Guidance

Identifying and managing conflicts of interest in a charity

Updated 22 April 2026

Applies to England and Wales

© Crown copyright 2026

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As a trustee you must make decisions based only on what is in your charity’s best interests. This is one of your legal duties. A conflict of interest is when what is in the charity’s best interests conflicts with, or may conflict with:

  • your personal interests, or
  • the interests of people or organisations connected to you

Trustees often have a number of different personal and professional interests. For example, the company they work for or another charity where they are a trustee. These different interests can bring advantages, but they can also raise conflicts of interest.

Conflicts of interest can happen in all types and sizes of charity. The important thing is that you know when conflicts may occur, identify when they do occur and manage them properly each time they occur. The Commission sees too many cases of trustees not being aware that they face a conflict of interest.

Identifying and properly managing conflicts means you can show that you are complying with your legal duties, despite the existence of a conflict of interest.

Some conflicts are less serious; others can be very serious. The more serious or complex the conflict of interest, the more the trustees will need to do to manage it properly. In the most serious cases this may include thinking about whether the conflicted trustee should resign from their trustee role.

It is the responsibility of all the trustees of a charity to manage conflicts of interest, not just the responsibility of the chair or the person who has the conflict. Managing conflicts of interest is one of the 7 legal principles of trustee decision making.

If you don’t manage conflicts of interest this could have serious consequences for you and your charity. For example:

  • a decision could be challenged and may not be valid. Your charity may lose money as a result and the trustees may be jointly liable to cover the loss from their personal funds
  • your charity’s reputation could be damaged, making it more difficult to get funding. Even the appearance of a conflict could damage your charity and wider public trust and confidence in charities
  • it may be evidence of misconduct and/or mismanagement and the Charity Commission may need to take action

So, understand what a conflict is and how to manage one – before you or another trustee faces a conflict of interest.

This guidance applies to all trustees of charities in England and Wales. This includes corporate trustees.

What is a conflict of interest?

There are two types of conflict of interest:

  • a financial conflict of interest (‘financial conflict’), and
  • a conflict of loyalty (‘loyalty conflict’)

In this guidance, when we refer to a ‘conflict of interest,’ we mean both financial and loyalty conflicts.

Financial conflicts

These happen when a trustee, or a person or organisation connected to them (a connected person) could get money – or something else of value such as a service – from a decision that trustees make. The trustee will have a conflict between the charity’s best interests and their own interest in either standing to receive the benefit or being connected to a person or organisation that will.

It doesn’t matter if the value of the benefit is small: it is still a financial conflict. It is also still a conflict if your charity will get a good deal. For example, if one of the trustees is providing a service to the charity at a reduced cost.

Financial conflicts can happen in a range of situations. For example, where the trustee (or connected person) is receiving money or something else of value as a result of:

  • providing the charity with goods or services
  • being employed by the charity
  • lending money to the charity
  • selling or leasing land or other assets (such as equipment) to the charity
  • buying or renting land or other assets from the charity
  • having a separate paid role at an organisation owned and controlled by the charity. For example, as a director of the charity’s trading company

It also involves situations where the trustee will get better access to a service that the charity provides. For example, if a trustee of a village hall charity can use the hall at a reduced rate.

If you decide to make a payment or provide a benefit to a trustee:

  • it must be in the charity’s best interests, and
  • you must manage the conflict of interest, and
  • you must have a power or authority (legal permission) before you make the payment. Read guidance on trustee payments and benefits

Loyalty conflicts

These can happen when the charity’s decision involves a person or organisation connected to a trustee. For example:

  • a trustee’s spouse or civil partner
  • a trustees’ immediate family and wider relatives
  • a trustee’s employer
  • another charity for which they are a trustee (even if the other charity has the same or similar purpose)
  • the organisation that appointed them as a trustee
  • a trustee’s friends

Such a decision may involve a loyalty conflict because the trustee’s loyalty or responsibility to the other person or organisation could influence their decision making. This means they might not be able to make a decision based only on what is in the best interests of the charity.

