There’s a lot of media attention on senior pay just now, but for me one of the best indicators of the state of the sector is how charities treat their front-line staff.

Take, for example, zero-hours contracts, which enable organisations to pay workers as and when required, with no guarantee of work from week to week.

The Joseph Rowntree Foundation says the number of people on these contracts rose by 50,000 between 2011 and 2012. Such jobs are a common practice in social care by both private sector and voluntary employers. I asked one of our housing association clients, which is diversifying into care, how it employs its staff. It uses zero-hours contracts and sees them as the only way to maintain a flexible workforce and respond to commissioners who are being forced to reduce unit costs.

But should charities adopt any approach to stay competitive? At what point do good organisations steer away from delivering services that do not generate enough surplus to pay decent wages? The union Unison says such contracts are not good for workers and is campaigning to end them.

I believe that zero-hours contracts add uncertainty for people who are delivering important services in stressful situations. They are a way of passing risk downwards, from commissioner to employer to care workers. Social scientists have a term for this: “in-work poverty”.

This highlights one of the sector’s big challenges: how do charities fund themselves and remunerate their people, especially those competing in markets where margins are lean? You can make services more efficient by cutting costs, but not-for-profits should beware of going too far.

For many years charities have been pressurised into minimising overheads and maximising the money going to beneficiaries. Pushing down costs through zero-hours contracts fits this narrative. But this is wrong-headed and needs a rethink. Under-resourced organisations will struggle to deliver high-quality services.

We don’t pay people in the charity sector well, especially at the front line. The sector has talent at all levels, often over-stretching themselves because they’re committed to the causes they work for.

The private sector learnt long ago that capital is required to fund infrastructure costs and grow great companies. The same applies to charities: they will have to think about how they structure themselves in future. Creating more capacity and scale through working collaboratively with other organisations is one way. Equally important is that we change attitudes among funders so that it is acceptable for charities to spend more on their infrastructure and people.

More investment in infrastructure (as opposed to infrastructure bodies), including staff at the front line, will directly benefit the services that beneficiaries receive. After all, if we can’t look after our own, how can we look after others?

This blog from Eastside Primetimers chief executive Richard Litchfield originally appeared in Third Sector magazine on February 11th 2014


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