This is an area that we come across a great deal more than one may expect.

Conflict of interest really only comes under scrutiny when something goes wrong, however when business planning, it is good practice for trustees to assume that any conflict of interest or potential conflict of interest should be identified and raised as soon as it is considered. This means that the board of trustees should be constantly vigilant to “potential” conflict.

Francesca Quint a very experienced lawyer specialising in almshouses has given some helpful advice.

“The law relating to conflicts of interest can be summarised as follows.

There are two fundamental principles originally developed in relation to trusts but now applicable to all charities and all companies:

(i) A Trustee (or equivalent) must not benefit from his trust, unless this is specifically authorised by the governing document, the general law or the Charity Commission/Court.

(ii) A Trustee (or equivalent) must not allow himself to be placed in a situation where his personal interest conflicts or may conflict or may be perceived as conflicting with the interest of the Trust (or charity or company).

The first question is to identify a conflict or potential conflict. This occurs where the trustee stands to gain personally from a decision or transaction, where someone for whom he is responsible or towards whom he owes an obligation or is otherwise connected with him will be affected, or where he has a duty towards a third party which may conflict with the charity’s interest.

The next step is for the Trustee to declare the conflict, which should be recorded. For a continuing conflict a register of interests may be kept by the charity.

The third step is for the Trustee and the other trustees to decide how the conflict should be managed. This will depend on the severity of the risk to the charity, the charity’s need for information and the degree to which avoiding the conflict (e.g. by the trustee being absent from meetings on the subject) will hamper the work of the charity.

There are a range of possibilities e.g.

  • The trustees absent himself from all discussion and decision-making on the matter and is not counted in the quorum for that item.
  • The trustee is invited to remain for the discussion part of the meeting in order to provide information but leaves the meeting for the actual decision-making.
  • In addition to his being absent from the decision-making, minutes and other documents relating to the matter are not supplied to the trustee in question.
  • The trustee resigns his trusteeship on the basis that it is incompatible with his interests (or those of people he is connected with).

The charity’s interests must always be and be seen to be paramount in trustee decision-making.

Francesca Quint | Barrister specialist in charity law

The Charity Commission publishes guidance on the subject, which trustees should read. The guidance recommends that all bodies of charity trustees adopt a conflict of interests policy.

https://www.gov.uk/government/publications/conflicts-of-interest-a-guide-for-charity-trustees-cc29

First published in Winter 19/20 Almshouses Gazette