Lots of the work that lands on the desks of charity governance solicitors arises from charity trustees not dealing with conflicts of interest or loyalty correctly. Trustees might happily employ a family member (or even themselves!) to work for the charity, grant a lease of their own property to their charity without getting Charity Commission consent thinking they are doing the charity a favour or decide that their charity will enter into a contract with the company they own or which employs them. The list is endless. 

Failure to identify and manage conflicts of interest or loyalty is often indicative of wider poor governance. In my experience, it can also be a sign that the trustees do not want to operate in a transparent way and become defensive when it is suggested that the decisions they are making are benefitting them/their family and not just the charity. Poor decision making where conflicts of interest and loyalty are not managed can lead to serious incidents that must be reported to the Charity Commission and in the worse cases a Charity Commission inquiry and action taken against individual trustees to recover the money that a charity has spent that has benefitted them.

Today the Charity Commission has published new guidance which is a helpful summary about handling both conflicts of interest and loyalty. I would encourage all charity trustees to read it and remind themselves of what they must do to ensure that they manage any conflicts they have when making decisions for their charity so that they are acting in the charity's best interests.