Last year, only 2% of Cambridge’s employed graduates opted for the third sectorLouis Ashworth

Our current system of ethics regarding compensation within the social sector needs to change. As it stands, the act of making (or trying to make) large sums in the for-profit sector, from activities as diverse as software development to salsa dancing, is for most people perfectly acceptable.

Take (to pick a case at random) David Mitchell’s earnings last year. Ask some friends what they think of his £3.5 million pay packet and they will probably balk at its size. Yet they will not, crucially, make any moral judgments about the actual desire to be compensated for making people laugh on TV.

“It must be more than a fuzzy feeling of altruism that guides people into the third sector”

Ask the same group their opinions on whether a charity CEO should be paid £3.5 million, however, and such a welcome reaction evaporates. Clearly, we are free to make money doing almost anything as long as that thing doesn’t involve helping the needy.

Not only is this thinking perverse, it is also preventing large-scale social change from taking place. To adequately tackle the big issues of our time – rising homelessness, poor mental health awareness and stagnant social mobility – we need as many of the brightest minds we can find to solve these problems. Yet in the current economic climate, the incentives for recent graduates to work in these areas aren’t strong enough.

Last year, only 2% of Cambridge’s employed graduates opted for the third sector. Compare this with 23% who chose to work in banking, accountancy, consulting or IT. We are faced, then, with the fact that 98% of some of Britain’s most highly-educated students are choosing not to use their talent to solve social problems by working for social enterprises and charities.

Are these people greedy? Hardly. They are simply making a choice: do I help myself (and my future family) by taking a well-paying job at JP Morgan or McKinsey, or do I work for Shelter, make an economic sacrifice but help those in need? The two paths seem mutually exclusive.

But it doesn’t have to be this way. If we reevaluate our thinking on this topic, we can allow charities to break free from what charity consultant Juanita Wheeler calls the “overhead myth” to offer (slightly) bigger pay packages, making the either/or scenario less off-putting for graduates. This myth is that the less an organisation spends on overheads, the more virtuous it becomes. The reality, however, is that a charity cannot adequately achieve its objectives without significant investment in its staff.

Charities, therefore, will need to take a larger percentage out of each donation to cover higher employee salaries to stimulate recruitment, which in turn will fuel growth. While many will object to this, it is important to remember that it is the size of the “pie” that matters to those in need, not the proportion of each contribution.


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Consider a thought experiment (paraphrased) from charity activist Dan Pallotta: Imagine you are homeless. Would you prefer 100 per cent of a £10 donation or 40 per cent of a £200 donation? Or, extending this hypothetical realm further, would you care about the CEO’s salary in the charity that helped you secure permanent housing and a steady job? Getting over the queasiness that these scenarios induce is absolutely necessary if we are to put human and financial capital to better use in the social sector.

At a time where we need more people than ever working in charity, it must be more than a fuzzy feeling of altruism that guides people into the third sector. We should not only allow nonprofits to incentivise graduates like their for-profit counterparts, but also welcome the dual desire to change the world and to accumulate personal wealth. Only then will today’s most pressing social needs have a chance to be solved.

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