Conflicts of Interest and Trustee Conduct
Use this section to put in place the rules that govern how trustees behave and how the charity handles situations where a trustee's personal interests could conflict with the charity's. It applies to trustees of every kind of charity, though some documents are drafted for a particular structure.
How should a charity handle conflicts of interest?
Trustees must act only in the charity's interests. A conflict arises where a trustee or someone connected with them could benefit from a decision the trustees are taking, or where a trustee owes duties to another organisation that is dealing with the charity. The Charity Commission expects trustees to identify and manage conflicts and a written policy is the usual way of doing so. There is a Conflict of Interest Policy for a Charitable Company Limited By Guarantee and a Conflict of Interest Policy for a Charitable Incorporated Organisation.
When a specific transaction is proposed, the trustee concerned should declare their interest formally. The Letter – Declaration of Trustee's/Director's Interest in Proposed Transaction (Charitable Company Limited By Guarantee) and the Letter – Declaration of Trustee's Interest in Proposed Transaction (CIO) are drafted for that purpose.
How should trustees conduct themselves?
A charity is not legally required to have a code of conduct for its trustees, but one gives trustees clear expectations about attendance, confidentiality, collective responsibility and behaviour towards one another and towards staff and beneficiaries. The Code of Conduct for Charity Trustees can be adopted by any charity. Board minutes recording its adoption are in the Meetings and Decisions section.
- Conflict of Interest Policy for a Charitable Company Limited By Guarantee
- Letter – Declaration of Trustee’s Interest in Proposed Transaction (CIO)
- Code of Conduct for Charity Trustees
- Letter – Declaration of Trustee’s/Director’s Interest in Proposed Transaction (Charitable Company Limited By Guarantee)
- Conflict of Interest Policy for a Charitable Incorporated Organisation
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Frequently Asked Questions
Before the charity enters the transaction, the trustee must declare the nature and extent of the interest to the other trustees, that is a statutory director duty, and a written declaration letter is the cleanest way to do it. The conflict must then be managed in accordance with the Articles and conflicts policy, including excluding the conflicted trustee from the decision where required, with the process and interest recorded in the minutes and register of interests. The declaration letter template is in this section and the register of interests template is in the Charitable Company Registers and Statutory Records section.