A NVCO report has called for greater transparency in the way charities report on the pay of senior staff. Its recommendations go further than the new Statement of Recommended Practice (SORP 2015) for charities’ accounts, which will apply from next year.
The data the report publishes on pay in the sector will go some way to reassure donors. It estimates that the proportion of highly paid staff in the sector is significantly lower than that in the public or private sector. It also demonstrates that staggering numbers of people are involved in charities as volunteers: around 12.6 million people volunteer at least once a month, nearly a million of those as charity trustees. In general, where charities do employ paid staff, typically this is at a discount to the full market rate, particularly at senior levels.
However, many charitable organisations (particularly in the health, housing, and educational fields) are very significant operations: there are over 500 charities with annual revenue of more than £10 million. The report includes a number of other statistics to illustrate the size and diversity of the charity sector as it operates today, which helps make the case for the need for charities to attract staff with suitable levels of expertise.
SORP 2015 will require a much wider range of charities to declare the numbers of people employed at a salary of over £60,000 in £10,000 bands. The report suggests that in addition charities with revenue of over £500,000 should publish their names and exact pay. Furthermore, such information should not be buried in the accounts, but no less than “two clicks” away from the charity’s home page.
As well as this headline-catching suggestion, the report considers in some detail how charitable trustees should approach setting staff remuneration. It recommends that a summary of the arguments used to justify pay levels should also be readily accessible on the internet. Given that the level of top executive’s pay in all sectors is likely to face continued media scrutiny, charities will need to decide whether to embrace these proposals as best practice, even where they go beyond their strict legal obligations.