Conflict of Interest Policy UK | Charities Act 2011 s.188

A conflict of interest policy is a written framework that tells trustees how to behave when their judgement could be swayed, or could reasonably be seen to be swayed, by something other than the charity's interests. The Commission's working definition is deliberately broad: a conflict exists whenever a trustee's personal interests or loyalties could, or could be seen to, prevent them from making a decision only in the charity's best interests. The "could be seen to" limb matters more than people expect, because perception damages public trust even where no actual gain occurs.

The policy is not the same thing as the register, and the two are often confused. The policy sets the rules: how conflicts are declared, when a trustee must withdraw, how the board records its reasoning, and when it must seek the Commission's authority. The declaration register is the evidence that the policy is being followed: a maintained schedule of each trustee's outside interests, connected persons and any conflicts that surface during the year. A board with an excellent policy and an empty register is in a weaker position than one with a modest policy and a register that is visibly kept up to date. Regulators and funders read the register as proof of behaviour, not intention.

The distinction the policy must hold clearly is between a conflict of interest, where a trustee stands to gain a benefit, and a conflict of loyalty, where the trustee gains nothing personally but owes a competing duty to another organisation. Both are caught by the same fiduciary rule and both belong in the register.

For charities in England and Wales the governing statute is the Charities Act 2011, read alongside the common law of fiduciary duties and the Charity Commission's guidance CC29, which the Commission refreshed and reissued on 22 April 2026 after a rise in conflict-related casework. The underlying principle is far older than the statute. A trustee must not place themselves in a position where interest and duty conflict, a rule the courts have applied stringently since Keech v Sandford (1726) and restated in cases such as Re Thompson's Settlement. The rule bites on the existence of the conflict itself, not on proof that the trustee was actually influenced, which is why declaration and withdrawal matter even when everyone trusts everyone.

The statute supplies the specifics. Connected persons are defined at section 188, capturing a trustee's spouse or civil partner, children, parents, siblings, grandchildren and grandparents, business partners, and any organisation in which the trustee or those relatives hold a controlling or substantial interest. Section 185, as amended by the Charities Act 2022 with effect from 31 October 2022, sets out the statutory power and the four conditions (A to D) under which a trustee or connected person may be paid for providing goods or services to the charity, the reference to goods being the substantive 2022 reform. Where the board cannot meet those conditions, or the charity's own governing document prohibits the payment, authority must come from the Commission under section 201. Disposals of charity land to a connected person engage separate rules under section 118. Trustees making any such decision are held to the duty of care in section 1(1) of the Trustee Act 2000.

Layered on top, charitable companies carry director duties under the Companies Act 2006, and CIOs are governed by the Charitable Incorporated Organisations (General) Regulations 2012. The Commission's full position is set out in its official CC29 guidance on identifying and managing conflicts of interest in a charity, which the board should treat as the benchmark its conduct will be measured against. A robust policy is the natural companion to your charity's governing constitution under the Charities Act 2011, since the two documents must not contradict each other on quorum and voting.

The most common trigger is registration or a funding round. A grant-maker conducting due diligence will ask for your governing document, recent minutes and your conflict of interest arrangements in the same breath, and an absent or stale policy is read as a governance red flag. The second recurring scenario is the appointment of a new trustee, when the board should capture that person's outside interests on the register from day one rather than discovering them later. This is the natural moment to pair the policy with a trustee appointment letter setting out fiduciary duties, so the new trustee understands the declaration obligation before their first meeting.

A live transaction is the third trigger, and the one that causes the most trouble. The board is about to lease premises from a company a trustee part-owns, or appoint a trustee's firm to deliver a contract, or employ a trustee's relative. Each is a trustee benefit that must be declared, managed and, depending on the figures and the governing document, authorised. Proceeding without recording the process is where charities lose, even when the underlying deal was fair.

Two edge cases deserve flagging. User trustees, common in village hall and school charities where the governing document requires beneficiary representation, face structural conflicts whenever a decision affects their own access to services, and the policy must explain how those are handled rather than pretending they do not exist. The second is the merger or shared-trustee scenario, where two charities share board members and there may be too few independent trustees to manage a conflict of loyalty internally. In that situation the board sometimes has no choice but to seek external input or Commission authority.

