Idealism of the Charity Fat Cats

Peter O'Pinion

9 Nov

Written By

While this isn’t a new topic, it’ll no doubt rear its head again after the recent announcement of Persimmon boss Jeff Fairburn’s £75m bonus payout.

So, we did some digging on the Daily Mail website and found an article that offers a wonderful contribution to the “charity fat cat bosses” discourse.

In case you’re not keen on clicking a Daily Mail link, here’s a summary of the delightful article from Stephen Glover:

“Why I no longer give to charities whose bosses take home fat cat salaries.

Many charity bosses are no longer low-paid idealists who spend their lives working for one or two charities. They flit between the charitable and private sectors. And if they end up as chief executives of charities, they are likely to be paid amounts which some people will think obscene.”

Shouldn’t charity bosses be paid less than their counterparts in the private sector by virtue of the job they do?”

We realise there’s an element of editorial sensationalism at play here, but it’s surprising how little regard for any degree of factual analysis Stephen Glover has when attacking the cornerstone of the short-lived Torie wet dream, “the Big Society.” Don’t get us wrong, we’re all for a little bit of objective mirror gazing from time to time, just not blasting misguided lasers into mirrors that others are using.

Let’s start with the first quote. Stephen, you’re kidding no one. We don’t believe that you ever have or ever will give to charity, although it depends on whether you count political donations to UKIP as donations.

Given the appalling lack of research and insight in your article, it strikes us as characteristically incongruous that you’d choose to do such diligent research on where your monthly philanthropic pennies should be spent.

Charity Bosses Should be Paid Less

Next, taking aim at his easily checkable assertion that charity bosses should earn less than their private sector counterparts - they do.

Bosses of the FTSE 100 receive an average annual pay award of £7.7m*
Bosses of the FTSE 250 receive an average annual pay award of £2.5m*
Bosses of the top 100 UK charities, by income, receive an average annual pay award of £187,900*

We know what you’re thinking, hands dusted, and move on to the next article. But, no. Ol’ Stephen goes on to state that charity bosses should be idealists.

Why do they want massive stacks of cash for doing good work? Should good work not be its own reward?

Let’s ignore how infantilising that particular narrative is for a moment and move on to the next point.

Where have all the idealists gone?

We were going to start by attacking the distinct lack of common sense in asking Uncle Derick to consider running Save the Children (£1.5bn turnover / 24,000 employees / operates in 120 countries / CEO salary of £227,300 / currently employing the ex-Prime Minister of Denmark as their CEO) as he has a bit of time on his hands since retiring from the City and taking to pottering his country pile.

But we then realised Stephen thinks he has us by the short and curlies because what he is asking of charity CEOs is so ethereal that he thinks there’s no objective way for us to dispel his unscientific blathering.

How wrong he is.

I present to you the (patent pending) Idealism Rating Formula.

If we accept the following facts:

We can see that Charity CEOs are taking home 97.6% less than their counterparts in the FTSE 100, and 89.6% less than their counterparts in the FTSE 250.

But we all know Stephen isn’t convinced by such trivial things as comparative analysis, so why don’t we delve a bit deeper using our friend, pop science?

This is how the above salaries look as a percentage of turnover:

FTSE 100: 0.04%*
FTSE 250: 0.21%*
Top 100 Charities: 0.06%*

Surprisingly, our good friends in the UK’s biggest companies are taking an altruistic 0.02% less than these fat cat charity bosses, although that’s probably because even the folks over at GlaxoSmithKline would probably have to admit that paying their CEO a salary of £65 million (which is what it would be if using the FTSE 250 ratio) would be a little gratuitous.

If the charity sector were to match the 0.04% ratio of the FTSE 100, charity bosses would pull an average salary of £116,800, which is still higher than the ‘ire benchmark’ of the Daily Mail.

That being said, we need to combine the ratios of the FTSE 100 & 250 to get an average for the sector that the charity sector is competing with when it comes to talent.

This gives us a private sector ratio of 0.125% vs the charity sector ratio of 0.06%.

If we assume that a large part of the idealism of charity sector leaders and staff is that they choose to work in a sector where the salaries are up to 97.6% lower in real terms, it’s also worth noting that the average private sector Chief would expect to be paid £365,253 in the charity sector, meaning charity bosses are paid 51.5% less in adjusted terms.

With that preamble out of the way, it’s time for the moment you’ve all been waiting for:

Charity avg. CEO pay = ©

Charity avg. revenue = £

((FTSE 100 avg. CEO pay / FTSE 100 avg. revenue * 100) + (FTSE 250 avg. CEO pay / FTSE 250 avg revenue * 100) / 2)) = $

(© / ((£/100) * $)) * 100 = Idealism Rating

The next time some pip squeak starts sounding off about overpaid charity staff at a dinner party, or your supporter care team receives a strongly worded email about something someone read in the tabloids, be sure to send them the above.

The way the rating works is simple. The higher the number, the less idealistic charity bosses are. 0 = working for free, 100 = no idealism at all.

It’s possible to have an idealism rating higher than 100, but you’d have to start asking some serious questions.

We’ve provided a handy calculator below so you can work out the idealism rating of any Charity CEO you like. Go nuts.

[CP_CALCULATED_FIELDS id="6"]

*The figures have been calculated using our own original workings. See below for details.

Each of the charity top 100, FTSE 250 and FTSE 100 were calculated using a sample of 10 organisations for each. These organisations were selected through the incredibly scientific method of picking them out of a hat.

If you want to question our methods, we don’t blame you.

FTSE 250