How do you make sure that you act in your charity’s best interests? It’s not about protecting your position as a trustee or even the jobs of all your staff. It’s not really about preserving your charity forever (although planning for the future is important, of course). It’s about doing the right thing.
It really means doing whatever you and your co-trustees (and no one else) decide will best enable the charity to carry out its purposes, to make sure that you’re delivering the best possible benefit to the people that your charity helps.
It’s about making well-informed and well thought out decisions together. Before you make any decisions, you and the other trustees have a shared responsibility to make sure that you:
- have enough information to hand
- are acting in good faith
- take account of all relevant factors and ignore the irrelevant ones
You also need to make sure that if there are any conflicting interests, such as a trustee receiving a benefit from the charity, the conflict has been dealt with (and any trustee benefit has been properly authorised).
You and your co-trustees can only comply with your duty to act in the charity’s best interests if you identify and deal with any conflicts of interest. This means ensuring that you prevent the conflict from unduly influencing your decision.
A conflict of interest is any situation where your personal interests could, or could appear to, prevent you from making a decision only in the charity’s best interests. For example, if you (or a person connected to you, such as a close relative, business partner or company):
- receive payment from the charity for goods or services, or as an employee
- make a loan to or receive a loan from the charity
- own a business that enters into a contract with the charity
- use the charity’s services
- enter into some other financial transaction with the charity
Even when you receive no financial benefit, you could have a conflict of loyalty. For example if your charity has business dealings with your employer, a friend, family member, or another body (such as a local authority or charity, or a charity’s trading subsidiary) that you serve on.
Conflicts of interest (and conflicts of loyalty) are more common than people think. If you think one of your fellow trustees appears to have a conflict of interest or loyalty, don’t be afraid to say so. You are not accusing them of wrongdoing.
In deciding how to deal with a conflict of interest, think about what feels right, and also how others might view the trustees’ actions. Think about your charity’s reputation. Usually, at the very least it will mean the conflicted trustee taking no part in the discussion or decision.
Remember that if your charity failed to identify a conflict of interest, or to deal with it properly, it can have negative impacts on both the charity and individual trustees including financial cost and reputational damage. It could even be viewed as misconduct or mismanagement by the trustees.
Sometimes acting in the charity’s best interests can mean challenging perceived wisdom. It might not be the best thing to carry on doing something just because that’s the way you’ve always done it, or because the loudest voice in the room says so. Ask awkward questions. Say when you don’t understand. But when a decision is reached, it means going along with it (unless you are so sure it’s seriously wrong that you need to tell the commission, or even resign).
Acting in your charity’s best interests is one of the main duties of trustees. Read the commission’s recently revised The essential trustee: what you need to know, what you need to do (CC3) for more guidance about your responsibilities as a charity trustee.