This is a transcript of the Third Sector Podcast episode: The problem of pay in the voluntary sector

Lucinda Rouse: Hello and welcome to the Third Sector Podcast. I’m Lucinda Rouse, senior reporter 

Emily Burt:  And I’m Emily Burt, editor of Third Sector, the UK’s leading title for the voluntary and not-for-profit sector. 

This week we will be looking at the problem of pay in the charity sector. While it’s long been an issue, depressed wages have become even more pronounced since the Covid-19 pandemic and the cost-of-living crisis.

So we’re going to seek to shed light on the extent of this problem and suggest ways in which you can support your staff while budgets remain tight.

Lucinda: But before we get to that, we have Andy here to tell us about the news. Hi Andy. 

Andy Ricketts: Hello Lucinda. 

Lucinda: Has the silly season got off to a good start? 

Andy: It depends on what you class as silly, really. It’s certainly been quieter. That is true without a doubt in terms of stuff that’s going on. It seems like everyone’s gone away on holiday. 

But what has been happening is organisations are looking for more ways to generate their own news. And one title that has done that is Wales Online, which has done a very impressive investigation into direct sales practices that were being done on behalf of two charities, and it’s shown some quite alarming findings. 

What happened is that a reporter from Wales Online ended up getting a job with two closely related companies in Cardiff called Vantage and Solutions Cardiff, that basically do door-to-door fundraising on behalf of a number of charities, SOS Children’s Villages being one of them and the National Deaf Children’s Society being the other.

And the reporter got a job with these companies and then went shadowing the actual door-to-door fundraisers on their daily routine and showed some really alarming practices in terms of people being lied to on the doorstep, fundraisers claiming that loads of other people in the street had signed up for a direct debit, even though they hadn’t, unfairly pressurising elderly residents on the doorstep, which they shouldn’t really be doing in accordance with the Code of Fundraising Practice.

And what the investigation uncovered was that there was a whole network of contracting and subcontracting that had led to these two organisations working on behalf of these charities. 

SOS Children’s Villages had subcontracted a company called Zen Fundraising, which had then subcontracted to a company called The Hub, which had then subcontracted to these companies, Vantage and Solutions Cardiff, which meant that they had little or no, it seems, oversight over what was going on on the front line. 

And that’s actually against the Code of Fundraising Practice itself, the code which was rewritten, our listeners will probably remember the Olive Cooke case in 2015, which led to a whole review done by Sir Stuart Etherington that recommended big changes to the way that fundraising is regulated. 

For listeners who don’t remember the Olive Cooke case, it was 2015 that the national newspapers reported that a 95-year-old poppy seller called Olive Cooke, who was believed to be the oldest poppy seller I think. 

The newspaper stories at the time said that she had basically been hounded to death by charity fundraisers in that she was receiving hundreds of pieces of direct mail from charities on a weekly basis because her details had been passed from organisation to organisation and she found herself on loads and loads of mailing lists of dozens of dozens of charities, and she had no way of seemingly managing that. 

In the end, the coroner made no connection with her death at the inquest and the charities. But it did expose some really alarming practice. And that led to Sir Stuart Etherington, who was the chief executive of the National Council of Voluntary Organisations at the time, being asked by the government to lead a review into the regulation of fundraising. 

And one of the changes was that charities should be more closely monitoring the companies that they’re working with.

Lucinda: Absolutely. Do you think these two charities even knew that it was being subcontracted to a subcontractor, to another subcontractor?

Andy: I don’t think they did. And obviously they’re really alarmed to find this has been the case and they’re reviewing the evidence that’s been supplied to them by Wales Online and obviously talking to the agencies in question.

And it also raised a whole number of other questions just for the fundraisers themselves in terms of them seemingly not getting paid properly, just getting commission on the sales that they made and a whole host of other issues that were being thrown up by these firms. 

So it’s really alarming. And the two charities have said that they’ve been looking into it. Obviously they’re reviewing all the donations that they got through these sources and it’ll be interesting to see what comes out of that. The Fundraising Regulator is also looking into it, probably unsurprisingly. 

Emily: Absolutely. And it’s bad practice like this which is so prevalent in spreading really damaging misconceptions about fundraising.

Can you even call it a misconception if this is what’s happening in some organisations? And you’ve spoken about Olive Cooke there. It was a real watershed moment – seemingly – for the charity sector in the setting up of the Fundraising Code.

So it’s great that there is a structure in place now to call malpractice like this into account and to review it, but the fact that it is still happening should be of concern to many in the sector.

I’m sure there are lots of charities this week who are going, hang on, do we know who’s going around door-knocking on behalf of us? Are we all absolutely confident about it? 

