Conflicts of interest are common and do not have to be a serious problem. However, if a conflict of interest isn’t managed properly, it may damage your charity’s reputation and, in serious cases, even breach the law.
If you are on the governing body (board or committee) of a charity, a conflict of interest can occur when your duty to act in the best interest of your charity ‘conflicts’ (or may conflict) with the opportunity or potential to get a personal benefit (or a benefit for someone related to you). Even if you feel that there is no conflict of interest, if an outsider is likely to see it as an issue, then this needs to be managed.
- Check your rules and any legislation that applies to your charity to understand your legal duty about handling or avoiding conflicts of interest.
- Have a written conflict of interest policy and a register of interests for staff and the members of your board. Make sure that staff and board members thoroughly understand the policy. Promote a culture of disclosure and ask people to disclose any conflicts of interest when they join your charity and keep it as a regular agenda item so that the register is kept up-to-date.
- In every board meeting, ask if there are any conflicts to declare. Take careful minutes – record any conflicts that are disclosed, who is present for discussion and record who did not vote on which items.
- When making any decisions ask yourself: 'Would an independent observer think I was acting in the best interests of my charity or in my own interest?' If there is any doubt, it is best to declare a conflict of interest.
- Before participating in a decision on any issue where you may have a conflict of interest, declare your interest first. This may not automatically remove you from the decision-making process, but will allow others to determine if your involvement is appropriate.
- Don’t be embarrassed to declare a conflict of interest! Most members of a board will encounter a conflict of interest (or several) at some point and you should feel confident to declare and manage it responsibly.
- Don’t vote on matters where you have a conflict of interest and, ideally (or if required), leave the room for the discussion.
- Conflicts of interest can come and go and sometimes a serious one can arise that means you may have to resign your position. For example, if you accepted a role with the funding body for your charity it may be necessary for you to resign. Don’t continue on in a role if your conflict of interest is regularly going to make it difficult for you to make a contribution.