Why a Charity's Staff Are Paid, and How Pay Gets Decided

This is written to be used rather than admired. Each section below is a decision about pay setting in charitable organisations, and each one has a default.

What unpaid would actually mean

A service employing nurses, social workers, lawyers, accountants or teachers cannot obtain those skills without paying for them. Requiring such work to be unpaid restricts it to people with independent income, which changes who delivers services and to whom.

It also removes accountability, since an organisation cannot manage the performance of, or dismiss, someone who is not employed. Volunteer-only organisations exist and do excellent work, and they are structurally limited to activities that fit around other people's paid jobs. The choice is not between a paid charity and an unpaid one but between a staffed service and no service.

How the figure is arrived at

Senior pay in a well-governed organisation is set by a committee of trustees rather than by the person receiving it. The usual method is benchmarking against comparable roles in similar organisations, moderated by what the organisation can actually afford.

From the receiving end, the comparison set matters enormously, since benchmarking against the commercial sector produces a very different answer from benchmarking against small charities. Good pay policies state the comparison group explicitly, which is what makes them reviewable rather than merely asserted. Where a policy is not published, asking for it is a legitimate question and organisations increasingly answer it.

Disclosure and where to find it

Many jurisdictions require charities above a size threshold to disclose senior pay, sometimes as bands and sometimes as individual figures. The rules on what must be disclosed, by whom and in what form differ substantially, so check your own regulator rather than assuming. Where disclosure exists, the figures appear in the annual accounts rather than in the narrative report, and are often in a note near the end.

In the annual accounts, a figure without context is nearly useless, since the same salary means different things at different organisational sizes and in different countries. Compare against organisations of similar size and complexity, or the number will mislead you in whichever direction you already lean.

The pay compression problem

Charities frequently pay below market for professional roles, which produces high turnover in exactly the functions where continuity matters most. Finance, technology, fundraising and human resources are the roles most exposed, because those skills transfer easily to better-paying employers.

The cost of that turnover is real and appears as recruitment expense, lost knowledge and projects restarted by each new postholder. Underpaying to look efficient therefore frequently costs more than the saving, though the saving is visible and the cost is not.

This is one of the clearest examples of the overhead ratio distorting decisions inside organisations rather than merely outside them.

What a fair criticism looks like

Objecting to a specific pay decision as poorly benchmarked, badly governed or inconsistent with an organisation's own values is a legitimate argument. Objecting to a large sum with no reference to the organisation's size, sector or the responsibilities involved is not an argument at all.

Asking who sets pay, against what comparison, and whether the process is documented, gets closer to whether the governance is sound. Asking whether pay rose while services were cut is a fair and answerable question that accounts will usually let you check. The question is whether the process is defensible rather than whether the number feels large.

Where the sector genuinely struggles

Pay transparency below senior level remains patchy, and pay gaps within charities have received far less scrutiny than headline figures. Low pay for frontline roles is a persistent issue in care, support and community services and receives a fraction of the attention senior pay does. Reliance on short-term restricted funding pushes organisations towards fixed-term contracts, which depresses pay and worsens retention simultaneously.

Sorting the donation bags, none of this is resolved by paying senior staff less, and the two questions are frequently conflated in public debate. Funding structure is the underlying cause and is much harder to campaign about than a single published figure.

The takeaway

Ask who set the pay and against what comparison; the process is reviewable and the number alone is not.

Give the boring thing they asked for rather than the interesting thing you have.