Conflicts of Interest

The Charity Commission defines conflict of interest as: any situation in which a trustee's (representative's) personal interests or loyalties could, or could be seen to, prevent them from making a decision only in the best interests of the charity (branch).

It is important to have a conflict of interest policy:

  • to demonstrate and document good governance in order to protect the integrity, credibility and reputation of the branch and CIOT/ATT;
  • to maintain the trust and confidence of our members, third parties (such as suppliers) and the public; and
  • as a reminder of what we do.

Three step approach to managing conflicts of interest

STEP 1: Identify Conflicts of Interest

This includes:

  • keeping a register of interests
  • querying potential conflicts of interest
  • having a conflicts of interest policy

STEP 2: Prevent the conflict of interest affecting the decision making process

STEP 3: Record the conflict of interest

Identifying a conflict of interest

Conflicts of interest may arise in a number of different ways:

1. Direct financial gain or benefit to the representative, such as:

  • payment to a representative for services provided to the branch/CIOT/ATT, such as legal or accounting services
  • the award of a contract to an organisation in which a representative has an interest and from which the representative will receive a financial benefit

2. Indirect financial gain

The most common example is the branch employing the services of a spouse or partner of a representative, where their finances are co-dependent. Despite the fact that the payment is not being made directly to a representative, the representative could be seen to benefit, at least indirectly, from the appointment and the resulting payment.

3. Conflict of loyalties, such as:

  • where a friend of a representative is employed by the branch
  • where a representative's loyalty to the CIOT/ATT conflicts with their loyalty to another charity of which they or their family are a member of. Representatives who are involved in more than one organisation or charity should always remember which 'hat they are wearing' when they attend meetings

Managing a conflict of interest

  1. All representatives should declare their interests in the Register of Interests which needs to be updated annually and also when any changes occur.
  2. There should be a standard agenda item for meetings so that at the beginning of every branch meeting each representative should declare any actual or potential conflicts of interest which he or she has in an agenda item.
  3. If a representative is uncertain whether or not he or she is conflicted, he or she should err on the side of openness, declaring the issue and discussing it with the other representatives.
  4. If a representative is aware of an undeclared conflict of interest affecting another representative, they should notify the Chair or, if the Chair is unavailable, one of the other representatives.
  5. Where a conflict of interest exists, the representatives will need to decide how to proceed so that they make their decision in the best interest of the branch.

Recording a conflict of interest

All decisions under a conflict of interest should be recorded by the Secretary and reported in the minutes of the meeting. The report will record:

  • the nature and extent of the conflict
  • which representative(s) were affected
  • whether any conflicts of interest were declared in advance
  • an outline of the discussion
  • the actions taken to manage the conflict, such as whether anyone withdrew from the discussion

Remember, there is nothing wrong in there being a conflict of interest, but it is important that it is declared so that it can be managed properly.

Further information can be found on the Charity Commission website.