Lucinda: Yeah and surely a scandal like this serves as quite a strong reminder that these door-to-door fundraisers are actually the most contact that much of the general public will have with your charity.

It doesn’t matter if they belong to an agency: they’re wearing your T-shirt, they are raising money on your behalf and they need to be kept under control.

Andy: Yes, absolutely. And the code makes it quite clear that charities should be doing that. So it will be interesting to see what comes out of the investigation that the Fundraising Regulator does.

Lucinda: Moving on to our main feature this week, of course you don’t need us to point out that now is not a great time for wages. 

Charity staff are by no means alone in struggling under the effects of inflation and the cost-of-living crisis and recent strike action in the past year by Shelter, St Mungo’s and, most recently, a branch of Citizens Advice, can all attest to that.

Bank of England figures from last December show that annual wage growth in the charity sector is lagging behind the rate of growth in the private sector. It was up only 4.8 per cent for charities compared to 6.4 per cent for businesses. 

And charities are unsurprisingly, given the situation, reporting difficulties in filling vacancies. Pro Bono Economics and Nottingham Business School released some research in March of this year saying that over half of charity employers were reporting that they currently have vacancies and 83 per cent saying those vacancies are proving hard to fill. 

Emily: It’s a very challenging time right now. And of course we know that the issue of depressed pay is a well-known and an ongoing challenge for the charity sector.

We know that people who work for charities earn on average 7 per cent less per hour than their counterparts across the rest of the economy. And research last year by the Living Wage Foundation found that 14 per cent of charity staff earned below the voluntary Real Living Wage, which is £11.95 an hour in London, £10.90 elsewhere in the country.

And just to note that statutory National Living Wage is slightly different. That’s £10.42 for 23s and over, and the minimum wage is £10.18 per hour for under 23s. 

So there are some interesting things around pay happening in the UK right now. In Scotland, all recipients of public cash now have to pay the real living wage to their staff. That’s been imposed since 1 July this year. So there is movement in some places. 

But is signing up to the real living wage enough in today’s environment? As you said, we have seen strikes across the sector. Shelter, for example, is an accredited living wage employer, but has still been hit by staff strikes.

So there’s a much more complicated picture happening here than just getting that accreditation. 

Lucinda: So today we want to ask why is it a struggle for charities to pay their staff enough? We’ll also be asking how can charities balance rising living costs with other budget pressures in the context of underfunding and rising demand for services.

And finally, we’d like to look at are there any stop-gap measures to better support employees. 

So joining us to get to the bottom of some of these questions is Lean Cross, director of Home-Start Greenwich, which is a southeast London charity which provides support to pregnant women, children under five, and their parents and carers.

Before joining Home-Start nine years ago, Leann worked on the development team at the Royal Borough of Greenwich. Hello Leann. 

Leann Cross: Hello. Lovely to meet you both. Thanks for having me. 

Emily: So Leann, just to kick us off, could you give us a picture of how things are looking for you and your staff at the moment and whether you’ve been seeing any changes in turnover through this very, very challenging time for the charity sector?

Leann: Yeah. We were a growing organisation over the last 10 years, so we’ve had quite a stable workforce up until Covid.

Post-pandemic, we’ve seen some subtle shifts and changes. Not so much the pandemic, but I think the pandemic then leading to the cost-of-living crisis put the extra pressure where you’re already in an environment of potential fatigue in the caring sector and especially in childcare. 

But then to have the extra squeeze, I think some of our staff have found that more difficult. So that’s led to more people making decisions about ending their careers and moving on, moving out of London for cheaper housing, better quality of life. 

And because of, I won’t go into too much, the childcare pressure we’ve seen, some of our staff are actually no longer working so they can care for their grandchildren. 

And so I think there’s been lots of those small things that have had quite a big impact on the organisation.

Lucinda: Sounds like a very challenging time. And am I correct in thinking that most of your funding comes from public service contracts? 

Leann: Yes. The majority of our funding is from the public sector, and then we have childcare and a small amount of fundraising and grants and funds. 

Lucinda: So how has inflation been affecting your budgets and how you’re able to deliver those contracts?

There’s quite a long timeframe, isn’t there, between setting those budgets, maybe several years ahead, and then coming to this point of execution where inflation and the rising costs and everything else just wasn’t forecast.

Leann: You sound like I’m in one of my boarding meetings. The reality is that we’ve had to place ourselves intentionally in a position where you can look at longer term sustainability. So we’ve been quite fortunate as a small, medium organisation to be able to push for longer term contracts, which is great for sustainability, great for confidence and recruitment.

