Can we justify paying people to do good on our behalf, or should doing good be something that all of us do at personal cost to only ourselves? If we are prepared to pay others, is there a limit to how much? On Tuesday the Daily  Telegraph published a politically motivated article based on research by Priti Patel MP. The article was a critique of the pay of senior charity executives in 14 charities out of a total of 163,000 charities in the UK. These 14 charities are the sole members of the Disasters Emergency Committee and their activity provides overseas aid on behalf of donors under the guidance of their Trustees. In response to this I wrote two blog postings here and here. Since then many people have written on various social media sites expressing how deeply they feel about this subject.

The Telegraph article considered several different criteria. One was the number of these charities that pay their most senior staff over £100,000, a second was those paying staff more than the Prime Minister (£142,500) and there was also a focus on the level of increases paid to senior members of staff over recent years. As I stressed previously these 14 charities are not typical of the broad charitable sector but for the record 6 of the charities pay at least one member of staff more than £100,000 and three pay staff more than £142,500. I have had extensive experience of the charitable sector, primarily as a Trustee, although I have never earned sums close to either of these figures nor agreed for anyone else to earn such sums.

The vast majority of our 163,000 charities don’t have any employees, but all have Trustees who are accountable to the wider community, donors, funders and the beneficiaries of the charity. Trustees are personally responsible for the good governance of the charity and this includes ensuring that the charity is well managed. In a large number of medium to large charities this management role will be delegated to members of staff with an appropriate level of skill and experience. To fail to enable good management is as significant a problem as wasting charitable funds. The pay levels of staff is something that Trustees are responsible for setting, although in large charities the detailed pay arrangements will be delegated to senior members of staff. All of the salaries assessed by Priti Patel should have been set by the Trustees of these 14 charities.

Some of these charities are handling sums of up to £400M in terms of income and at least one employs nearly 6000 people. At least one runs an extensive chain of charity shops which need to be well managed with similar skills to any other retail business. They all deliver services to some of the most inhospitable places on earth. These charities are dependent on employing people at the highest levels with strong entrepreneurial skills. The sort of skills that would otherwise allow them to earn substantial sums of money. If these charities are compared to commercial companies they will be paying similar amounts for fuel, utilities, rent, printing and stationary. They should benefit from full or partial levels of some taxes, but otherwise organisationally their day to day work is very similar to many businesses.

So what to do? If you were a Trustee of one of these charities would you expect your staff to work for free? A tough call if you need 6000 people to do this work full time. Would you try to pay all of your staff a minimum or better still a living wage? It seems unlikely that many people would be prepared to manage so many people and organise such large organisations for a living wage. Another figure that could be used is the average UK wage which is deemed to be about £26,000, again how realistic is this?

Assuming that these options have been eliminated the Trustees are left with three more. Deal with each post on its merits and carefully and painstakingly test on a case by case base how little people will work for to do the various jobs. The risk is that there may be people willing to work at a given level who do not have sufficient skills to do the job well enough to deliver the work of the charity effectively. This is the equivalent of losing the ship for the cost of a bit of tar. Secondly Trustees can apply some logic and science and come up with a mathematical approach that takes into account the levels of pay in comparable charities for similar posts as well as the day to day responsibilities that post holder will need to fulfil. These are not perfect ways of working and each group of Trustees will weight their factors differently. The final option is to pay what the commercial world will pay its staff for similar roles. In some cases these charities are paying 30% less than an equivalent role in a commercial setting, in others the differential is as much as 10 times.

Clearly some of us would do things differently to the way we think these Trustees have worked. Becoming a Trustee of a charity would be an excellent way to understand the challenges faced by the people who have made these decisions. Most local charities are keen to recruit new Trustees and you may well have the skills to help. As someone who is interested in the charitable sector I think we need a proper debate on the issue of funding of charities and the way in which they are regulated. However it should not be framed by those with party political motivations to limit the involvement of charities in providing overseas aid. If we are to debate this let us include a wider range of charities including those like Wellcome Trust who pay their CEO £600,000  and their Chairman (usually a voluntary roles) 137,000!