The Charity Commission’s updated guidance on managing conflicts of interest and loyalty lands against a backdrop of increasing regulatory concern. The Charity Commission reports that poorly handled conflicts are the most common cause for regulatory involvement, with cases becoming more frequent and more serious. In that context, the Commission’s drive to shorten and simplify its guidance is understandable.
The revision of the guidance is part of the Commission’s drive to simplify and shorten its guidance, making it more user friendly and easy to access on mobile phones.
There is also some reassurance that consultation has had an impact. Mills & Reeve partner Sarah Williams served on the Charity Law Association working party that fed into the Commission’s consultation on conflicts in October 2025, and it is pleasing to see that some of that group’s practical suggestions have been reflected in the final guidance.
The guidance does not recalibrate the legal framework. Trustees are still expected to identify conflicts, declare them clearly, and manage them in a way that puts the charity’s interests first. The tone is practical and accessible, and boards that follow it conscientiously are likely to satisfy the Commission’s expectations.
There are a few matters to be aware of:
Conflicts of loyalty
The guidance highlights that conflicts of loyalty can occur when a charity’s decision involves a person or organisation connected to a trustee, explaining that:
“Such a decision may involve a loyalty conflict because the trustee’s loyalty or responsibility to the other person or organisation could influence their decision making. This means they might not be able to make a decision based only on what is in the best interests of the charity.”
The guidance provides a list of examples of when a conflict of loyalty can arise, including where the decision relates to the organisation that appointed the trustee, or a trustee’s friends. This can be a tricky area to navigate, and in practice, of course, many corporate foundations and group structures rely on third party appointment rights while still expecting independent judgement. Likewise, a trustees friendship network may be wide. The guidance acts as a timely reminder for all those on charity boards to ensure they consider carefully and identify whether they have any conflicts of loyalty which need to be declared in relation to items for decision, and then ensure they are managed properly, taking into account the range of connections they may have.
Trustees should also continue to consider and apply the Charity Commission’s guidance on decision making for charity trustees. The guidance on decision making re-iterates that trustees must manage conflicts of interests, emphasising that:
“If you cannot manage a conflict of interest, you may not be able to go ahead with the decision. In some circumstances you may be able to go ahead with authority from the Charity Commission”.
Trustees should also continue to ensure they do not take ‘irrelevant’ factors such as personal feelings or prejudices into account in their decision-making.
Low risk or universal conflicts
While the guidance lists management tools including recusal, withdrawal from discussion and removal from decision making, it gives limited recognition to low risk or universal conflicts where participation may remain appropriate. One example of this might be membership charities setting subscription rates where all the trustees are members. In such circumstances, where every trustee member has a financial interest, but excluding the entire board would seem impractical and unnecessary.
To withdraw or not?
The Commission’s updated guidance set out clear steps for charities to follow if their governing documents do not contain any rules about conflicts of interests, or the rules are ‘inadequate’. This includes an emphasis on considered whether it is in the best interests of the charity to remove the conflict (for example, by not going ahead with the proposal or, the trustee with the conflict resigning). Whilst charities will commonly have a constitutional provision which requires a conflicted trustee to withdraw from decision making, but allows them to stay in the meeting to inform the discussion (if invited to do so by their fellow trustees), the Charity Commission’s default ‘minimum’ steps for managing financial conflicts provide that trustees with a financial conflict should always leave the meeting.
Conflicts provisions in your constitution
The new guidance makes it very clear that the Commission expects a proactive approach to your charity’s constitutional conflicts provisions.
“If your charity’s governing document:
- does not contain any rules at all on managing conflicts of interest, or
- contains rules, but these are inadequate, change it. Don’t wait until a trustee faces a conflict of interest to do this.”
Charities should also have a conflicts policy and a register of conflicts.
Next steps
Charities should be reviewing their constitutions soon to check that conflicts are adequately dealt with. The guidance makes it very clear that the Commission expects charities to seek professional advice when dealing with serious or complex conflicts, where for example all the trustees are conflicted, or the conflict gives rise to reputational risk to the charity.
The Commission is right to respond robustly to genuine abuses. But the hardest issues sit in the grey areas. Proportionality and informed judgement are as central to good conflicts management as process itself.
If you have any questions please contact Sarah Williams or Neil Burton.
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