Charities must merge and curb senior management pay to weather funding storm

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A huge crisis is about to hit the social care sector, with implications for jobs and services - and charities must adapt to meet the change, TFN is told

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26th July 2016 by Graham Martin 4 Comments

A whirlwind of closures is about to engulf Scotland’s care charities – which must make a choice between paying senior management salaries and providing essential services.

Third sector groups are about to be caught in a perfect storm of increasing need and evaporating funding streams.

Deborah Dyer, voluntary sector organiser at Unison Scotland, says the narrative over the next two years will be one of projects and even whole social care charities folding, with no-one there to pick up the pieces for vulnerable people denied lifeline services.

Care charities have increasingly tendered for – and won – local authority contracts to run services.

However, the cash coming from councils has dried up or has been frozen, forcing third sector groups to fund themselves using the finite resource of cash from Big Lottery and other funders.

Deborah Dyer, Unison

Deborah Dyer, Unison

We can envisage frontline staff growing to meet need – but can we fund the growth of chief executives and senior managers?

When this runs out, they are forced to use their own reserves to continue, as was seen in the case of Aberlour’s Bridges Project, which closed last week.

Adding to the uncertainty has been the Scottish Government decree that all social care workers must receive a living wage of £8.25 per hour, though Holyrood has already put £250 million into this.

Dyer, who has 600 Scottish charities on her books, is well placed to have an overview of the crisis facing the care sector.

She says charities must adapt or die and that hard decisions must be made. However, she insists that a transformation to “smarter working” can be done without shedding essential frontline jobs or services.

Charities must become meaner and leaner – even if that means mergers and a bonfire of big paying senior management positions.

She told TFN: “The big change now for the care sector is that lottery funding for many projects is coming to an end. These are vital community projects – but the problem is that when they finish they close and that’s it – there’s nowhere else for the people they look after to go because the local authorities can’t pick them up and the charities can’t pick them up.

“Like at Aberlour, many do try to fund them through reserves. But reserves are running out and projects are starting to run in deficits. We will increasingly see closures, whether that’s charities or projects.

“At root, the problem is unrealistic funding from councils. In some cases there has been no uplift in funding in eight – ten years, so it’s hard for charities to do what they’ve been asked to do.

“Charities will be forced to hand projects back to local authorities so In terms of projects, in some cases will re-tender but in many cases they won’t and these services will be lost.

Charties have a vital role to play in the care sector, she insists, and with increasing need, the future could even be bright, with new opportunities opening up.

However, voluntary groups will have to make some hard choices.

She said: “but the reality is that charities need to pull their socks up and work smarter, look at back offices, senior staff, look at where they are spending cash, look at chief exec pay, assistant chief exec pay, assistant to the assistant chief exec pay, having 12 people on a leadership team. Good charities are beginning to ask: do we need a leadership team that big? Could we reduce it?

“Charities must take a long hard look at themselves and stop doping the nice to haves, they must say what is our business? It’s care. We need to fund care, we need to pay decent wages.

“We need to look at mergers. At Unision, I’ve got 600 charities on my books, the city council has 200 charities it procures with – that’s 200 chief execs, 200 heads of HR, there’s a lot of replication. We need to have that debate.”

The upshot of the crisis will not just mean jobs in the charity sector going. It will lead to children’s centres, addiction services, care homes and other essential services closing, with all that entails for wider society.

However, Dyer says there is hope: “Both the councils and the charities need to talk to each other. The need is growing, people are living longer, disabled people are living fantastic lives into old age so the third sector will survive this, but in order for it to survive the charities will have to make some difficult decisions.

“We can envisage the frontline staff growing to meet this need – but can we continue to fund the growth of chief executives and senior managers as well?”

Dyer’s comments came as a group of 16 organisations issued a statement warning that the country’s social care system risks cracking under the strain, as demand rises and funding fails to keep pace.

Independent Living In Scotland is calling for urgent action by government and policymakers, including the creation of a commission to investigate funding.

Dr Jim Elder-Woodward, chair of the Scottish Independent Living Coalition, said: “Underfunded social care support leads to isolation and deprivation for disabled people and prevents them from having dignity and choice and control over their own lives and participating in the civic and social life of society as full and equal citizens.”

What do you think? Do we need to curb senior management? How has your organisation been coping. Leave a comment or email us here.

26th July 2016 by Sheila

I am quite worried by this piece. I work in the remote rural parts of Scotland and frankly the big charities either do not exist or where they do the well paid managerial jobs are centralised a long way from the rural communities. I am a bit frightened at the comment "Scottish Government having decreed that all social care workers must receive the living wage of £8.25 per hour". This would seem to imply that this rate is unaffordable, yet it is the LIVING wage. I also feel I should mention that the living wage is based on a full time job while many social care workers are not working full time and often not paid for travel time between clients when, in rural areas, the distances and time spent can be quite extensive. Many of the managers are not paid much more than the living wage.I have just returned from a Scottish Women's Convention Roadshow where the level of pay for women in rural communities came up as being a major issue. There is no fat to burn anymore and if budgets are not maintained there is no safety net for vulnerable people. Perhaps we have to grow a thick skin and stick to our guns, if not enough money is being received to run our charities then we close. It will be tough.And a final thought, maybe its not the charities that have to cut down on senior salaries but central and local government and the NHS who could make massive savings which could be passed on to those working at the coal face.

