While salary levels in charitable nonprofits are a legitimate area of public interest - as all financial matters in charities should be - they have received disproportionate attention in recent years. This has deflected from an appreciation of the key role played by nonprofits today, and the challenges they face.
The new financial reporting standard FRS 102 requires all companies to declare the number of employees who earn over 70k per annum. Benefacts' analysis has shown that the proportion of employees in the nonprofit sector in this category is low relative to the size of the sector (1,800 out of 149,000 or around 1%) - and ten times lower than in the wider economy.
This finding is supported by the 2015 National Guide to Pay and Benefits in Community, Voluntary and Charitable Organisations which concluded that “pay rates in the community and voluntary sector are significantly below those of the private sector, particularly in relation to higher management grades”. These are the facts in relation to the nonprofit sector – it’s a low paid sector. Why? I believe it is related to the role played by nonprofits in service provision and the way that work is funded.
Ireland’s nonprofits play a crucial role in delivering services in healthcare, social care, community services, childcare, home supports for older people and people with disabilities to name but a few. About half of the funding for this work is raised and earned by nonprofits themselves (over €5 billion a year) - providing a massive subsidy to the cost of public services. The rest comes in the form of statutory service contracts and grants.
Is this the right way to be funding public services in 21st century Ireland? Arguably this approach has resulted in essential public services being delivered by chronically underfunded nonprofits doing their best to manage insufficient resources, compelled to employ an increasingly precarious, lower-paid workforce.
I believe it is time to open a sustained dialogue on the appropriate role of charitable nonprofits in public service provision. Charitable nonprofits will more than likely continue to perform a key role – but they must be adequately and securely funded and their work better integrated to ensure people receive the high quality and seamless services they are entitled to. And if those of us who work (paid or unpaid) in the nonprofit sector don’t lead this discussion, are we conspiring in sustaining a system that doesn’t deliver the best possible outcomes for everyone: service users, nonprofits and workers alike?