Regulation with Rosie: conflicts of interest

If your boards have council representatives, you must avoid conflicts of interest.

In last week's column, I looked at alternatives to having a local authority representative on the trustee board when a charity is funded or part-funded by a local authority. However, there may also be times when it's essential. Sometimes, for example, it's a requirement in the governing document, quite apart from any funding relationship.

The most important thing to remember is that, in carrying out their responsibilities, trustees must act solely in the interests of the charity. A trustee is not a delegate or representative of any appointing or funding body.

In these circumstances, there can be conflicts of interest that must be minimised and managed. Saying there might be a conflict of interest isn't accusing anyone of wrongdoing; it's just flagging up a situation in which a trustee's personal interests might, or might appear to, influence their decision-making.

For most boards, this can generally be managed in a fairly straightforward way, with the relevant trustee declaring his or her conflict of interest and opting out of the part of the decision-making process that involves that interest.

For boards with a trustee who is a funding representative, this type of opting out can be more difficult. Depending on the scope of the authority's funding, the extent to which the representative can meaningfully opt out is less certain. If a charity runs much of its services on local authority funding, there might be tricky issues to work through when contracts are being negotiated.

For more information, trustees can refer to the Charity Commission's guidance on how to manage conflicts of interest. It's better to anticipate and deal with conflicts of interest than to bury your head in the sand.

- Rosie Chapman is executive director of policy and effectiveness at the Charity Commission

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