Paying Charity CEOs large amounts isn't as bad as it looks

A turn-off, but not a scandal.

The Charity Commission warns that spiralling levels of chief executive pay risk bringing organisations and the wider charitable sector into disrepute, following news in the Telegraph that 30 charity chiefs are paid more than £100,000.

High levels of pay and administration costs can be a real turn off. This comes from a natural desire to ensure that money is well-spent, which for a number of people means as much money as possible goes directly to the front-line, to helping people most in need.

To begin with, if all the money goes to the frontline, but staff at the front-line are being ineffective because the strategy’s poor, then that money’s been badly spent. For us, there isn’t a level at which pay in the charity sector becomes too high; charities are trying to solve some of our most stubborn social problems and they need to attract talent to be able to do that.

Pay in charities is a much more finely balanced argument than is usually supposed. We’ve put together some advice on how donors can think about whether or not giving to a charity with high salaries should be a cause for concern:

First, and most importantly, it’s all about impact. Knowing that children have been sponsored or that schools have been built isn’t enough: you need to know exactly what difference the charity is making, and how this is happening. Action on Hearing Loss’s annual report provides a summary of what it has achieved against its aims, which helps donors decide whether the organisation spends their money well.

Second, you need to consider the complexity of the charity. The CEO of Oxfam is paid £120,000, and is responsible for a £360 million budget, 700 shops in the UK and 5,000 employees and 20,000 volunteers who work in over 90 countries across the world—some of them very risky places to be. £120,000 doesn’t feel like a lot in the context of that job description. The CEO of Next also runs 700 shops (but no humanitarian aid) and gets nearly £1.5m. Of course, this is all proportionate to the task and budget at hand: you don’t want a £500,000 income charity to spend £100,000 on its CEO’s salary.

Third, although its difficult to tell from the outside, what value is the CEO bringing? Have they increased the charity’s profile and fundraising? Have they devised a good strategy? If the case is that you need to pay up for talent, then supporters should be able to see the fruits of that talent.

Finally, it’s worth thinking about the quality of the staff throughout the organisation. If the charity is making an argument that they need to pay well to attract the best staff at the top, then you want them to apply the same logic to front-line staff. Medicins Sans Frontières has a rule that the chief executive can’t be paid more than three times the pay of the lowest paid member of staff.

By making the judgement call based on these factors — and not on gut feelings about pay — more money will be well spent. We’d like to see the impact of the UK’s leading aid charities make the headlines, instead of six-figure salaries that really say nothing on their own.

Angela Kail is head of Funder Effectiveness at New Philanthropy Capital, which helps donors choose effective charities

This piece first appeared on Spear's.

Photograph: Getty Images

This is a story from the team at Spears magazine.

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Labour is condemned to watch helplessly as Theresa May consolidates power

The Zombie Party is too weak to win and too strong to die. 

Labour’s defeat to the Tories in the Copeland by-election in Cumbria, which the party had held for more than 80 years, is a humiliation for Jeremy Corbyn and his moribund party. This is the first time a governing party had gained a seat in a by-election since Margaret Thatcher’s Conservatives won Mitchum and Morden in 1982. 
 
The victorious candidate Trudy Harrison, who increased the Tories’ share of the vote in this former Labour “stronghold" by more than 8 percentage points, hailed the victory as “truly historic”, while Labour MP John Woodcock called it a “disaster”, and even the shadow chancellor and Corbyn ally, John McDonnell, conceded it was a “profound disappointment”. 
 
At a time in the electoral cycle when a credible opposition should be winning by-elections and riding high in the polls, Labour is in disarray: rejected, humiliated, ridiculed. It has all but collapsed in Scotland, where the Tory leader Ruth Davidson has emerged as the popular, unapologetic leader of Unionism. And in England the danger now is not that it will lose seats to Ukip — whose leader Paul Nuttall was rejected yesterday in the Stoke-on-Trent Central by-election, which Labour held on a low turn-out after a dispiriting campaign — but to Theresa May’s Conservatives. 
 