Loyalty conflicts can also happen when charities merge or change structure if the two charities share some or all of the same trustees. This means there may not be enough independent trustees on the boards of either charity to manage the conflict of loyalty

Read examples of financial and loyalty conflicts.

Connected person

A connected person is a person or organisation that is connected to a trustee. In broad terms this includes:

  • a trustee’s spouse or civil partner
  • a trustee’s immediate family
  • a trustee’s business partner
  • businesses where a trustee has an interest through ownership or influence

For conflicts of loyalty this may also include:

  • a trustee’s employer
  • another charity for which they are a trustee (even if the other charity has the same or similar purpose)
  • the organisation that appointed them as a trustee
  • a trustee’s wider relatives
  • a trustee’s friends

For some situations, the law states who is a connected person. Check who is a connected person when you are:

Your charity’s governing document may also state who is a connected person.

If you are not sure whether a person or business is a connected person, you should get legal advice.

Check your charity’s governing document

Check if your charity’s governing document sets out rules about conflicts of interest, such as:

  • declaring the conflict at an early stage
  • leaving the relevant discussion
  • not taking part in the relevant decision or vote
  • not counting the conflicted trustee in the quorum. A quorum is the minimum number or proportion of voting trustees that must attend a meeting to make decisions
  • how a conflict can be authorised by the trustees

You should also check if your governing document says that conflicts of interest do not apply to certain transactions.

If your charity’s governing document:

  • does not contain any rules at all on managing conflicts of interest, or
  • contains rules, but these are inadequate

change it. Don’t wait until a trustee faces a conflict of interest to do this.

If a trustee does face a conflict, adding rules to the governing document is a legal requirement for charitable companies. Therefore if your charity is a company, you must amend your Articles of Association to add these rules before you make the decision which gives rise to the conflict of interest.

Read the next section of this guidance to understand how you should manage conflicts of interest. This can help you understand the rules to include in your governing document.

You can also use wording from the appropriate model governing document for your charity type.

There are legal rules on amending governing documents. Read guidance about this.

If your charity is a company and you need to make a decision urgently, you can apply to the Commission to authorise the conflict of interest. You will need to explain why you cannot amend your governing document.

If you have a conflict – a step by step approach to managing it

This section describes how you should manage conflicts of interest.

Follow these steps if your charity’s governing document:

  • does not contain any rules at all about conflicts of interest, or
  • contains rules, but these are inadequate

Read extra guidance if your charity is a company.

Step 1 – Identify the conflict

Identify conflicts, or potential conflicts, early. For example, at the start of each trustee meeting. Have this as a rule in your conflict of interest policy so that all the trustees are aware of what is expected of them. Even the appearance of a conflict that has not been managed can damage the charity.

Do not ignore something that might be a conflict for you or another trustee. Talk to the other trustees about it if you’re unsure.

Keeping a register of conflicts can also help you identify conflicts early. Have one at your charity and make sure it is regularly updated.

Be alert to trustees having a conflict by making sure all trustees understand what a conflict of interest is and the different situations in which they can arise. For example, where:

  • there are trustees at your charity who are connected to other organisations including other charities, which may give rise to a conflict of interest
  • there are trustees at your charity who are connected to each other (for example they are related to each other). Read an example of this.

Even if your charity is getting a good deal, you must still manage the conflict.

Step 2 - Declare conflicts of interest

You must tell the other trustees if something your charity is proposing raises a financial or loyalty conflict for you. Do this early, before you have any discussions about the matter or make decisions about it.

Have this as an agenda item at each trustee meeting. And make sure you record, in your meeting minutes, the trustees who declared a conflict of interest and why.

Step 3 – Consider removing the conflict of interest

As trustees, you must not allow the conflict to affect your decision.

You must consider whether it is in your charity’s best interests to remove the conflict. This is particularly important if it is a serious or complex conflict.

