Where does a Charity Director's Salary come from?

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Hi All,

I am currently working for someone who is thinking of turning his business into a charity. The business has benevolent aims, in that its essential aim is to support and empower a particular vulnerable group of people in society, so I do believe that it would be eligible for charitable status.

However, the Director of the would-be charity is going to want - or, moreover, need - some kind of salary. He doesn't want a salary of epic proportions, just enough to keep his househould and family ticking over, as he has a wife and 3 young boys.

Where exactly does the salary of a charity director come from, when a charity initially begins? Is it through grants?

I get the impression that salaries only tend to become payable when a charity really establishes itself and has a high level of income.

Is it possible then, when a charity first starts out, for the Director to be salaried?

Cheers guys

Salaries for directors or any staff come from the same place any other running costs come from; ie whatever the source of funds is. If he is asking for grants then it would come from that, if he is raising money from events/collections/donations or whatever, it would come out of that.

Big charities obviously employ loads of staff and salaries are a perfectly reasonable running cost to come out of charitable donations. However for a tiny charity starting out, if he is asking for public donations he is probably going to struggle if in effect he is going to want a large proportion of income to go to him.

In most cases a charity would only start incurring staff costs when they are big enough with a high enough turnover to start employing staff.

On the other hand if it's an established business already and can withstand staff costs and a salary for him while still spending the rest on whatever the activities of the business are, then wouldn't it just be a case of wanting to change the status of the organisation rather than change anything/much about how it's run? Where is the turnover coming from currently?

It sounds a bit suspicious tbh. If he is already running it as a business then why does he want charitable status? Is it to avoid tax?

He will nee# to find trustees, who would be his bosses. They would decide his salary. It sounds like he's expecting far too high a salary.$21-27k is what a lot of people running small charities get.

Many larger charities pay director salaries that would make your eyes water and I am sure that most people who support such 'causes' don't realise this - top directors can earn in excess of £100k, and the larger operations are run just like established corporations.

A salary is simply another running cost, and the only difference is that the owner will be giving up his 'ownership' of the firm and will not be able to direct it as he wishes. The trustees will take on that responsibility, and will be able to treat him like any other employee (decide his salary, terminate his employment if they have grounds, etc).

As for where the money comes from to pay the salary - well it will be the same place that it comes from now.

I think he needs to look into this quite bit more - there is also community interest companies which might be another option -
This might be of help
www.ncvo-vol.org.uk/settingupacharity
www.businesslink.gov.uk/bdotg/action/layer?topicId=1077475650

Hi guys,

Thanks you all for your replies.

The company, to date, has made £0 profit. My boss is attempting to sell self management and recovery training to those experiencing mental and emotional distress and those that support them (i.e. nurses/social workers etc) but he's made nothing to date - nobody wants to pay for things that ar available free of charge from other charities, such as Mind and other mental health organisations.

His aims are quintessentially benevolent - having experienced very serious mental health problems himself, he wants to inspire hope in others and show them that they can start to rebuild their lives. However, he says he also needs to make a living (as does everyone) so he is considering starting a charity because then, he can offer his training and support to people for free, while still receiving a salary. It's just not working as a commerical enterprise and understandably so, in my opinion.

I think that the appeal to him of starting a charity is that he (or the board of trustees) will be able to get grants etc for his salary, while doing work he is passionate about.

Hypothetical situation - would it be feasible to apply to a charitable trust for £10k, listing the purpose as to pay Director's salary?

If there are other established charities doing the same thing already, which seems to be what he's found so far, I'm not sure that he'd find it easy to get funding for a new charity.

He should also bear in mind that if he's a charity, he'll need to spend a fair amount of time fund-raising, which might significantly cut down the amount of time he has to do the work he really wants to be doing.

I'm a Director of a Charity. My salary comes partly from grant funds, and partly from earned income. In difficult times, it's feasible it could come from reserves.

Is there a reason he wants to change to a charity rather than a social enterprise?

"I think that the appeal to him of starting a charity is that he (or the board of trustees) will be able to get grants etc for his salary, while doing work he is passionate about."

Highly unlikely that it would be the board of trustees that actually did the grant finding - that's why charities employ directors.

"Hypothetical situation - would it be feasible to apply to a charitable trust for £10k, listing the purpose as to pay Director's salary?"

This is ringing alarm bells with me. There are very, very few charitable trusts around these days that make such grants - and the competition is excrutiating! Has he fully research grant funds available to do the kind of work that he wants to do? Some grant funders will cover overheads and salaries, some will also cover 'management fees' but these need to be provably and equitably apportioned.

Charities are supposed to run as businesses.

There are lots of different types of charities - for example we don't actually fundraise direct with the public on a donations basis, but we write grant applications (both limited to charitable activities, but also tendering opportunities).

I think he really needs to raise his understanding of charitable trust funds before embarking on such a thing. Llead in time for grant funding is also often long - six to twelve months (sometimes more) and

He'd probably be better off getting a job with one of the charities doing the work he is interested in.

He'd also be better calling himself a project co-ordinator than a director.

It's really hard to get funding for salaries. Trusts and grant-givers will look at his application and say, basically, why is this guy applying for us to pay his mortgage? They may perceive a conflict of interest between his two roles:to raise money for the benefit of the clients, and to then in effect employ himself as a supplier. I also think he will have a hard time getting it past the Charity Commission.

He would do better to offer his services to established charities in the field, I think.

I was a co-founder and a trustee for many years of a big private grant-giving trust, and I can promise you that we wouldn't have funded this kind of set-up. Which is not to say that we would never fund individual salaries: sometimes it's really effective to support an individual who is an amazing social entrepeneur. But it would either be through an established organisation, or directly as a grant. The trouble with the set-up you describe is that it ties the charity in to only providing training through this guy - if you wanted to fund that kind of training, you'd want it to go through somebody who could assess different providers and pick the best one, wouldn't you?

Agree with most of the above - I'm Director of a mid size charity. Issues of competition will still exist if he's a charity - funders will know that too and consider whether to fund him or one of the well known charities. Perhaps talk to the local CVS for more advice.