The Charity Commission, the independent regulator of charities in England and Wales, has today published revised public guidance on conflicts of interest for charity trustees.
The guidance follows a public consultation and has been developed in light of the frequency of improperly handled conflicts of interest across the Commission’s casework. In its recent publication, Tackling Abuse and Mismanagement, the regulator reported that conflicts of interest were a feature in all of its completed investigations of 2012/13 (see endnote 1).
As a result, the new guidance has been designed to improve general levels of understanding amongst trustees about this common governance issue and to be clearer about what is expected of charities and their trustees regardless of the size of the charity and the extent of the risks posed. The guidance consists of a high level summary and detailed guidance. We have also published a paper setting out the legal underpinning of the guidance.
Across the guidance there is a new emphasis on the seriousness of the issue and the consequences that can follow from mishandling conflicts of interest. For the first time the Commission’s guidance expressly explains that potential conflicts of interest may need to be considered as a ‘pre-appointment’ issue, placing the emphasis on preventing conflicts from arising. There is also an increased emphasis on the responsibility of individual trustees to identify and declare any conflicts of interest.
Other key features of the new guidance include:
- A simple three step approach to dealing with conflicts of interest
- A revised working definition of conflicts of interest
- A number of practical examples to illustrate the principles in the guidance
Sam Younger, Chief Executive of the Charity Commission, said:
This guidance is about making sure trustees get this basic of good governance right. It’s unacceptable that improperly handled conflicts of interest are so pervasive in our compliance work and all too often we are seeing serious weaknesses in charities’ knowledge and ability to handle the issue. That’s why this guidance is clearer about what’s expected of trustees - the simple three step approach has been designed with this in mind.
But the tone of this guidance is also tougher - reflecting the more robust approach that we expect trustees to take in avoiding or otherwise handling conflicts of interest. And we have also been clear about the serious legal and regulatory consequences trustees may face if they fail in this duty.
Importantly, we must not forget about the expectations that the public has of charities - trust and confidence in charities is high but improperly handled conflicts of interest can undermine this, giving the public cause to question the motives of trustees, who must always act exclusively in the best interests of the charity.
I urge all trustees to adopt a conflicts of interest policy and for those that already have one to consider whether it’s good enough in light of the revised guidance.
The revised guidance can be read in full on the Charity Commission website.
Notes to Editors
The Charity Commission is the independent regulator of charities in England and Wales.
Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
charities know what they have to do
the public know what charities do
charities are held to account
- Tackling Abuse and Mismanagement 2012/13 reported that the 9 completed investigations (including both statutory inquiries and regulatory compliance cases) of 2012/13 featured concerns about conflicts of interest and unauthorised trustee benefit. The report can be viewed in full on the Charity Commission website.