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When the labour itself is worthy . . .

23 August 2013

Paul Vallely probes the complexities of charity executives' pay

COLIN and Clive were having a disagreement, and it was all my fault. I had been telling them about the story about the food co-operative Daily Bread, where everyone gets the same wage ( News, 16 August). Clive thought it was a great idea. Colin said that the notion that everyone - from the managing director to the cleaner - should get the same money was crazy.

What fuelled the argument was another disagreement: about whether charity bosses are overpaid ( News, 9 August). Colin, who is a robust free-market man, said that people should be paid according to what they are worth to an organisation. Top charity chiefs manage huge budgets and make life-or-death decisions. You have to pay for talent. A boss who doubled the fund-raising could earn his salary in a few weeks.

Clive, however, who collects clothes for a British Heart Foundation (BHF) shop, said that he had been distinctly demotivated when he found that the BHF chief executive was on more than £150,000 a year. And doubling fund-raising was a bogus argument: the man at the top of the British Red Cross had seen his pay jump by 12 per cent to £184,000 since 2010, despite a three-per-cent fall in revenue. Donors want their cash to go to the cause, not to line the pockets of executives.

Emotive language can be used to bolster either case. But gospel-inspired organisations have two insights to offer here. Daily Bread takes as its bottom line the idea that people are more important than profit. Its equal-pay-for-all approach embodies an exemplary idealism, which takes its inspiration from Matthew's account of the Sermon on the Mount, in which Jesus tells his listeners: "You are the light of the world. A city that is set on a hill cannot be hidden."

In the same parable, another metaphor is used, that of his disciples as the "salt of the earth". This suggests that Christians must immerse themselves in the common mass, although without losing their distinctiveness. Even so, the labourer is worthy of his hire.

Church charities seem to be conflicted about these models. On the one hand, they seek to attract competent leaders by paying them properly. The CEO of the Salvation Army is paid £140,000. The director of Christian Aid gets £126,072, while CAFOD pays its director £87,000 a year. And yet these figures are nowhere near the average wage for the bosses of Britain's top 100 charities, whose salaries top the £200,000 mark.

There is still a problem with the heads of church charities' receiving annual pay-rises during hard times, when charity incomes are falling. It is rooted in the idea that all executives - in banking, government, or the charity sector - should have their salaries fixed by a process of continual comparison with one another. This means that inflationary dynamics in public bodies and the private sector are leaking to charities, and driving up pay among top managers there, too.

But measuring a charity boss against what he or she might otherwise earn in the private sector is a false yardstick. Charities are big businesses nowadays, but they are also something much more: they are an expression of altruism and common purpose. Exemplary idealism is a counsel of perfection, which stands as an aspirational goal. In the real world, charity chiefs should be paid properly. But that involves a recognition of their singular status. They should not expect annual wage rises at a time of austerity.

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