• The statement of purpose and scope opens the policy by setting out the fiduciary principle in plain terms and confirming that it binds every trustee, including corporate trustees and, by extension through linked policies, senior staff. It anchors the document to the Charities Act 2011 and CC29 so the board's standard is explicit on the face of the document.
• The definitions clause distinguishes a conflict of interest from a conflict of loyalty and reproduces the section 188 connected persons list, so trustees can self-assess accurately rather than guessing whether a cousin or a business partner counts.
• The declaration procedure sets out the standing obligation to declare interests on appointment, the annual refresh, and the duty to declare a fresh conflict the moment it arises at a meeting, before the relevant item is discussed.
• The management and withdrawal clause governs what happens next: the conflicted trustee withdraws from discussion and voting, is excluded from quorum on that item, and the board records its reasoning. This is the clause that protects the validity of the decision.
• The authorisation clause identifies when the board can manage a benefit itself under section 185 and when it must apply to the Commission under section 201 or for a land disposal under section 118.
• The declaration register is a structured schedule capturing each trustee's name, the nature of the interest, the connected person where relevant, the date declared and how each conflict was managed, designed to be exported and produced on request.

This policy is drafted for England and Wales, where the Charities Act 2011 and the Charity Commission's jurisdiction apply. Trustees should be aware that the framework is not UK-wide, and a charity operating across borders cannot assume one document covers every nation.

In Scotland, charities are regulated by the Office of the Scottish Charity Regulator (OSCR) under the Charities and Trustee Investment (Scotland) Act 2005, which imposes its own conflict of interest duties on charity trustees and uses different terminology and thresholds. A cross-border charity registered in both jurisdictions should map its policy against both regimes rather than relying on the English version alone.

In Northern Ireland, the Charity Commission for Northern Ireland operates under the Charities Act (Northern Ireland) 2008, again with its own registration and reporting expectations. A policy drafted solely to the English statute will not satisfy a Northern Irish regulator on its own.

Within England and Wales, the practical variation is by legal form rather than geography. A charitable company must read the policy together with its director duties under the Companies Act 2006 and the conflict provisions in its articles. A CIO must align the policy with the Charitable Incorporated Organisations (General) Regulations 2012, which contain specific decision-making and recording rules. An unincorporated association or trust relies more heavily on the policy and the Charities Act 2011 itself, since there is no separate company-law layer. The template flags these distinctions so the board adopts the version that matches its structure, a point worth confirming against your CIO constitution drafted for Charity Commission registration.

You begin by entering the charity's registered name, charity number and legal form, since the form determines which company-law or CIO clauses stay in and which drop out. From there the template asks whether your governing document already contains an express power to pay trustees for goods or services, because the answer changes how the authorisation clause reads and whether a section 201 application is likely. You then set the practical mechanics the board prefers: how often the register is refreshed, who maintains it, and whether declarations are confirmed at every meeting or annually with in-meeting updates.

The register itself is populated next, one row per trustee, capturing existing outside interests and connected persons before the policy goes live so it is never adopted empty. Once the fields are complete the document assembles into a clean policy followed by the register schedule, ready to table at a board meeting for formal adoption by resolution. Recording that adoption in your trustees' written resolution under the Charities Act 2011 gives you the audit trail showing exactly when the board approved it. You then download in Word to keep editing or in PDF to lock the adopted version for your records.

The most frequent failure is treating the policy as a one-off filing rather than a living process. A board adopts a polished policy, files it, and never declares a single interest on the register afterwards. When a funder or the Commission asks for evidence, the empty register tells the real story, and a well-drafted policy with no declarations behind it can look worse than no policy at all. The fix is mundane: a standing agenda item at the start of every meeting asking whether anyone has a conflict on today's business, with the answer minuted even when it is "none".

The second recurring error is misunderstanding withdrawal. Trustees often think declaring the interest is enough and then stay in the room to argue their corner. Declaration without withdrawal does not protect the decision, because the no-conflict rule targets the trustee's presence and influence, not merely their silence. A related slip is forgetting that the conflicted trustee must also be excluded from the quorum count on that item, which can invalidate the vote if it leaves the meeting inquorate. Boards also routinely overlook conflicts of loyalty, assuming the policy only catches financial gain, when a trustee's duty to another charity or employer is exactly the kind of competing loyalty the Commission expects to be managed. Finally, charities paying a trustee for goods or services frequently rely on a power their governing document does not actually contain, or fail to meet all four conditions of section 185, turning a fair payment into an unauthorised one that trustees may have to repay.