The Copeland result was a vindication for Theresa May. When recently I interviewed her in Downing Street she had a simple message for Labour: we are coming after your voters – and she is. 
 
Because of its embrace of the radical left and internal divisions, May accused Labour of abandoning many of its traditional supporters. The party was not responding to their concerns on issues such as “the impact of immigration on lower income levels”.
 
True enough: Corbyn favours mass immigration and open borders yet is an economic protectionist – a classic Marxist position but electoral suicide in our new emerging post-liberal era in which populist movements are rising across Europe and an America First nationalist is in the White House.
 
“I hope there are Labour voters,” Theresa May told me, “out there who will now look at us afresh and say, ‘Labour hasn’t responded to our concerns, it hasn’t recognised what matters to us, but the Conservatives have seen that and are responding to it. I want our greater prosperity not to be confined to particular groups of people or a single part of the country.”
 
The polls suggest that more than simply disaffected Labour voters are looking at the Tories afresh, as we embark on the epic challenge of negotiating the Brexit settlement.
  
May believes that Brexit was not only a vote to leave the European Union but a demand for change from those people – many of them in places such as Copeland - who felt ignored and excluded from prosperity and greater opportunity.
 
Her vision is for a “Great Meritocracy” (whereas Corbyn’s is for a socialist republic) combining greater social justice with enhanced social mobility. It’s an intellectually fascinating and ambitious project and, if successful (and many doubt her, not least her own right wing), it has the potential to condemn Labour to electoral oblivion.
    
The collapse of the Labour party as a stable and credible political force is dismaying. Many of the party’s problems precede Corbyn, who is sincere and determined but is not a national leader. But then neither was Ed Miliband, who misunderstood the financial crisis, which he believed had created a “social democratic moment”, and misread the country he sought to govern. Miliband treated politics like an elevated Oxbridge PPE seminar and introduced the new rules by which the party elected its leader, disempowering MPs.
 
The distinguished Cambridge historian Robert Tombs has called the European Union a system of “managed discontents”. Something similar could be said of Corbyn’s Labour, except that its discontents are scarcely managed at all.

Most Labour MPs despise or are embarrassed by their leader. The MPs are divided and demoralised, with some pondering whether to follow Tristram Hunt and Jamie Reed (whose resignations created respectively the Stoke Central and Copeland by-elections) out of politics. The Corbynites are breaking up into factions (one hears talk of “hard” and “soft” Corbynites), and Corbyn himself is incapable of appealing to those who do not share his ideological convictions.
 
For now, the Labour leader retains the support of activists and members and, crucially, of Unite, Britain’s biggest union and the party’s paymaster. But even his friends must accept that he is leading the party in only one direction – into the abyss.
 
On the eve of the two by-elections, Corbyn posted a message on Facebook: “Whatever the results, the Labour Party – and our mass membership – must go further to break the failed political consensus, and win power to rebuild and transform Britain.”
 
The statement was received with derision on social media. The idea that Labour can win power any time soon (notwithstanding some black swan event) is magical thinking. Corbyn’s personal ratings among traditional working class semi-skilled and unskilled Labour voters are catastrophically poor. He appeals to students, affluent metropolitans with degrees, and minority groups. As for the majority of the electorate, forget it.
 
MPs are reluctant to challenge Jeremy Corbyn because they know any leadership contest would revitalize his leadership, as happened last summer when the Welsh MP Owen Smith mounted an ill-considered and doomed “coup”. Nor is there a pre-eminent candidate waiting in the shadows to strike, as Michael Heseltine was in the last years of the Thatcher administration.
 
So Labour will continue to be the Zombie Party: too weak to win but too strong to die. Its founding mission was to defend the labour interest and to create a fairer, more ethical society. But Labour has lost its role, its confidence and sense of purpose. Obsessed by identity liberalism, bewildered by Brexit and led by a radical socialist, Labour can only look on helplessly as the Tories start to win seats in its former heartlands and hunker down for another decade or more in power.

This column was originally published in the London Evening Standard.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.