Conflict Of Interest Policy Template For Charities

Running a charity or social enterprise often means working with passionate people who bring strong networks, professional skills and lived experience. That's a real strength, but it can also create moments where personal interests and charity duties overlap.

Maybe one of your trustees owns a venue you want to hire. Maybe a director's partner is applying for a paid role. Or maybe a staff member sits on the board of another organisation competing for the same grant.

A clear conflict of interest policy helps you deal with those moments calmly, fairly and consistently. It doesn't have to be complicated, but it does need to fit your structure, your governing document, any board charter and the way your charity actually makes decisions.

What Is A Conflict Of Interest Policy For A Charity?

A conflict of interest policy is a governance document that explains how you identify, declare, record and manage conflicts before decisions are made.

For charities, this usually applies to trustees, directors, committee members, senior staff and anyone else involved in decision-making. If you're a charitable company, your trustees are also usually company directors under the Companies Act 2006. If you're a CIO, unincorporated charity or charitable trust, your governing document and charity law duties will usually do more of the heavy lifting.

A conflict can be financial, personal, professional or organisational. It can also be actual, potential or perceived. That last category matters because charity governance isn't just about doing the right thing. It's also about being able to show donors, funders, beneficiaries and the Charity Commission that decisions were made in the charity's best interests.

Common examples include:

• A trustee's company bidding to supply services to the charity.
• A board member's family member applying for a paid job or contract.
• A trustee sitting on another board that's applying for the same funding.
• A staff member approving expenses for someone they have a close personal relationship with.
• A director of a social enterprise holding shares in a supplier or customer.

Your policy should make it easy for people to speak up early. The goal isn't to embarrass anyone. It's to protect your charity's decisions and avoid problems down the track.

Do Charities Need A Conflict Of Interest Policy?

Yes, most charities should have a written conflict of interest policy, and for many charities it's a core part of good governance.

The Charity Commission expects trustees to identify and manage conflicts properly. Your trustees also have legal duties to act only in the charity's best interests, avoid unauthorised benefits and make decisions that further the charity's purposes. These duties come from a mix of charity law, your governing document and, for charitable companies, company law duties under the Companies Act 2006.

If your organisation is a company limited by guarantee, CIC, trading subsidiary, special purpose company or other social enterprise structure, your directors may also have statutory duties around conflicts. For example, company directors must avoid situations where they have, or could have, a direct or indirect interest that conflicts with the company's interests. They also need to declare interests in proposed transactions or arrangements.

Even where the law doesn't name a policy as a strict requirement, having one makes your job much easier. It gives you a repeatable process for:

• checking conflicts before meetings and major decisions
• keeping a conflict of interest register
• deciding when someone should leave the room or not vote
• recording decisions in board minutes
• showing funders and regulators that your governance is under control

A policy is especially useful if your charity is growing, taking on paid staff, applying for grants, partnering with businesses or paying trustees in limited circumstances. Those are the moments where informal chats can start to fall short.

What Should A Conflict Of Interest Policy Template Include?

A good conflict of interest policy template should include clear rules for declarations, registers, decision-making exclusions and record keeping.

A template can be a useful starting point, but charities often need tailored wording because your legal position depends on your structure, governing document and the types of decisions you make. For example, a small unincorporated charity may need a simpler process than a charitable company with a trading subsidiary and paid senior leadership team.

Fill-In Outline For A Charity Conflict Policy

1. Purpose Of The Policy: Explain that the policy protects the charity's decision-making and public trust.
2. Who The Policy Applies To: List trustees, directors, committee members, staff, volunteers, consultants and connected people where relevant.
3. What Counts As A Conflict: Define actual, potential and perceived conflicts, with charity-specific examples.
4. Duty To Declare Interests: Set out when declarations must be made, such as on appointment, annually and before each relevant decision.
5. Conflict Of Interest Register: Explain what information you'll record, who maintains it and who can access it.
6. Meeting Procedure: State how conflicts are raised, minuted and managed during board or committee meetings, including any committee governance rules.
7. Decision-Making Exclusions: Explain when a conflicted person must leave the discussion, receive no papers, abstain from voting or be excluded from the whole item.
8. Payments And Benefits: Refer to your governing document and Charity Commission rules where trustees or connected people may receive payment or benefit.
9. Staff And Volunteer Conflicts: Cover recruitment, procurement, grant-making, gifts, secondary employment and outside roles.
10. Breaches And Concerns: Set out how concerns are reported, investigated and resolved.
11. Review Cycle: State how often the policy and register will be reviewed, usually at least annually.

You can also include practical declaration wording, such as: I declare that I have an interest in this matter because I am a director of the proposed supplier. I won't take part in the discussion or vote unless the board decides I may remain for information only.

The key is clarity. If someone has to guess what to do, your policy probably needs tightening.

How Should Trustees Declare And Record Conflicts?

Trustees should declare conflicts as soon as they know about them, and your charity should record them in both the meeting minutes and a conflict of interest register.