If you’re looking at the five, the sevens, a minimum of three years. And that’s been our focus, it’s been part of our strategy over the last three years. But the downside with that is that you’re working on commissions that you may have bid for four years ago or based on costings from five years ago. 

So the last two years is unprecedented. The levels of inflation, the costs, the cost of employment, recruitment, employee assistance programmes, everything’s gone up. The bottom line’s gone up, utilities have gone up. We’re nowhere near what we would’ve originally been basing our numbers on. 

And you come into looking at, okay, well what else can you do? You look at your work plans and how many people you need to be able to deliver that contract.

And that’s gone up and people are working more flexibly, so you need more headcount. And so there’s some hidden costs there. So all in all, it has been a really challenging time. I think for our organisation, we’re quite strategic and we try to think about a three to five-year business plan at any one time.

So that’s been a constant shuffle. I’ve been very fortunate to engage with, and I would advise anyone who hasn’t got an internal finance and HR team to get really good visionary HR and business support. 

I think that makes a big difference to looking at the different things on your employee value propositions and how you can keep your workforce motivated.

And second to that is having a really clear financial head in amongst the crazy. There’s a lot of passion in charities, and you have to be charitable, but you have to run it as a business. And I’m quite unashamed of that. 

And we were really fortunate to find, get a really great connection. So we have a part-time FD who helped us to set that trend and I have an internal finance team who look at the budgets and are quite ruthless about thinking about the future so that we can prioritise pay, benefits, training and development and being able to support staff during this very difficult  time. 

Emily: Absolutely, and I think something that you said a moment ago there, which really resonates with me, is the limitations of those funding cycles for charities. 

And I have definitely spoken to other charitable organisations, in the last 12 months especially, who said, we got restricted funding which was meant to last us five years, but that was three years ago. And what we had budgeted for what everything was going to cost us back then, it’s now three, four times the cost as well as everything else ballooning out of control, which if you have that very restricted, very structured funding programme then means that you just can’t afford to deliver what you were hoping to do. 

And I think that’s a really big challenge around that restricted-unrestricted funding debate, which we see a lot of in the charity sector. Are you seeing much flexibility on the side of your funders when it comes to helping you navigate challenges like this?

Leann: Generally speaking, we’ve got funders who are also advocates of the London Living Wage. So that helps because they’ve got their own aims that are in line with ours. And the more national partners obviously look at the national living wage or real living wage. 

I think it’s about having really open conversations because the difference between running a charity and being part of a very large organisation is those who are in the management tier are doing everything.

So it’s not necessarily that your funders may not be thinking that way. They just might not know they need to be thinking in that way. So I would really impress that in my experience it’s about having open conversations, sharing data. So when our utilities were really high, I’ve gone back and said, look, this is our running cost for the next two years’ projections. How can we work together better to do that? 

Being really realistic. We have very regular meetings with some of our main funders and sharing the challenges as well as the successes. And that can be difficult because I think when you’re a charity and you’re working on funding commitments, you want to show the best side. You want to show that you’ve got results. 

And it’s not just being humble, but being realistic that actually we came to a point where we like, we can’t keep doing what we’re doing for what we were doing it for three years ago. And you don’t want to bite the hand that feeds you in some respects, but you also want to get it right for your staff and for your organisation.

And it’s getting better at having difficult conversations and being quite focused on what we can do together. I always go on the approach of, I’m not just sharing a problem. I’m sharing where I see a potential solution and seeing if we can make that happen. It doesn’t always work because everybody’s got their own constraints, and sometimes that’s really difficult when you feel like you’re at the bottom of everybody else’s mountain. 

But having really good conversations, developing really good relationships, being clear, holding onto data and making the uncomfortable decision to look at long-term forecasts so that you can stop things happening earlier rather than later. 

But that’s been my experience. I have spoken to others and I know that that’s not yet unfortunately, a consistent picture everywhere. 

Lucinda: Mmm. Difficult conversations both with the funders externally, but then also with your own staff.

And I was wondering whether there has been a lot of feedback from your team about a need for you to be increasing the level of support that you are giving them. What are the main challenges facing them and what kind of solutions are you able to provide in the absence of a massive funding uplift, which everyone wants, but I don’t think many people are getting at the moment?

Leann: Yeah. I think it’s really challenging to get this piece right and I’m not saying that I get it 100 per cent right. But we are trying to.

And that is, especially when you’re a charity and you’re supporting families and you’re supporting people and you’re often going out of your way to try and move potential obstacles for children, families. 

A staff member once asked me, well, if you’re happy to go above and beyond for the families, but aren’t we families too? Aren’t we the community too? 

