Conflict, loyalty and proportionality: The Charity Commission’s new conflicts guidance

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:

Potential bias v conflicts of loyalty

First, the guidance appears to conflate conflicts of loyalty with the broader concept of potential bias. It suggests a conflict of loyalty can arise simply because a trustee was appointed by another organisation, or because of personal friendships. Taken literally, that could cause real difficulties. Many corporate foundations and group structures rely on third party appointment rights while still expecting independent judgement. Likewise, trustees frequently develop friendships through board service; but should still be able to vote in the best interests of their charity.

Low risk of universal conflicts

Second, while the guidance lists management tools, recusal, withdrawal from discussion, or removal from decision making, it gives limited recognition to low risk or universal conflicts where participation may remain appropriate. Membership charities setting subscription rates provide an obvious example. Every trustee member has a financial interest, but excluding the entire board would be impractical and unnecessary. The same logic applies when boards renew trustee indemnity insurance, where trustees benefit personally but the decision is plainly in the charity’s interests.

To withdraw or not?

A common constitutional provision expects a conflicted trustee to withdraw from decision making, but allows them to stay in the meeting to inform the discussion. The Charity Commission’s new guidance insists 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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