There’s a story, much-used among producers of Freakonomics-style literature, about a nursery in Israel that got fed up with parents arriving late to collect their children, and started charging latecomers.
What happened? People got even later.
Previously, it seems, they had felt guilty about arriving late, because they felt a social obligation to the people running the nursery. Now they were able to pay a fiver or so, and arrive as late as they liked, guilt-free.
The nursery realised that the late charge had this unintended effect, and dropped it. People carried on arriving late, because the social contract had already been broken, and turned into a monetary contract instead. The nursery realised the social contract worked better, but parents wouldn’t go back. You couldn’t get the genie back in the bottle.
So it is for trustees. People working for free have a social contract, not a monetary one, and will often go far further than those working for pay.
For this reason, I am dubious about the idea of paying trustees, which Lord Hodgson today advocated in his review of the Charities Act 2006. I just don’t think it will lead to better results.
If you say to someone “Will you be our trustee for moral reasons, because it’s the right thing to do, and because you are participating in a long tradition of service to the community?” that’s attractive.
If you say “Will you do it for a few quid?” it’s frankly less attractive. The board member is now a part-time mercenary, like a board member at a commercial company. But he’s likely to be the worse kind of mercenary – a badly paid one – because I doubt charities can afford to pay market rates.
I can’t see supporters of charities taking it well, either, because they also have a social contract that they will see as being broken. It will tarnish the whole charity brand if the big household-name charities start offering wages that look to the man on the street like another well-paid, fat-cat sinecure.
A further problem, once you start to pay trustees, is that it suddenly becomes difficult for other organisations to continue to ask them to do it for free.
Why, a trustee will ask, are they getting paid for sitting on one charity’s board, and not another’s.
In the end, you end up in the situation that we’ve already seen with directors in companies everywhere else – the price of labour starts to skyrocket, as people redefined what they’re worth, but the quality barely moves. If anything, it goes down.