And that was quite gut-punching because it was like, are we forgetting the people that are actually adding the value and delivering the service? So that’s when we had to stop, pause, look quite internal, and think about what we can do internally to enrich and to benefit.

I think also when you’ve a charity and you get to the point where your turnover is over £1m, it sounds like you’ve got lots and lots of money, and trying to explain where that goes and what restricted funding is and what your overheads are, and so we’ve got better at sharing that information. I think we’ve still got some ways to go.

And the other thing that we’ve done to open ourselves up was to have an internal survey to just start hearing on the ground. Because sometimes, especially with our management team, we are so busy, outwardly-focused with commissioners and funders and everything else we forget about actually touching base and seeing what really matters. 

So for one group, it could well be pay. For another group, it could be something else. So that survey showed us that though some in the organisation felt that they were in a place that they wanted to be and our salaries matched expectation, there was a proportion – and it was a significant proportion – that didn’t feel that way. 

And we had to dig deep and realised that when you work in the third sector, but you are working hand in hand with public sector, and the pay variance is there and it feels like you’re doing a similar role, that can create challenges, or some of our funding means you take on a business through TUPE, so you’ve TUPE people in who are used to very different ways of working, abilities to reach different milestones financially. 

So trying to balance that and trying to bring everyone together to feel like one culture, one way of working, has been really, really challenging. But I think having those open conversations and being realistic and sharing things have definitely helped.

Lucinda: And then what kind of solutions have you put forward and what have been particularly well received? 

Leann: A variety, actually. So unfortunately there wasn’t one thing that was going to work for everybody. So we’ve been doing surveys and getting more information, having much more feedback from staff.

But then we very quickly put in an employee assistance programme. We’ve worked with organisations to look at cycle schemes and data schemes and salary sacrifice schemes. They can work differently. We’ve been working with local organisations around food poverty and how we can have better nutrition, cook meals cheaper and more effectively.

How do we do our shop, which staff are then also given that information? We’ve looked at different benefits and discounts and encouraging people to take that up, whether that’s through us or the local area. 

And then we’ve also done something quite drastic with our pay bands, where we’ve altered our pay bands. And we really were committed and Home-Start’s been with the London Living Wage, we accredited in 2016. So we’ve been the whole real wage campaign. But I would confess that probably I felt a little bit like it was done to before was my way of thinking. Like, oh, it’s gone up, so we have to meet that. 

But now we’ve tried to reframe it so it’s our baseline. We consistently have those conversations and we’re looking at much more aspirational ways of how can we help people to move through pay bands, to be able to have much more affordability, to be given the right pay for the right work. 

And that’s really changed. And thinking about how we have been able to give people who have got the qualifications and are working really hard that pay to show their value. I mean, that’s not the only way we value people, but it does make a difference.

And on a leadership level, when you are out supporting people, you really have to think about, who are we as an organisation? What kind of value is there for people that work with us? How do they feel about it? Can they afford to live? Do we have an organisation full of people that are actually working poor, which isn’t something you want.

So making real decisions to do things and to do things better and to look at how we are paying them. Because it’s not just the hourly pay, it’s looking at how many hours people are working to get paid. And when we did some internal data, looking at how many of our staff have young families, and if you’re doing double jobs or working in the evenings, we are encouraging people that we work with to have bonding and connection time with their children.

And then if my own team are then constantly having to take on extra activities that really does make things really difficult for them. So it’s been a really holistic approach, we’re still getting there. But we are very proud of how far we’ve come in this quite challenging place. 

Emily: And I think that is so important. And I spoke to a charity last summer. They ran a community food bank. And when I was talking to their chief executive and their founder, she said, we are all about providing affordable food to people in need in our communities. 

But she said, we also actually now have staff members who are using our services at the same time. And I think again, this cost-of-living crisis, it extends so far into everyone’s way of life.

And of course, you cannot provide a quality service to the frontline if the people within your own organisation are struggling themselves. So that case for supporting them is absolutely vital. 

Leann: Definitely. And I think one of the things we think about a lot is that as a charity, we don’t expect to be paid a fortune. We know it’s not possible. But the people that work in charities, for charities are really passionate about what they do, and they’re people that really care. 

So they often overextend themselves anyway. I’m constantly like, okay, shut down now. Just let it go. It can wait till tomorrow. So I think that bit about when people put in so hard, being able to give back in whatever way and to put people at the heart of how we’re thinking, how we’re framing our business plan. 

And for me, as a leader with my team, we’re really looking at that long-term sustainability. Because I’ve worked on six-month contracts or three months, it’s not a great way to live your life. I know I found that really difficult when I started having a family. 