You may be able to remove the conflict by: 

  • not going ahead with the proposal. For example, by deciding not to pay a trustee to prepare the charity’s accounts but instead pay an independent accountant
  • the trustee with the conflict resigning and then the remaining trustees making the decision. For example, where you are employing the trustee. If the decision giving rise to the conflict involves the former trustee receiving a benefit, the benefit must still be authorised

Step 4 - Manage conflicts of interest

If you decide not to remove the conflict of interest you must manage it so that it does not affect your decision.

You must follow:

As a minimum, for a financial conflict, the trustee affected by the conflict should:

  • declare the conflict of interest
  • leave the relevant discussion
  • not take part in the decision giving rise to the conflict
  • not be counted in the quorum

If you are managing a loyalty conflict, there are different options depending on how serious the conflict is. For example:

  • requiring the trustee to leave the discussion and decision for all high risk or controversial decisions
  • allowing the trustee to provide any relevant information before the discussion, but then requiring them to leave the meeting
  • for low risk loyalty conflicts, allowing the trustee to remain in the meeting on condition that they do not take part in the decision or voting. Read an example of this  

When you make the decision giving rise to the conflict, comply with the principles of trustee decision making.

Having enough unconflicted trustees to make the decision

Check your governing document for your charity’s quorum.

You must have enough unconflicted trustees in the meeting when a conflicted trustee withdraws to make the decision about the matter giving rise to the conflict.

You may need to appoint new, independent trustees if your charity cannot reach the quorum when a conflicted trustee withdraws. You should adopt an open recruitment process to help make sure you appoint trustees who are independent.

Step 5 - Record conflicts of interest

Keep a written record of how you have managed conflicts of interest. You will usually record these in the minutes of your meetings. This will help you show you acted properly.

Make sure you record:

  • what the conflict was
  • who or what it affected
  • when it was declared
  • how you managed it. For example, asking the conflicted trustee to leave the relevant discussions and not take part in the decision
  • which rules you followed (for example, your charity’s governing document, the law, the steps outlined in this guidance)
  • that you obtained legal advice, if you did

A conflict of interest policy

You should have a conflict of interest policy to help you:

  • ensure trustees understand what a conflict of interest is
  • be consistent in how you manage conflicts
  • show you are meeting your legal duties
  • show you take conflicts seriously, for example to your charity’s beneficiaries, supporters, donors and grant-funders

Your policy should:

  • refer to your register of conflicts
  • include a list of the information you will collect when new trustees join the charity, and annually, to keep your register updated. Ask about potential conflicts of interest before you appoint trustees. In some cases, it will be appropriate not to appoint a person likely to be affected by frequent or serious conflicts
  • set out what your charity’s rules are, for example that trustees are expected to declare conflicts at the start of trustee meetings. Make sure these are consistent with what your governing document says if it has rules about conflicts
  • for non-company charities, explain how your charity will manage conflicts if no governing document or statutory rules apply

The Chartered Governance Institute (CGI) provides a template conflict of interest policy, declaration form and register of interests, which may be suitable for you to adapt to meet your charity’s specific needs. 

You may want to make your policy and some or all of your register of interests available to the public. Make sure you comply with data protection rules if you decide to do this.

Regularly review your policy, so that it continues to meet your charity’s needs.

You can use charity funds to pay the reasonable costs of training or resources on managing conflicts of interest.

Manage a serious or complex conflict of interest

Some conflicts are so serious or complex that trustees cannot comply with their duty to act only in the charity’s best interests. Or they cannot show that they have. For example, where one or more of the following applies:

  • all the trustees are conflicted or there are not enough trustees to reach a quorum to make the decision
  • the charity has a single corporate trustee (usually a company or a local authority) which is conflicted
  • the decision giving rise to the conflict involves significant money or assets
  • the decision giving rise to the conflict involves significant risk to the charity, including reputational risk
  • the decision involves complex transactions. For example transactions that involve one or more companies that are connected to the trustees

It is important that you recognise if a conflict is serious or complex and what this means. For example, you may need independent professional advice about the proposal to be able to show that the decision is in the charity’s best interest. This will be important if you need Charity Commission involvement.

