Trustees must always act in the best interests of the charity they represent. Anything that may affect the decision of a trustee in the best interests of the charity is a conflict of interest.
A conflict of interest is explained best by a few examples:
- A trustee is employed by a local authority that is considering funding the charity
In this example there is not necessarily any financial or other gain for the trustee but the trustee would need to declare the conflict of interest to the other trustees.
- A trustee receives payment for some work they do for the charity
This example concerns direct financial gain and the Charity Commission points out that payment to trustees needs to be authorised, either by a clause in the governing document or by an Order of the Court.
- The sibling of a trustee has submitted a quote to the trustees for a piece of work
In this example a relative of the trustee stands to gain and trustees should not make decisions in order to gain financial or other benefit for their family, friends or business connections, the trustee would need to declare the conflict of interest to the other trustees.
How to manage conflicts of interest
The Charity Commissions suggests that a good way to manage conflicts is to have a written policy on how to deal with conflicts and keep a register of interests.
If your charity has a conflict of interest policy in place and a system for recording interests then it is going to be much easier for trustees to grasp the implications of this issue. Trustees who are involved in more than one organisation, or more than one charity, should always remember which 'hat they are wearing' when they attend a meeting of the board of trustees of the charity. All other hats should be left outside and if they do arise then the interest should be declared!
It is good practice at the beginning of a meeting for every charity trustee to declare any private interest which he or she has in an item to be discussed, and certainly before any debate of the item itself.
What to include in a conflict of interest policy
Your organisation should have a conflict of interest policy in place. It should include:
- General duties of trustees
- Statement about declarations of interest
- Financial interests
- Duality of interests (which hat example!)
- What to do when interest may be unclear
- How to record interests
Help with conflicts of interest
The Charity Commission's website provides more detailed guidance about the following:
Charities and meetings (including declaring conflicts of interest)