous commercial skills.”
Some 38 per cent of chief executives in Acevo’s membership had taken a substantial pay cut to move from the private sector to take up the leadership of a charity, he said, with the average salary standing at £57,000 a year.
“Just because we work with the poor and excluded why should we take small salaries even though we are entitled to claim more?” Mr Bubb said.
Competitive salaries were crucial if charities were to persuade people to regard the sector as a serious career option. “Charity salaries used to be so low that the only people who were chief executives of charities were retired from the army or City and could afford to do it. Are we saying that only rich people should be allowed to run charities?”
John Tarn, the chairman of Riverside, sought to justify the chief executive’s salary. He said: “As one of the largest housing associations in the country, Riverside has 2,500 staff and manages properties nationwide from Carlisle to Kent. The size and scope of our work means that we require an exceptional leader with the skills and experience to drive the association forward.”