Living Wage Week: Pay, funders and the charity sector

By Catherine Sorrell

The London Community Foundation has been a Living Wage Friendly Funder since 2016. Living Wage Friendly Funders support charities to pay the real Living Wage, currently £10.55/hour in London, through their grant-making, with the aim of working to end low pay in the charity sector. Catherine Sorrell, Programme Manager, reflects on the problems facing charities, and the role funders can play in this, following on from the Living Wage Foundation’s publication of Tackling Low Pay in the Charity Sector: An Action Plan earlier in the year.

Although hundreds of charities have embraced the real Living Wage, as set by the Living Wage Foundation, low pay remains a real challenge for the sector. Funders and commissioners, whilst trying to support charities, can often unintentionally contribute to the problem, with charities feeling under pressure to present the lowest possible costs when bidding for funding. Commissioners, often facing their own funding cuts, will often award contracts to the provider offering the cheapest quote, inevitably causing a race to the bottom, with smaller charities particularly affected. Additionally, some funders and commissioners prioritise project costs over the core costs of an organisation, making core funding for staff costs scarcer and highly competitive. These factors, among others, mean that charity workers find their wages becoming smaller and smaller.

These issues can often stem from a wider culture that expects charities to be run on a voluntary basis. There is an expectation that charity workers should accept low pay as their work is vocational. As research undertaken by the Living Wage Foundation found, charities are very conscious of a public perception that donations should go to beneficiaries rather than staff. But if practitioners are not properly invested in, they may be forced to leave the sector. If charities are to attract and retain staff with expertise, they need to be able to pay an expert rate. Furthermore, pay is connected to value, and consistent low pay can leave workers feeling undervalued and demoralised. Concentration of low pay in the charity sector also poses a threat to the diversity of staff within it, particularly as women, people from BAMER background, and part-time workers are disproportionately affected by low pay.

Funders, whilst sometimes contributing to the problem, are also well placed to be part of the solution. The Living Wage Friendly Funder scheme, which so far 40 funders and commissioners across the UK including LCF have signed up to, aims to do just that. Participation in the scheme involves supporting grantees to pay the Living Wage, and ensuring that any contributions to staff costs are paid at the level of the real Living Wage at minimum. It also involves raising awareness of the Living Wage, in an attempt to change the culture surrounding charity pay. As a society, we need to stop viewing paying charity staff a decent wage as a misuse of donations, and begin to see it as an investment in skilled workers who support the most vulnerable in society, and a reflection of the value of that work. As funders, we need to make every effort possible to ensure that our attempts to support the work of charities do not end up causing harm to those who work for them.

Follow this link to learn more about the Living Wage Friendly Funder Scheme.