Conflicts of interest – updated guidance from the Charity Commission

The Charity Commission has recently published updated guidance to help trustees identify and manage conflicts of interest more effectively.

The revised guidance follows a warning from the Commission that cases involving alleged private benefit increased by 23% in a single year, with conflicts of interest featuring regularly in many of those cases.

While the principles themselves have not changed significantly, the guidance places greater emphasis on recognising conflicts early and managing them transparently. The previous three-step approach of “identify, prevent and record” has been expanded into a new five-step process:

• Identify

• Declare

• Consider removing

• Manage

• Record

The Commission is also encouraging trustees to think not only about actual conflicts, but situations that could be perceived as a conflict by others.

One of the most notable changes relates to conflicts of loyalty. The guidance now highlights a wider range of relationships that could create a conflict, including friendships, wider family connections and links to other organisations.

Trustees should also be aware that the Commission has taken a firmer stance on decision-making where a conflict exists. While a conflicted trustee may remain in a meeting, the guidance states they should not take part in the decision itself.

The updated guidance also reminds trustees that decisions made without properly managing a conflict of interest could be challenged and, in some circumstances, trustees may become personally liable for losses suffered by the charity.

What should charities do now?

This is a good opportunity to review your charity’s Conflicts of Interest Policy and ensure trustees understand both conflicts of interest and conflicts of loyalty.

Practical steps include:

• Reviewing trustee declarations of interest.

• Ensuring conflicts are properly recorded in meeting minutes.

• Refreshing trustee knowledge and awareness.

• Checking whether your governing document contains provisions relating to conflicts.

The updated guidance is clearer and easier to follow than previous versions, making it a useful resource for both new and experienced trustees. Taking a proactive approach to conflicts of interest helps protect trustees, strengthens governance and maintains public trust in your charity.