26th July 2016 by Calum

I agree with the comment from Sheila. I have worked in the charitable sector in Highland and still have strong connections to it. I know of few charities with the size of management team that Deborah Dyer uses as an example. I have seen considerable reduction in management capacity in Highland leading to committed folk taking on larger and larger workloads often leading to harm to their health and family life. I also agree with Sheila's comment on salary levels - they are considerably below those paid in local authorities and private industry and yet the management environment can be far more demanding with much less support from specialist colleagues in fields such as Finance and HR. Ms Dyer's comment, that every charity has a Chief Executive and a Head of HR shows that she does not truly understand the nature of the Third Sector in Scotland. "Curbing senior management pay" will not bring in sufficient finance to bridge the widening gap between stagnating funding and increasing need. The tone of the article appears to follow a narrative that the problem is as always that there are "fat cats" at the top of every organisation who take inflated pay whilst failing to properly pay the front line workers. There are huge issues to be addressed about how we as a society value the labour of those who care for our most vulnerable citizens but trotting out this narrative does not actually address the real issues. One of which is that our politicians refuse to be honest with voters that we have to pay sufficient tax to fund even the most basic of services for those with support needs. But that message wins few votes.

27th July 2016 by Deborah

I agree with the great points made by Sheila and Calum. Our members in rural communities who look after our most vulnerable citizens tell us about being out of the house for twelve plus hours a day but only being paid for eight. Often the jobs are part time and isolating. Travel and poor pay are real issues. How these amazing dedicated staff cope I truly don't know but they do everyday. All third sector employees can afford to pay the Scottish Living Wage indeed many UNISON charities do. Many have already cut senior management and cut back office costs. These are the good charities. The problem is many choose not to do so. Unison believes that pay for frontline care workers should infact be much much more. What we can evidence is poorly run charities where hugely disproportionate salaries are paid to senior managers and chief executives. We are working with our members to tackle these charities! We accept that the public sector wages are higher but this is primarily because they are unionised. We must work together to ensure fully a funded social care sector that delivers high quality care, with decent staff wages. We need to tackle those charties that are poorly run and don't value their care staff.Many services will be lost over the next three years as austerity begins to bite. Well run charties who are properly funded and who treat and pay there staff will survive.

1st August 2016 by Calum

I presume that the “Deborah” who made the comment on the 27th is the Ms Dyer who was featured in the original article. Whilst saying that she agrees with. The great points made by Sheila and Calum.” She doesn’t actually address the points that we make about unwarranted criticism of genuinely hard working management staff in charities and the relatively low level of wages they receive for their roles. Basically she repeats the mantra that overpaid managements are to blame for the problem.She states: “All third sector employees (ers?)can afford to pay the Scottish Living Wage indeed many UNISON charities do. Many have already cut senior management and cut back office costs. These are the good charities.” I would hope that charities can afford to pay the Living Wage but I would need to see evidence of their balance sheets before I gave a view. The fact that charities have reduced management capacity may simply end up with creating more work for the other staff and cutting back room jobs may just make the members of other unions redundant and yet gain increase the workload for other staff. That does not make a charity “good” it just makes it more fragile and probably a more stressful place to work.“What we can evidence is poorly run charities where hugely disproportionate salaries are paid to senior managers and chief executives. We are working with our members to tackle these charities!” Well Ms Dyer “Name them and Shame them!” – because I doubt if they will be here in the Highlands! “We accept that the public sector wages are higher but this is primarily because they are unionised.” Yes, they are unionised but Ms Dyer told us about the unionised charities that UNISON had staff in – being unionised hasn’t helped them greatly according to your text.Ms Dyer ends with the comment: “Well run charties (charities) who are properly funded and who treat and pay there (their) staff will survive.” This is true but a well run charity has the right people, with the right skills, in the right numbers, in the right place at the right time to deliver the aims of the charity. That balance will not be achieved by the simplistic measure of slashing management capacity. Making this issue into a management versus worker contest will take us nowhere positive. When local authority/health board funders are being squeezed by government settlements – charities and other contractors get badly squeezed in turn. We all have to work together to sort this problem at the source. The key issue is how government funds services and how they portray the cost of these services to the voters and tax payers. For all its protestations about being an egalitarian society does Scotland really value the work of its care sector, who work with our most vulnerable fellow citizens, enough to pay decent salaries to all workers in it?