surviving in an age of scrutiny
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#TRUSTEECONF2014
AM5: Surviving in an age of scrutiny
Importance of Regulation
Role of the Charity Commission• charitable status and registration• accounting and reporting• statutory inquiries
New Age of Scrutiny
What we are used to
• fundraising practices• administration costs• unprofessionalism• campaigning and politicisation• chief executive pay
Councils call to crack down on ‘chuggers’
Criticised charity to raise spending on administration
Unprofessional leadership erodes charity ambition
Charities must stick to good causes and not play at politics
30 charity chiefs paid more than £100,000
What’s ‘new’
• fraud within charities• abuse of charitable tax relief• unethical investments• corporate partnerships
Politicisation of Charities
• Lobbying Act: new non-party campaigning rules
Charities' political lobbying should be restricted, select committee hears
Robert Halfon MP of the Public Administration Select Committee says charities should be required to report on how much money they spend on campaigning
Charity comes under fire for ‘party political’ tweets
Oxfam: MPs shocked by ‘disgraceful’ political campaigning
Tory MP accuses IPPR of making a ‘donation in kind’ to Labour
What does this mean?
Public Trust and Confidence
Reasons why trust has decreased
Public Attitudes to Charities
Drivers of dissatisfaction
How charities can respond
Be openEmbrace transparencyCommunicate
Rosie ChapmanCFG trustee and independent adviser
www.bprcassociates.comrosiechapman1@btinternet.com
07803 504439
Surviving in an age of scrutiny - charity senior executive pay
Charity senior executive pay - context
• Media scrutiny – its an easy story to write...• Turn of charities to be in the spot-light?
Private sector shareholder revolt Public Sector: Hutton Review of Fair Pay
• Charities spend too much on executive salaries: top concern amongst 42% public (Ipsos MORI/NPC April 2014)
• UK median salary £27,000 (ONS Dec 2013)• Almost half of MPs oppose £100k pay for
charity ceos (nfp Synergy Sept 2014)
Daily Telegraph, August 2013
Charity pay – some facts and figures
• Charity ceos base salaries up to 25% less than private sector peers in equiv. organisations; 45% if bonuses and long term incentives included
• Esp. true for charities funded primarily by donations and philanthropy rather than contracts/fees
• About the same as public sector though (Source: Hay Group)
• Over 6% private sector earn £60k or >, c.f. 4.5% public sector and 1.9% charity workforce
NCVO Inquiry
• 18 Independent Panel members – representing a wide range of organisations
• Sought evidence from a wide range of sources
• Published recommendations in April 2014 - http://www.ncvo.org.uk/images/documents/about_us/our-finances-and-pay/Executive_Pay_Report.pdf
Inquiry recommendations - 1
• Adopt good practice principles for setting pay• Adoption of a remuneration policy• Consider esteem and value attached to
working for a charity • Consider using remuneration ratios • Transparency - publish an annual statement
(cond)...
Inquiry recommendations - 2
• Publish an annual remuneration statement Explain challenges face and why specialist
staff are required Explain how impacts upon delivery of
charitable purposes Report actual remuneration, roles and
names of individual highest-paid staff, as defined by the charity
Publish all this information on the charity’s website (no more than two clicks from the home page)
Pay transparency across sectors
Transparency choices for large charities?
Align with:• private companies – limited public
interest?• listed companies – shareholder
interest?• public sector – public, voter and
taxpayer interest?
Housing experience – executive pay transparency
• Of top 15 housing associations (Registered Providers), whose income is equivalent to FTSE 350 companies:• Roughly 1/2 follow Corporate Code
which applies to listed companies, and
• Rest go no further than housing SORP (equivalent to charities’ SORP)
• Will large charities have a similar split?
Mail on Sunday 24/8/14
Three emerging categories for large charities?
• Early adopters – e.g. Save the Children, British Heart Foundation, NCVOhttp://www.ncvo.org.uk/about-us/finances-pay
• Those who say that they’ll reflect the recommendation in their 14/15 trustee annual report (Auditor reticence?)
• No change
Conclusion
• Not sustainable for charities to align themselves with private companies’ re transparency? Nature of stakeholder relationships precludes that.
• Cross-sector trend towards greater transparency - large charities would do well to embrace
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