Special Report: State of the Sector

10 Aug 2016 Nick Garbutt    Last updated: 18 Aug 2016

NICVA has just published its State of the Sector report: the most accurate and comprehensive survey of the Community and Voluntary Sector in Northern Ireland.

Politicians are often accused of listening intently to business interests and ignoring the voluntary and community sector. You can find an analysis of this here.

Yet a glance at the headline numbers suggests this both a mistake and a missed opportunity, given the importance of the sector to the local economy.  This, after all, is a sector which employs 44,703 people, has a combined income of £589 million and is supported by 241, 264 volunteers - around a quarter of the entire population.

And the report suggests that charities are vital to the implementation of government policy. £436,514,290 is distributed annually by government departments and non-departmental government bodies either by way of grant, or increasingly through contracts to deliver services on their behalf.

This contrasts with the commonly-held perception that charities are funded primarily by public donation. Some of course are but the total given annually in Northern Ireland is just under £53 million, a considerable sum.  Individuals, quite rightly donate to concerns that they have a personal interest in. This means that public giving alone can never cover off needs. In cash terms, health charities are given the most, followed by religious causes, with hospices, hospitals and childrens’ charities also performing well. Also a sizeable chunk of donations are to overseas aid charities and so doesn’t get spent here.

Charitable giving although still higher than the rest of the UK is falling. Despite this 81% of the population give to charities over the course of the year, compared with 70% elsewhere. We do, however donate less. This is presumably at least partly the result of the impact of recession and austerity on a population which gets paid less.

But the fact that grants and contracts provide the vast majority of funding to charities exposes the misunderstanding that lies at the heart of the tabloid “CEO fat cat pay” myth.

Charities which are contracted to carry out vital public services, in mental health for example need to be competently run and that involves the appointment of competent managers paid at a reasonable rate for the job.

There is also evidence that charitable giving is being influenced by negative publicity about CEO pay: with the sector falling down the ratings for most trusted organisations, now lying in 12th place, behind TV shows and supermarkets. Politicians, incidentally are bottom.  

So is pay a concern? It appears to be but not in the sense portrayed by elements in the media. The survey finds that the average CEO salary across Northern Ireland is £43,000, considerably above the average salary of £24,000 but hardly fat cat territory. Surely the scandal lies elsewhere with underperforming FTSE 100 companies paying their bosses astronomical salaries as this other survey reveals?

The vast majority of charitable boards fix salaries according to widely used benchmarks with the National Joint Council the most commonly adopted.  

However, there is some evidence that the sector is falling behind in terms of pay scales with many organisations finding it increasingly difficult to recruit staff with the most common reasons being a lack of suitably skilled, qualified or insufficient numbers of applicants. Salary constraints were cited by almost 30% of respondents as barriers to recruitment.  

Away from the bosses the average salary for full time charity workers is £23,188, lower when compared to the workforce across all sectors in the rest of the UK (£27,215) and Northern Ireland (£24,491). Benefits are also in short supply: only around 10% offer redundancy packages and 13.4% offer parental leave.  

One of the hottest issues in employment generally is the “glass ceiling syndrome” So how does the sector fare? As far as boards are concerned there still seems to be a significant problem. The good news is that there is a roughly equal split between men and women trustees, but men are more likely to be chairs of boards, whilst women are more commonly secretaries.

Women vastly outnumber men in the workforce accounting for 75% of the total workforce but just 44% of CEOs. They are also over-represented in lower paid roles. However the survey suggests that although men get paid slightly more overall, women chief executives and senior managers are getting paid more than their male counterparts.

The survey’s section on the profile of charities in NI is fascinating. There are 6,127 charities in NI but a surprising number have annual incomes of less than £10,000 per annum. These account for 33% of the total. Those with the highest incomes of £1 Million per annum plus, which generate the most publicity, account for just 6.8% of the total. Many of these carry out essential functions for government and will, given their turnovers and the complexity of their work, be the ones which pay their CEOs the most.

There are disturbing trends emerging in the report, not least of which is the apparent collapse of support for the sector in local authorities. Total investment has fallen from £9,638,975 in 2007-2008 to £5,622,960 in 2013-14 with some of the authorities pre reorganisation showing dramatic falls. Newry and Mourne Council awarded £986,000 in 2007-2008, compared to just £52,324 in 2013-2014. Similarly, Newtownabbey Borough Council awarded £497,429 in 2007-2008 compared to £38,999 in 2013-2014. An important caveat here: only six councils directly furnished figures so most of the numbers quoted have come from the Government Funders Database.

Likewise the Big Lottery is spending less, dropping by £11 million over the same period.

There are storm clouds ahead with many in the sector fearing the impact of further public spending cuts: an understandable concern given the sums and dependencies at stake.

The research was carried out before Brexit. The EU currently contributes £10 Million (40%) to the ESF fund, which was distributed by DEL pre departmental reorganisations. Current recipients will have plenty of sleepless nights before we learn if and how that investment will be replaced. 

View NICVA's State of the Sector research here.

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