To manage the conflict of interest you should consider:

  • if you should go ahead or whether you can change your plans
  • the conflicted trustee resigning. The remaining trustees would then make the decision giving rise to the conflict. Check if you can meet your charity’s quorum. If the decision involves a benefit to the former trustee, this must still be authorised
  • appointing new, independent trustees not affected by the conflict

It will not always be possible to change your plans, and it may be in your charity’s best interests to go ahead. For example, a decision to merge two charities though the trustees are conflicted because they are trustees of both charities.

But your decision not to change your plans, or to remove the conflict in some other way, must be in the charity’s best interests. You must identify the risks of going ahead and how you will manage those risks. For example, the risk of public criticism. Use our decision-making guidance to help you make your decision.

If you decide to go ahead, you must manage the conflict of interest:

  • you must make sure you comply with what your governing document says
  • you must comply with any legal rules that apply to your charity or the decision you are making

Get legal advice if you’re unsure about how to manage the conflict of interest.

If the trustees cannot manage the conflict themselves, you must get authority from the Charity Commission.

Read examples of conflicts.

User trustees

A user trustee is:

  • a trustee who also uses their charity’s services or facilities as a beneficiary
  • a trustee who has a relationship with a service user, for example as a close relative or carer

Some charities must have some user trustees. For example:

  • village hall charities must usually have some trustees who represent the groups that use the hall
  • some schools must have some parent governors as trustees

User trustees can help their fellow trustees understand the perspectives of the charity’s users especially when thinking about decisions that may affect them.

If a decision involves a user trustee having better access to the charity’s services than other users, you must manage that conflict of interest. Follow any rules in your governing document on conflicts generally or conflicts involving user trustees. If your governing document does not have any rules on conflicts, follow the steps in this guidance.

When you need to involve the Charity Commission

When you need authority from the Charity Commission

You must have authority (legal permission) before making any payments to trustees or people connected to them. Read guidance on trustee payments and benefits.  

In certain  limited circumstances, if you have a conflict of interest that you cannot manage, you can apply to the Commission to authorise the conflict. For example, where two charities (which share the same trustees) are merging and, to achieve the merger, one charity is transferring its assets to the other.

If you need authority, you will need to explain what other options you have considered to manage the conflict of interest, and why they are not possible. For example:

  • alternatives to going ahead with the issue causing the conflict
  • asking the conflicted trustee to resign
  • appointing new, independent trustees who are not affected by the conflict

When the Charity Commission may take regulatory action

If a charity has not identified and properly managed a conflict of interest, the Charity Commission may have a regulatory interest.

Check if you need to tell the Commission about it.

You should put things right as soon as possible, which may include getting legal advice on your options. As a minimum, ensure you have rules in the charity’s governing document and a conflict policy to deal with any future conflicts of interest.

The Commission may take regulatory action if there are serious concerns arising from the failure to manage conflicts. Read about how the Commission assesses concerns that come to our attention.

Examples

Here are some examples of conflicts of interest, which trustees must manage by applying the guidance above.

In all these examples, it is important to: 

Example 1

Trustee A is required to attend a full day’s safeguarding training course at the charity, which will take place during their working hours. Trustee A will lose out financially by attending the training. They apply to the charity for compensation for loss of earnings.

Trustee A has a financial conflict of interest which must be managed when the trustees decide whether to make this payment.

The unconflicted trustees must also comply with the rules on paying trustees if they decided to make payment to trustee A.

Example 2

The charity decides to recruit a senior researcher. The wife of one of the trustees (trustee B) is qualified for the position and may apply. Trustee B declares a conflict of interest and does not take part in any discussions or activity about the role or its recruitment. The trustees read the Commission’s guidance on employing people connected to trustees to make sure:

  • they manage the financial conflict of interest if trustee B’s wife applies for the role
  • they comply with the rules on paying people connected to trustees if trustee B’s wife is the successful candidate

Example 3

The charity runs a local art gallery, and it owns a trading company which runs a gift shop and café.

A new trustee – trustee C – has significant business experience. The trustees of the charity consider it would be in the charity’s best interests to appoint trustee C as a director of the trading company, which is a paid role.

