Charity sector chief exec pay in 9% slump, says ACEVO

18 February 2015 -

Third sector bosses have taken a pay cut during tough economic times – but pressure remains on large charities to publish wage deals of senior staff

Jermaine Haughton

Salaries of bosses in the UK charity sector have sunk by almost a tenth, according to findings unearthed by charity leaders’ network the Association of Chief Executives of Voluntary Organisations (ACEVO). Its Pay Survey 2014/15 reports that median chief executive pay fell by £5,000 to £55,000 in the year up to March 2014, compared to the previous 12 months. When considering inflation, the fall represents a real-terms decrease of 9%.

ACEVO chief executive Sir Stephen Bubb argued that the drop reflects the strained financial and political circumstances that many charities are facing. “This year’s pay survey shows the scale of the challenge for the third sector in its continuing drive to be more representative of the communities it serves,” he said. “The fact that pay has fallen shows how charities are taking a responsible position on pay in difficult economic times. But we must not be afraid of setting professional pay levels and arguing the case for salaries that recruit and retain the best people – as well as offering value for money.”

With a response pool comprised of 572 chief executives and 64 board chairs, the survey found that the highest average chief executive pay was based in London, at £68,000. Conversely, charity CEOs in Wales earn the lowest average figure at £37,849.

Bubb pointed out that including a greater number of smaller charities in this year’s study ,may have contributed to the fall. “Nevertheless,” he said, “the survey shows the impact of a difficult economic and political situation.”

A worrying lack of ethnic diversity among charity bosses also emerged from the survey, with 91.2% of CEO respondents and 100% of chairs describing themselves as white Caucasian. Gender pay gaps, however, have improved: compared to an 18.6% gap recorded in the 2013/14 survey, median female salaries are now 16.3% lower than those of their male counterparts. It is clear that, in both areas, much is still needed to be done to improve diversity among charity sector bosses.

ACEVO North director of leadership Jenny Berry said: “Social leaders consistently tell us [the survey] is one of the most valuable resources we produce. It informs trustees, staff and beneficiaries about senior pay in the third sector. It informs the work Acevo’s doing to promote wider representation of its beneficiaries across the charity sector, through our Special Interest Groups on Women Leaders and Black and Minority Ethnic Leaders among other programmes."

In the past year, charities have come under increasing pressure to be more transparent about executive pay. At present, the charity-related Statements of Recommended Practice (SORPs) do not request larger charities to disclose the pay of their most senior managers – instead asking them to anonymously reveal the number of staff paid in £10,000 brackets, above £60,000.

The National Council for Voluntary Organisations (NCVO) has been particularly vocal on this theme. Last April, it published a report urging charities to produce remuneration data explaining their pay strategies within their annual statements – and said that the individual remuneration figures of highest-paid staff should be supported by details on their positions and names. Taking the lead, the body revealed it has a 3.8:1 ratio of the highest earner’s salary, with its CEO Sir Stuart Etherington on £128,069 a year, against the charity’s median salary of £33,641.

NCVO director of public policy Karl Wilding said: “If we would like to be better understood by the public, then we will have to start by being open and honest with them.”

CMI’s recent Management2020 report contained numerous ideas about how organisations can harness purpose, people and potential – including by championing diversity. Download the full report.