Smart Moves: Charities feel the financial pinch

The Scouts Association is to give its 190 staff a pay increase of 12 per cent. It is one of a series of pay restructures in the voluntary sector that have included increases of up to 30 per cent for senior scientists at the Wellcome Trust and of seven per cent for 234 call centre staff at the RSPCA. Clearly, the image of the voluntary sector as the place for people who want to work for a cause - and are willing to settle for less pay to do so - is under threat.

The past decade has seen significant changes in the way voluntary organisations are funded. The sector has experienced a decline in giving - charitable donations fell from pounds 5.3bn in 1993 to pounds 4.51bn in 1997, a fall of 31 per cent. This has been exacerbated by the introduction of the National Lottery, and a perception that more goes to charities than actually does. Many charities have seen their income from central and government grants fall by up to five per cent.

This has led to a competitive environment in which voluntary organisations are under pressure to operate more like businesses and to employ more skilled staff. But, according to research by Charity People, the human resources consultancy, the recruitment and retention of skilled staff is a growing concern for voluntary bodies because they cannot match the salary levels of the corporate sector. It found that 64 per cent of organisations had experienced difficulties in recruiting skilled personnel, with the problem areas being fundraising, finance and IT.

The pay gap between the sectors is huge. Iain Pritchard is head of IT at accountancy firm Sayer Vincent and was previously head of IT at The Children's Society. He claims it is common for professionals moving from the private sector to take a 50 per cent pay cut in the voluntary sector. Too many voluntary bodies fail to recognise the value of investing in skilled staff since they find it hard to justify the cost. Mr Pritchard says: "There needs to be an education at a senior level about how important these skills are and the need to invest in the best people to get the best results."

Crisis, the homeless charity, has found it difficult to recruit fundraising, marketing and IT professionals, and is forced to offer a "market supplement", an incentive of a few thousand pounds. The charity's personnel manager, Barbara Waugh, explains: "When we advertised for an IT job we offered this supplement as there's a shortage of staff in this area and we knew we'd have to pay extra to get the right person." But she is realistic that the charity can never compete with the private sector.

Cathy Daniels, an accounts director at Charity People, urges the sector instead to address its skills shortage internally. The solution lies in the training and development of staff, so voluntary organisations should take on people who are perhaps not as qualified as they would like, and train them in the position.