Trustee C has a financial conflict of interest which must be managed.

The trustees must also comply with the rules on employing trustees.

Example 4

The charity advertises that the ground floor of its property is available for lease. A trustee (trustee D) owns a company which is considering applying to rent the space.

Trustee D has a financial conflict, which they must declare. They must not take part in decisions about who the charity will lease the ground floor to. If the unconflicted trustees decide to lease to the company, they must comply with the law on leasing charity land to a trustee or connected person.

Example 5

The charity is looking to decorate its premises.

One of its trustees (trustee E) is a self-employed painter and decorator. Trustee E provides a quote, which is lower than others the charity receives.

The trustees decide to use the statutory power to pay a trustee for services. This requires the trustees to meet certain legal conditions, one of which is that trustee E must withdraw from all discussions and the decision about who the charity will contract with.

Example 6

Trustee F is a trustee of two local care home charities. Both charities are planning to bid for the same local authority contract.

Trustee F will not benefit financially from the bids. However, they face a loyalty conflict, which the trustees of both charities must manage.

It is also a high risk loyalty conflict because any knowledge trustee F has because of their role at one charity could be beneficial to the other charity.

Example 7

The trustees of a village hall charity are looking to have the hall rewired.

The preferred contractor is a local company owned by a longstanding friend of one of the village hall trustees. This trustee has no connection to their friend’s business and there is no financial interdependence between them.

This is a loyalty conflict which the trustees must manage.

Example 8

The trustees of an educational charity are making a decision about delivering a programme of work at regional arts centres, including a centre where one of its trustees (trustee G) is a member.

Trustee G has a conflict of loyalty because of their membership of the arts centre. Trustee G must declare the conflict but the other trustees decide this is a low risk conflict and trustee G can remain in the meeting but not take part in the decision or voting, because:

  • trustee G’s connection to the arts centre is through membership only
  • trustee G’s membership is unlikely to have a bearing on their approach to making the decision
  • any benefits to the arts centre members as a result of the decision will only affect trustee G in the same way as other members

Example 9

The charity is a place of worship. Following a storm, urgent repairs are needed to the roof. The charity does not have all the funds it needs for the repairs. One of the trustees, trustee H, offers to lend the money to the charity interest free, as long as there are monthly repayments and the full amount is paid back within 12 months.

Trustee H is married to trustee I. Trustee I is also the brother of trustee J.

So, trustees H, I and J are all conflicted:

  • trustee H faces a financial conflict because they are interested in their loan being repaid
  • trustee I faces a financial conflict because they are financially interdependent with their spouse, trustee H
  • trustee J is not financially interdependent with their sibling, trustee H, so they face a loyalty conflict

The trustees must manage all of these conflicts when deciding whether to take on the loan and terms, and any subsequent decisions about the loan.

Example 10

A trustee of charity K, which is a small general purposes grant making charity is also a trustee of a charity that works with young people (charity L). Charity L has applied to charity K for a grant to run a mental health awareness programme for children under 16. The trustees of charity K meet twice a year to consider grant applications and decide who receives grants.

The trustee who is trustee of both charities has a loyalty conflict, because their decision as trustee of charity K about who to award grants to may be influenced by their loyalty to charity L.

Example 11

A local authority (which is also the planning authority) is trustee of a large recreation ground and children’s play area, which is held on charitable trust. The local authority has been paying out of its corporate funds for the maintenance and upkeep of the land. The local authority as trustee is considering closing the play area and selling part of the land for development to provide the charity with the funds it needs to maintain the rest of the recreation ground. This means the local authority can stop subsidising the charity from public funds.

The local authority faces a financial conflict of interest because:

  • it stands to benefit from the disposal – disposing of the land will enable it to stop subsidising the charity
  • it is the planning authority which will make decisions on how the land can be developed

There is guidance for local authorities that act as trustees on managing conflicts of interest and disposing of charity land.

The main sources of law relevant to this guidance are the Charities Act 2011 and common law.

There are other legal rules that apply specifically to charitable companies and CIOs:

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