#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