Surviving in an age of scrutiny
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Presented at NCVO's Trustee Conference on Monday 11 November 2014. The presentation was by Kate Sayer, Sayer Vincent and Stephen Brooker, joint founder of Trustees Unlimited. These slides look at the significant changes, around increasing transparency that all trustees and Honorary Treasurers need to react to. To learn more about governance: http://www.ncvo.org.uk/practical-support/governance To find out about NCVO's Trustee Conference: http://www.ncvo.org.uk/training-and-events/trustee-conference
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Surviving in an age of scrutiny
- 1. AM5: Surviving in an age of scrutiny #TRUSTEECONF2014
- 2. Importance of Regulation Role of the Charity Commission • charitable status and registration • accounting and reporting • statutory inquiries
- 3. New Age of Scrutiny
- 4. What we are used to • fundraising practices • administration costs • unprofessionalism • campaigning and politicisation • chief executive pay
- 5. 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
- 6. What’s ‘new’ • fraud within charities • abuse of charitable tax relief • unethical investments • corporate partnerships
- 7. 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
- 8. Charity comes under fire for ‘party political’ tweets
- 9. Oxfam: MPs shocked by ‘disgraceful’ political campaigning
- 10. Tory MP accuses IPPR of making a ‘donation in kind’ to Labour
- 12. What does this mean? Public Trust and Confidence
- 13. Reasons why trust has decreased
- 14. Public Attitudes to Charities
- 16. How charities can respond Be open Embrace transparency Communicate
- 17. Surviving in an age of scrutiny - charity senior executive pay Rosie Chapman CFG trustee and independent adviser www.bprcassociates.com rosiechapman1@btinternet.com 07803 504439
- 18. 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)
- 19. Daily Telegraph, August 2013
- 20. 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
- 21. 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
- 22. 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)...
- 23. 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)
- 24. Pay transparency across sectors
- 25. Transparency choices for large charities? Align with: • private companies – limited public interest? • listed companies – shareholder interest? • public sector – public, voter and taxpayer interest?
- 26. 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?
- 27. Mail on Sunday 24/8/14
- 28. Three emerging categories for large charities? • Early adopters – e.g. Save the Children, British Heart Foundation, NCVO http://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
- 31. 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
Editor's Notes
- As people arrive 9.30 – 10am
- Private companies are largely exempt from any reporting requirements relating to pay; either regulatory or as good practice. Presumably this is because they are not seen as having stakeholders in the same way that a public interest is said to exist in the work of public bodies and charities. However, the picture for listed companies and the public sector is very different. Local authorities, for example, are expected to disclose more than the Inquiry is recommending for charities. These local authority regulations were derived from the Hutton Report on Fair Pay in the Public Sector, and its associated Fair Pay Code. My understanding is that the reporting regulations for Clinical Commissioning Groups are broadly similar to those of local authorities. The BBC is another public body with transparency about its senior executives’ remuneration . Listed companies have to comply with very detailed and prescriptive regulations about the contents of their remuneration committee report. For example, the report has to say whether and, if so, how the company has consulted with employees when drawing up its remuneration policy.
- Story last summer – helped prompt Pay Inquiry. Specifically aimed at International Aid charities
- Private companies are largely exempt from any reporting requirements relating to pay; either regulatory or as good practice. Presumably this is because they are not seen as having stakeholders in the same way that a public interest is said to exist in the work of public bodies and charities. However, the picture for listed companies and the public sector is very different. Local authorities, for example, are expected to disclose more than the Inquiry is recommending for charities. These local authority regulations were derived from the Hutton Report on Fair Pay in the Public Sector, and its associated Fair Pay Code. My understanding is that the reporting regulations for Clinical Commissioning Groups are broadly similar to those of local authorities. The BBC is another public body with transparency about its senior executives’ remuneration . Listed companies have to comply with very detailed and prescriptive regulations about the contents of their remuneration committee report. For example, the report has to say whether and, if so, how the company has consulted with employees when drawing up its remuneration policy.
- Analysis as part of the Pay Inquiry
- Private companies are largely exempt from any reporting requirements relating to pay; either regulatory or as good practice. Presumably this is because they are not seen as having stakeholders in the same way that a public interest is said to exist in the work of public bodies and charities. However, the picture for listed companies and the public sector is very different. Local authorities, for example, are expected to disclose more than the Inquiry is recommending for charities. These local authority regulations were derived from the Hutton Report on Fair Pay in the Public Sector, and its associated Fair Pay Code. My understanding is that the reporting regulations for Clinical Commissioning Groups are broadly similar to those of local authorities. The BBC is another public body with transparency about its senior executives’ remuneration . Listed companies have to comply with very detailed and prescriptive regulations about the contents of their remuneration committee report. For example, the report has to say whether and, if so, how the company has consulted with employees when drawing up its remuneration policy.
- Positive eg Affinity Sutton
- Journalists this summer had another go
- Not sure it’s sustainable for charities to align themselves with private companies in relation to transparency. Nature of stakeholder relationships precludes that. Elsewhere there’s a cross-sector trend towards greater transparency, which large charities would do well to embrace. Have suggested some specific ways in which that might be done – welcome views on whether they resonate