Are Charity CEOs Getting Paid More or Less Than They Used To?
It’s been nearly six years since the Charity Commission warned of the dangers of overpaying chief execs in the charity sector. And despite salaries slowly creeping up across the sector at all levels, the conversation around ‘fat cat’ CEO pay hasn’t really changed.
It’s still a hotly debated issue; one that begs us to question—are charity CEOs really getting paid too much?
Holding charity CEOs to a higher standard
The most highly paid charity sector CEO’s may earn nothing like their equivalents in the private sector, but we’ve all heard of some big sums. It can be hard to stomach when, for many of us, very high pay is unjustifiable on any terms.
Still, what many private sector CEOs take home is a whole other ball game. It beggars belief that any one person has such specialised skills that they need to be rewarded in this way. And what does it say about the organisation? What does it say about its management structure, the staff and its training and development opportunities?
Leadership salaries are at a more appropriate level in the charity sector, but quite rightly they still need to be closely monitored. People don’t want to think that their donations, their fundraising efforts, their voluntary support are being used to line the CEO’s pockets.
Nevertheless, we’re asking more from our big brand charities—and their leaders—than at any other time. These are huge, complex organisations that are part of the fabric of our society. We depend on them to deliver the best possible service to their beneficiaries in straitened times and to do it for less. They’re also under constant scrutiny by politicians, the public—and, of course, the press.
It may be a few years since the Daily Mail’s 2016 article “Why I no longer give to charities who take home fat cat salaries”, but the issues it and others like it raised have had a lasting impact. Not least because they came out at around the same time as the highly publicised safeguarding scandals at flagship organisations like Oxfam and Save the Children.
In many ways, it’s understandable that these two strands of negative news about charities conflated into one in the minds of many at that time. To a degree, the legacy remains, with charity sector CEO pay often given as a reason why someone won’t donate to a particular charity.
But how can we expect to attract the ablest people to leadership roles in charities if we’re not offering them competitive salaries, commensurate with their skills and experience? It doesn’t mean they’re not dedicated to the charity’s purpose—most could still earn a lot more elsewhere, but their pay needs to reflect the demands of the role.
What the 2019 Charity Sector Salary Report can tell us about CEO pay
The latest edition of the Charity Sector Pay Report, produced by Harris Hill and CharityJob, doesn’t specifically examine data on CEO pay because these salaries are dependent on a number of competing factors.
Including the scale of the organisation, its ambition, complexity, location and geographic footprint, sector regulatory requirements, as well as the challenges specific to the organisation and the role. The team at Harris Hill also work on a number of non-executive posts each year that don’t receive a salary, making it harder still to make useful comparisons.
Nevertheless, it’s Harris Hill’s view, based on the expert knowledge of their Executive Search team, that there’s been a small increase in CEO pay in the last year—although effectively not an increase in real terms. This follows a slight dip in the previous years.
Interestingly, they’re seeing a generally more collaborative approach to these appointments ‘as part of a wider conversation on governance that has taken place in recent years with Chairs and Trustees often prepared to play a more supportive role in times of challenge, and when an organisation is without a CEO’.
It’s their view that funders are becoming more important too—in some cases paying the search fee, and in others even paying the CEO salary.
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Download the full 2019 Charity Sector Salary Report today.
And what does CharityJob’s salary data tell us about CEO pay?
Our own salary data at CharityJob shows a slight increase in CEO pay for the jobs we’ve advertised in the last three years:
- Average CEO salary in 2017: £56,000
- Average CEO salary in 2018: £56,000
- Average CEO salary in 2019: £58,000
Where the average salary remained quite stable between 2017 and 2018, we’re seeing it start to shift upwards again. Whether this is reflective of the incremental rise we saw sector-wide in 2019, it’s still far below the average for CEO salaries in the for-profit sector (£127,003 in the UK and £130,585 in London, according to Glassdoor). And even more importantly, it’s just over half the £100k salary that charity CEOs are often accused of taking.
If we were to break it down by charity size, we’d see the average CEO/Director-level salaries advertised by CharityJob in 2019 are as follows:
- Large charity: £66,759
- Medium charity: £65,273
- Small charity: £57,251
Of course, there are always exceptions to the data. We’re not saying that £100k+ salaries don’t exist in the sector, but chances are, they’re more likely to be found in the bigger, ‘brand name’ organisations. And with 61% of charity sector employees working in organisations with less than 50 paid staff (and 25% working in organisations with less than 10), these highly-paid CEOs aren’t representative of the charity sector as a whole.
High pay across the sector
In March of this year, Third Sector released their latest analysis of high pay at the UK largest charities, Charity Pay Study 2019: The Top Earners, 1-100.
It’s a Top 100 list compiled after scrutinising the annual accounts of the largest 150 charities by income (and some smaller charities are known to pay high salaries).
This year’s list is headed up by an employee at the richest charitable organisation in the UK, the medical research charity, The Wellcome Trust. He earnt £3.2 million after his investment portfolio returned a profit of £2.2 billion. So, in all sorts of ways, completely A-typical of the sector overall.
Still, based on this list alone, the median high earner’s salary across the top 100 remained at £185,000 which is the same as in 2017. To give that context, the median pay for FTSE 100 Chief Executives in the same year was £3.9 million.
Even at this level, it looks like average salaries for leadership roles are static—or only slightly up on previous years.
Meanwhile, ACEVO (The Association of Chief Executives of Voluntary Organisation) conducted research amongst its members showing a general downward trend in charity chief executive pay in recent years. In 2013 the median annual basic salary among those polled came out as £60,000. By 2017 it had dropped to £50,000, where it remained last year.
So, why in real terms do leadership salaries appear to be held down?
Vicky Browning, the Chief Executive of ACEVO is quoted in the Third Sector article as thinking, “it’s much less to do with media coverage than to the financial pressures many organisations have faced over that period.”
It’s also the case that CEOs and leadership posts are staying longer in their roles—they’re not moving jobs so often, and that’s suppressing pay. Like all areas of the sector, there’s a growing appreciation of the other benefits that accrue with an established position. A better, collaborative relationship with the board and some flexibility over your working life.
So, it seems safe to say that overall—and certainly in real terms—CEO salaries have stayed at around the same in the last year but aren’t dropping as was the case in the aftermath of the scandals of three or four years ago.
And that’s due to a number of factors working together—financial pressures, a lasting sensitivity to the issue of high pay in our sector, improved working relationships between Boards, Trustees and the Executive Team and an appreciation of the other benefits available in our sector.