So if we can give some assurances, if we can start thinking about how we build a better plan for the future, for the long-term sustainability, it means that people can relax a little bit into the job and really enjoy doing it.

And that’s the destination that we want to get to, that we really do feel that the commitment we made has actually helped us to be consistently reviewing that and having that constant thinking of where are we going and how do we continue to make this happen? 

Emily: So I guess my question then, because I think, as you say, it’s so important there is such compelling case for doing it, but of course when you work in charity, you have to make every single penny count and you have to make it work as hard as it can. So if you are investing in your staff in those long-term commitments, does that mean you’re then having to look at how you manage costs elsewhere in the organisation? 

And is there a case of cutting some areas so that you can give that support? Or are you passing costs on potentially to service users, for example, in nursery services or otherwise? How do you manage and navigate that balancing act?

Leann: That’s a really good question because it’s really tough. So our approach is definitely, we’ve been looking at ways where we can make efficiencies. So that’s from the really granular details to making things last longer and doing things better and thinking about quality over quantity, all the way up to efficiencies in our contracts, efficiencies in what we’re asking for.

And I think also not overextending ourselves. I think as an organisation you want to be like, yeah, we can do it, we can make it happen. But sometimes you can overextend yourself beyond what you can realistically deliver. And I think that’s something now we’ve learned to just pull back a bit and go, can we actually do this? What’s the long-term plan on this? 

But I would go back to having a really strong finance team who can look at the details and having that debate internally about what’s really going to be the ask. So we’ve had to sometimes pull back and not go for things that we would’ve done before. And that’s really difficult because you’re a charity.

You want to meet the needs of the people in your community or around you or for your funders and you want to do a good job. But I think where we’ve seen it, and definitely the pandemic helped to cement that, is that you have to know where to stop. You have to know what you can do and what you can’t.

And making that decision and having that integrity to stand by that decision can have a really good impact for your organisation. And sometimes that also means making difficult decisions that your team don’t like. And that’s really hard because I think if we work in charities, we’re generally people pleasers. So it’s not easy, but once you see it start working, you then feel more confident about the next time.

Lucinda: Leann, you’ve touched on so many really interesting areas from your communication with your funders to your communication with your staff to thinking a little bit outside the box and being creative on how you can respond to some of the challenges that they’re facing on a personal level while still delivering services, fulfilling the mission of your charity.

I just wondered if you had any specific advice or top tips for people who are in your position. Where can people start?

Leann: I don’t think there’s one approach, but I think a definite start is, talk to your team. So if you know that you’ve got some difficult things coming up, as leaders, you want to shield everyone from the bad stuff, but share it in a non-frightening way and get the viewpoint of others wider than the management team. 

There might be ideas out there about how you can make the commitment to the real wage, make the commitment to a contract or a fund. And some of our best ideas have come from people on the ground who are like, well, why don’t we just do this? And I’m like, oh, that’s really simple. Thank you for that. 

I think secondly, if you’ve got a management board, then you need to be in a place where together you make some commitments that you stick to. So who do you want to be? What’s your culture? What’s your ethic as an organisation? And to not be afraid to think as an organisation, what’s our destination point and how are we going to get there? And then build the team around you to help you to get there, because you can’t do it on your own. 

And I think the third piece is to funders. It’s great if we can have those conversations and go back and say, right, let’s look at stuff. I often think, and I’ve got a fantastic board who are very supportive of my challenges and my questions, but it’s really hard to say especially to a huge funder, it’s hard to go and say, I need more money, or this isn’t working. Can I change my KPIs or can I change something else? 

It’s a really difficult place because you don’t know what the future holds for you. And if funders know that cost-of-living’s gone up, recruitment and retention are issues. I’ve not even gone into childcare and the difficulties there.

Come to the organisations. If you’ve got the finances or the budgets to even make something possible or change a KPI or go, actually, when we said this five years ago, this need is no longer here, let’s stop that. 

Have those conversations because the third sector needs support. But sometimes the support can come without being asked for it. 

Emily: Fantastic. That is absolutely brilliant and so much good advice there for organisations of all sizes to take forward.

So Leann, thank you so much for joining us today. It’s been brilliant to have you on. 

Leann: Thank you for having me.

Lucinda: Well, that’s it for this week. Next week we’ll be taking you to the zoo to show you a day in the life of the head of procurement at the Zoological Society of London. 

Emily: I hope you have a wild time. Oh dear. In the meantime, you can send us your feedback and any ideas for topics that you would like to hear. And you can send that via our survey, and we will, as ever be linking to it in the show notes.

Lucinda: But for now, thank you to our guest, Leann Cross, and our producer Nav Pal. Join us again next week.