The Nonprofit Salary Bill Comes under Scrutiny

A recent survey conducted by British newspaper The Daily Telegraph (5 August 2013) has caused an uproar in the nonprofit sector in the United Kingdom (UK). It revealed that nonprofit sector executives from well-known global nonprofits funded by the British aid agency are pocketing up to £184 000 (approximately R2.7 million) per annum in salaries. In some cases, according to the ‘charity rich list’, nine of those charities paid about £300 000 pounds (R3.5 million) each to some of their employees in 2012. This has raised a public relations nightmare in the midst of aid budget reviews. Interestingly, this revelation has not been denied by the organisations in question but been defended vehemently.

As would be expected, this disclosure has got everyone about the ‘excesses’ of the nonprofit sector. The ‘Progressives’, as I would call them, have emerged in defence of the amounts paid, while the so called ‘Mother Theresa types’ have drawn up the ethical card in condemnation.
The Progressives argue that talent does not come cheap and that people must be rewarded for the value they bring to the nonprofit. They have put forward efficiency as a justification, that is, the calibre of executives in question has directly contributed to the efficient functioning of the nonprofit, therefore a reward for such is appropriate. The common and the little understood assertion that nonprofit organisations (NPOs) are no longer small voluntary organisations but big businesses that require a business corporate approach, has also crisscrossed the debate lines. There is almost an aura of arrogance in the position taken, namely that the executives deserve it and their exorbitant salaries must therefore be accepted, in line with the common expression: ‘you pay peanuts and you get monkeys’.

On the other hand, the countering voices are cautioning that the biggest charities risk bringing the wider charitable world into disrepute by taking large pay rises while donations are falling. The big question being asked, once again, is whether charity work is a career or a vocation. This suggests, on their part, that if it is a career then the excesses are justified, but if it is a vocation then personal (financial) sacrifices must be demonstrated in an attempt to make all of humanity better. This sounds more like a true shepherd must or is expected to smell like the sheep he is herding. In our modern sophistication of nonprofit enthusiasm, is this possible? It is a valid argument that finds legitimacy in the reality of our economic circumstances as nonprofits.

Perhaps we need to bring the debate closer to home, and sooner, before a British type of public outcry erupts and finds us unprepared in practice and conduct. South Africa’s economic disparities are well pontificated and documented. In the daily work place, we are well-informed through research of the salary gaps between women and men with the same responsibilities. The recent expose of the mining sector as relates to executive salaries and bonuses in light of the Marikana massacre is one other classical example. I struggle to lay hold of any similar credible survey for the nonprofit sector in South Africa. Much of what I found states ‘market-related’ remuneration. That alone needs to be unpacked in context.

However, it is a known fact that the nonprofit sector has achieved much through unpaid labour, that is, the sacrifices made by field workers or volunteers. These form the backbone of charity work and its achievements. Yet they receive ‘Mother Theresa rewards’ in exchange for their efforts, as well as make up a significant constituency of the impoverished in South Africa. Could this currently dormant nonprofit sector erupt into a Marikana-scale indignation?

The sad part about the British nonprofit case is that salaries for executives soared during the recession, an act which has rightly outraged the public (donors), who are incensed at the insensitivity so arrogantly displayed. This happened when everyone around the world was feeling the pinch, when presidential calls were being made to commit to austerity, when some for-profit executives were cutting and turning down salary increases in solidarity. It seems the UK nonprofit sector miraculously flourished to the extent of being generous to their executives. Another question arises, could this be the dominant culture in the nonprofit sector? Maybe we need to measure performance of nonprofit executives by the extent to which they have achieved social impact, and not by operational efficiency alone.

If we do not learn from the current fiasco in Britain, we are bound to negate the good work that most of us are sacrificially involved in. Our authority to speak and act against social material divisions and injustices in our communities will be compromised.

If a similar survey was to be conducted in South Africa, what will it tell us? How will we react to it? The British government, having taken stock of the gravity of the issue, has, this month, set up a commission to review executive pay for charities. It will be interesting to follow this development and review the actions they choose to take.

- Thami Sonile writes in his personal capacity. Among many of his involvements, he is completing a Social Entrepreneurship Certificate Programme at the Gordon Institute of Business Science. He can be contacted via email:   

NGO Services

NGO Services

NGO Events