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Charity Commission Hot Topic - Conflicts of Interest for Charities

Earlier this year the Charity Commission released CC29 “Conflicts of interest: a guide for charity trustees” to view this document please go to: https://www.gov.uk/government/publications/conflicts-of-interest-a-guide-for-charity-trustees-cc29.

Conflicts of interest can be caused when a trustee is put in a situation in which their personal interests or loyalties could, or could be seen to, prevent them from making a decision which is only in the best interests of the charity.

These conflicts of interest need to be managed so that the public can have faith in the way charities are run.

The first stage is to identify the conflict of interest. It should be remembered during this stage that conflicts of interest extend to the interests of any person connected to a trustees. The charity should have a clear policy for reporting conflicts of interest and the process for dealing with any identified conflict. A register of conflicts of interest should be kept so that trustees can avoid getting into situations where a threat may be perceived.

 Once conflicts have been identified the charity must prevent the conflict of interest from affecting the decisions of the charity. Depending on the severity of the conflict there are different options available to the trustees

  • The charity could decide not to go into a transaction that involves a related party as any decision to do with this transaction could be compromised.
  • They could ask for the trustee with the conflict to resign from the charity so that the decision can be made conflict free.
  • The trustee with the conflict could also be asked to not participate in any discussion to do with situations in which they have a conflict.

If the charity decides not to remove the conflict they must consider how doing this is in the best interest of the charity.

Trustees should make a formal record of any conflicts of interest and how they have been dealt with. If they prepare accrual accounts they must also disclose any trustee benefits in the charity’s accounts.

 

 

Date: 20th October, 2014
Author: Wendy Bambrick

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