Did you know?

The Charity Commission has recently reissued its guidance on Conflicts of Interest (COI) and that guidance, coupled with the fact that all nine of the Commission’s completed investigations last year involved COI, make clear that the heat is on charities to deal with COI appropriately.

COI in charities are incredibly common; they do not have to entail a trustee having the potential for financial gain and can quite often be mere conflicts of “loyalties”. For example, common COIs that arise in large charities are:

  • The charity is considering paying a trustee for professional services.
  • The charity is considering contracting with a business partner of a member of the charity’s management team.
  • A trustee is nominated by another body, and an upcoming decision of the charity could affect that body.
  • A trustee is also on the board of another charity applying for the same grant or bidding for the same contract.

Clearly such situations do not necessarily indicate any wrongdoing. Even so, because trustees must act in the best interests of the charity they have a duty to prevent such COI from affecting their decisions. This is not just an issue for the trustees, however, but also for anyone making decisions for the charity, including the management team.

Mismanagement of Conflicts of Interest could lead to decisions being challenged and to reputational damage to the charity and the charity’s individual decision-makers.

What should you be thinking about?

The headline point is that a charity should be able to deal with COI if everyone is aware of their duties and if it has good policies in place. It is therefore worth considering:

  • Does your governing document properly address COI, or does it need to be updated?
  • At the very least the charity should have in place a written policy on how to deal with COI and a Register of Interests (which should list all of the leadership’s other trusteeships, involvements and pertinent loyalties).  
  • If your charity has a COI policy in place, is it practical and comprehensive? Does it cover the points raised in the Commission’s guidance? Does it set out how conflicts will be managed in an easy-to-follow way, including how interests should be declared, and how a conflicted person should be included or not in discussions, quorum and voting?
  • Is your COI policy understood, in use, and updated periodically? It is not enough for it to gather dust in a drawer somewhere.
  • Is your leadership being asked to complete the Register of Interests on recruitment and is it circulated periodically for update and updated and as situations arise?
  • Does your leadership require training on COI? This can be a dry topic on paper but could be brought home with a training session drawing on the charity’s experiences.
  • Do COIs feature in decision-making about recruiting new trustees and in the induction of new trustees? This will be especially relevant when your charity’s board includes trustees nominated by other bodies. 

If you would be interested in receiving training on Conflicts of Interest or would like further information on this subject please contact Gerald Kidd or your usual contact at Pothecary Witham Weld.