We have every right to be interested in the salaries of those in the charitocracy
Published 20/02/2014 | 02:30
A deer frozen in the headlights of a fast-approaching truck sums up Rehab's behaviour under scrutiny. It has misjudged woefully the level of public interest in salaries among the charitocracy in general – and at Rehab in particular, where a stingy attitude to transparency is proving unsatisfactory.
The bungling of its board is impacting not just on the charity but on the reputation of the sector. Charities have been slow to repair collateral damage – perhaps Rehab isn't the only deer caught in headlights.
Even now, what's known about Angela Kerins's pay is limited. Finally, we learnt this week that she earns €240,000 a year, plus a 6pc pension top-up. This is an increase of €6,000 on the Rehab chief executive's last known salary in 2011.
However, the board has omitted to share details of her salary in 2012 and 2013, which is surely a little odd. Furthermore, senior executives' pay won't be disclosed until the 2015 accounts, meaning they will be unavailable before 2016.
To recap, Rehab expects to continue receiving €82m a year of public money without letting people in on the secret of how exactly it is spent. Now that's a board walled up inside an ivory tower.
It is not Ms Kerins's job to justify her pay. The board ought to explain the principles on which her package was agreed, and make its case to the public. Efforts so far have been unpersuasive. 'Inadequate' is the word that springs to mind. Speaking of which, 'inadequate' is exactly how one of Rehab's outlets in the UK was evaluated independently.
Rehab's British services are co-ordinated by TBG Learning, a youth and adult training provider. An inspection report into its Birmingham facility was made last November by Ofsted, the office for standards in education. TBG Learning received a grade four – the lowest possible grade, classified as 'inadequate'. Both management and teachers were criticised.
If the Rehab board wants the public to accept that its chief executive's pay should outpace the charity sector norm because of her performance, there is a fly in the ointment in Birmingham. In its statement, it advances a questionable argument about paying "significantly below the market median" – dubious because the charity and commercial spheres can't and shouldn't be compared. There is, after all, a vocational element to working for a charity.
Rehab tells us that Ms Kerins voluntarily waived all bonus entitlements for the past four years. A decision entirely to her credit. But I am mystified why any senior executive in a charity – even a charity with a commercial arm – should receive performance-related bonuses. It seems inappropriate.
Confusion could be avoided if commercial organisations with charitable status had their work split into two separate divisions, and perhaps this is the way forward.
Any charity that imagines the public to be indifferent to salaries and administration costs is deluding itself. And that lack of engagement with reality betrayed by some in the charitocracy world concerns me.
Just as surprising as the scale of some of those salaries and top-ups is the utter lack of preparation on the part of charities to justify them. The fallback defence is that chief executives do complex jobs, salaries need to be benchmarked to the private sector, and the leader's salary is a tiny percentage of the total budget. Such arguments do not convince a jaundiced public.
Naturally, charities need to be run in a business-like fashion, and everybody is entitled to a just wage for their work. If negligible salaries are paid, the risk is that only people of private means will become involved. However, there are balances to be struck in the pursuit of value for money.
Charitable designation gives organisations valuable tax exemptions. Where they also receive public funding, the need for public accountability increases – charities can't expect immunity from scrutiny. They have a responsibility to uphold the highest standards and adhere to best practice.
Information must be supplied to the public in return for charitable status. Data which should be shared annually includes what percentage of every euro raised or donated is spent on charitable activities, and how much is gobbled up by overheads. Also of interest are salary ratios from the highest to the lowest-paid employee: one ought not to be many multiples of the other.
The same debate is contining in Britain, where last year the chairman of its Charity Commission, William Shawcross, warned that boardroom excess was bringing charities "into disrepute". He said: "In these difficult times, when many charities are experiencing shortfalls, trustees should consider whether very high salaries are really appropriate, and fair to both the donors and the taxpayers who fund charities."
Talented chief executives don't grow on trees. When appointing one, charities take into account factors including public profile; an ability to work at the highest levels of government with both civil servants and politicians; and the capacity to relate to supporters.
Equally, rewards exist beyond current remuneration packages. Acting as a charity CEO can prove to be a stepping stone – for women, in particular. According to Women on Boards UK, the charity sphere is a useful training sector, equipping women to move into executive roles on the FTSE and in private and public companies.
The public likes to regard charities as huggable organisations staffed by good eggs. In fact, they are multi-million-euro businesses and their chief executives handle a demanding role.
Getting executive pay right is important for them, but it is even more important if public confidence is to be restored. People want reassurance that money is being spent wisely – to that end, full transparency is in everybody's best interests.
When legitimate questions are asked, silence followed by redacted information is in nobody's interests.