Duncan Brown: Executive pay in overseas aid charities

“Average pensions for top directors have increased to almost £260,000 a year: 25 times those of other employees,” was how The Guardian reported the latest Trades Union Congress (TUC)-sponsored PensionsWatch research, published at the beginning of September.

The TUC has a clear point of view on ‘excessive’ executive remuneration. In keeping with many working in HR, I agree with much of the press criticism and support the measures now being taken: the compulsory shareholder vote, clearer communications of the total value of packages, and so on.

But the danger with any general phenomenon is that we ignore some of the specifics and motivations, and within the general media barrage of criticism, some innocent parties get caught in the crossfire. Take the case of overseas aid charities.

On 6 August, The Daily Telegraph published a front-page story headlined 30 charity chiefs paid more than £100,000, reporting a 60% increase over the past three years among Britain’s 14 leading aid charities. It ran the story for the next six days, referring regularly to falling revenues and concluding: “The new ruling class of charity managerialists are driven by self-interest…if a class of charitocrats, richer and more powerful than their ordinary donors, has come into being, that is wrong.” The story was picked up widely by television, press and social media.

Aside from typical misunderstandings, such as reporting ‘pay increases’ that rather reflected a change in job holder, I found the exclusive focus on overseas aid charities the most sinister aspect. Charity governance and reporting may need to be improved to the new private sector standards, reflected in international development minister Justine Greening’s call for greater transparency.

But is, say, the £119,560 pay of the chief executive of Oxfam, a huge and complex organisation, excessive by any standards? Especially when among Britain’s top 100 largest charities as a whole, median chief executive pay is now around £210,000, a figure that would also equate to the CEO of a much smaller private sector company.

Or the chief executive of Christian Aid, who was paid a similar amount and is subject to a pay ratio cap of four-times average earnings in the organisation? The average ratio in the FTSE 100 at the moment is around 200.

The proportion of funds that can be spent by these charities on the UK management of disaster responses is capped at a pretty efficient 7%. As donors, we rightly expect that our money does not go to line senior executives’ pockets. But we also expect highly efficient and effective leadership.

Could The Telegraph’s focus be in any way related to a particular political perspective on overseas aid? The paper reported in May that it “has led the way in exposing the shocking waste of Britain’s foreign-aid budget”, believing that “it makes no sense to ring-fence the Department for International Development’s budget, especially in a time of austerity, when other departments are making sacrifices and the taxpayer is feeling the pinch”.

As always, it’s down to you, the reader, to decide. But when an executive pay story leads to donors removing these charities from their wills, then reward professionals, I would argue, have a duty to put our heads above the parapet, for once, and ensure the facts are heard.

Follow Duncan on Twitter: @duncanbhr