NCVO senior executive pay recommendations and guidance

On 28 April 2014, NCVO published a report on its inquiry into charity senior executive pay, including guidance for trustees on setting remuneration.

The principal recommendations are for charities to publish:

• the exact salaries of named senior staff members on their websites, in an easily accessible place for donors; and
• the ratio between their highest and median salaries to indicate the level of pay throughout the organisation.

The NCVO recommendations and guidance do not create any new legal obligations for charities and they go beyond current reporting requirements. Although, the recommendations have the support of the Charity Commission and other influential figures in the sector, the Charity Commission rejected a proposal earlier this year to require charities to disclose the name and salary of their highest paid individual as part of new reporting obligations under SORP 2015 on the basis that “the disclosure of one individual’s pay might attract interest and headlines but did not really provide much of an insight into the pay policies of a charity”. However, the proposal had been supported by the majority (71%) of funders who responded to the SORP 2015 consultation.

With the issue under continued media scrutiny, charity trustees should consider reviewing their charity’s policies and practices on setting and disclosing senior executive pay, taking into account the recommendations and guidance that is now available. Any decision not to disclose detailed information about senior executive pay should be able to be defended by the trustees.

For more information or to discuss your charity pay, governance or other charity law matter contact one of our charity solicitors today on 01895 207809 or email charities@ibblaw.co.uk.