Practically, you want a rhythm that makes declarations normal rather than awkward. Many charities do this at three points:

• On appointment: New trustees, directors and senior staff complete an interests declaration before or shortly after they join.
• Annually: Everyone confirms their interests once a year, even if nothing has changed.
• At each meeting: The chair asks for declarations at the start of the meeting and again before any sensitive item if needed.

Your conflict of interest register should usually include:

• the person's name and role
• the nature of the interest
• whether it's financial, personal, professional or organisational
• the date it was declared
• the decision or matter it relates to
• how the conflict was managed
• when it should be reviewed or removed

Because a conflicts register can contain personal information, you should also handle it consistently with the UK GDPR and the Data Protection Act 2018. That usually means collecting only what you need, keeping it accurate, limiting access to people who need it for governance purposes and not keeping old entries for longer than necessary.

Your minutes don't need to include private detail beyond what is necessary, but they should be clear enough to show the process. For example: Sam declared an interest as a director of Bright Events Ltd, one of the suppliers being considered. Sam left the meeting for the discussion and vote. The remaining trustees approved Supplier B.

What Happens When A Trustee Or Staff Member Has A Conflict?

When a trustee or staff member has a conflict, you should pause the decision, record the declaration and decide what level of exclusion is needed before the decision continues.

Not every conflict needs the same response. A minor perceived conflict may simply need to be declared and minuted. A direct financial conflict may mean the person receives no papers, leaves the meeting and doesn't vote. If the conflict is serious or ongoing, you may need to redesign the process or get tailored advice before going ahead.

A Practical Decision Process

1. Identify The Conflict: Ask what interest exists and whether it affects, or could appear to affect, the decision.
2. Check Your Governing Document: Look for rules on trustee benefits, quorum, voting and authorising conflicts.
3. Decide The Response: Choose whether the person can stay, stay for information only, leave for discussion, leave for the vote or be excluded entirely.
4. Check The Quorum: Make sure enough unconflicted people remain to make a valid decision.
5. Minute Everything: Record the conflict, the process and the final decision.
6. Update The Register: Add or update the conflict and review date.

Worked Example

Say you run a small youth charity in Manchester with 5 trustees. Your quorum is 3. You need to choose a website supplier for a grant-funded project worth £8,000. One trustee, Aisha, owns one of the agencies that has quoted for the work.

Aisha declares the interest before the meeting. The board decides she won't receive the comparison paper, won't join the discussion and won't vote. She leaves the room for that item. The remaining 4 trustees still meet the quorum of 3, so they can make a valid decision. They choose a different supplier because it offers better value, a stronger safeguarding policy and relevant delivery experience. The minutes record Aisha's declaration, her exclusion and the decision-making basis.

That process protects Aisha, the board and the charity. If a funder later asks how the supplier was chosen, you have a clear record.

Common Mistakes To Avoid When Managing Charity Conflicts

The biggest mistake is treating conflicts as personal wrongdoing, rather than a governance issue to be managed.

People in charities often wear several hats. A trustee might be a local business owner, professional adviser, donor, beneficiary representative or director of a partner organisation. That doesn't automatically mean they can't be involved. The problem usually arises when interests are hidden, poorly recorded or allowed to influence decisions.

Watch out for these common issues:

• Relying On Memory: If declarations only happen informally, you may struggle to prove what was declared and how the board responded.
• Using A Register But Not The Minutes: Your register shows interests over time, but minutes show how you handled a particular decision.
• Forgetting Connected People: Conflicts can involve spouses, partners, close family members, business partners or companies connected to trustees and directors.
• Ignoring Perceived Conflicts: Even if someone believes they can be fair, the question is also how it looks to a reasonable outsider.
• Leaving Quorum Too Late: If several trustees are conflicted, you may not have enough unconflicted people left to make the decision.
• Paying Trustees Without Checking The Rules: Trustee payments and benefits need careful handling under your governing document and the Charities Act 2011.
• Using The Same Policy Forever: Your policy should change as your charity grows, hires staff, creates trading subsidiaries or enters new partnerships.

It also helps to train your chair and senior staff on how to raise conflicts in a low-drama way. A simple standing agenda item can make a big difference. If people know they will be asked every time, declarations become part of your normal governance culture.

Key Takeaways

• A conflict of interest policy helps your charity identify, declare, record and manage trustee, director and staff conflicts.
• Your policy should cover actual, potential and perceived conflicts, not just obvious financial interests.
• A conflict of interest register is useful, but you should also record the decision-making process in your minutes.
• Conflicted people may need to leave the discussion, not receive papers, abstain from voting or be excluded from the whole decision.
• Your governing document, charity law and company law rules can affect what your board can authorise.
• A tailored policy is especially valuable if you pay staff or trustees, work with related suppliers, apply for grants or run a social enterprise structure.

If you'd like help with your charity conflict of interest policy, trustee declarations, conflicts register or governance documents, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.