The Charity Commission will “take action” if the line is crossed regarding trustees’ decision-making on charity spending, the regulator’s chief executive has warned.
The regulator said it expects charities to undertake benchmarking exercises to set appropriate salaries for senior positions, and trustees should use the framework set out in its guidance about decision-making.
The Charity Commission was approached by the Telegraph newspaper, whose analysis of the regulator’s data found a 35.7 per cent increase in the number of charities paying their employees more than £400,000 in the past five years.
Regulatory data also showed the number of people working for charities earning more than £400,000 had increased by 42.2 per cent over the same period, the newspaper found.
Responding to the findings, David Holdsworth, chief executive of the regulator, said trustees were expected to make “prudent decisions” on all charity spending, including pay.
“Large and complex charities must attract talented people to run them, but the public rightly expects the demands of executive jobs in charities to be balanced with the selflessness that underpins what it means to be charitable. So do we,” he said.
“Careful decisions about pay foster public trust and confidence in the sector as well as best serve the charity’s beneficiaries now and into the future.
“Trustees are legally bound to make prudent decisions on all charity spending, including pay, and if this line is crossed, we will take action.
“To increase public accountability, we have also introduced greater transparency on every charity’s entry on the public register, demonstrated in The Telegraph’s data analysis.”
It comes after the grantmaking giant Wellcome published its annual accounts, which showed it awarded Nick Moakes, its chief financial officer, a pay package worth £5m.
Moakes topped Third Sector’s annual pay study, published last month.
When asked what exactly constituted “taking action”, the regulator said it would assess matters closely.
A Charity Commission spokesperson said: “Trustees must comply with their legal duties and responsibilities, which includes managing their resources prudently.
“As is always the case, were we to become aware of concerns that trustees of a charity had made decisions about executive pay that were not in line with our guidance on making decisions or the essential trustee duties, we would assess the matter closely and determine our next steps on the basis of our risk and regulatory framework.”