Why managing conflicts of interest really matters

The Charity Commission has updated its guidance to trustees on conflicts of interests and how they should be dealt with.

Why now? What has changed?

Shockingly, this is a direct response to their 2025 findings that there has been a sharp rise in alleged abuse of charitable status for private benefit: up 23% in 2025 alone. A recurring factor in those cases has been poor (or absent) management of conflicts between trustees’ duties to their charity and their private interests.

The Commission is not alone in their concern about this. Over the years we have had countless robust conversations with clients and prospective clients about these questions. This includes:

• Trustees of established charities who either don’t know what a conflict of interest is, ignore conflicts or, in a few cases, actively exploit their position for personal gain.

• People wanting to set up charities, usually with sound motivations to do good in their community, who also need to earn a living from the charity’s work and/or want to retain a high degree of control over what the charity does.

• People who appear to be wanting to run a commercial business (albeit usually with positive societal impacts) but who primarily want the tax and funding benefits of being a charity.

Increasingly, we are having to explain that charities (which must be established for public benefit) are fundamentally incompatible with private control and personal gain.

Often the result is that we never hear from the enquirer again.

Sometimes, refreshingly, the outcome is development of a different structure, at least while the idea matures or where a more entrepreneurial approach is needed.

An increasingly common journey we encounter is for a founder to start with a Community Interest Company, to allow more flexibility and control while the organisation establishes is purpose, mission and approaches. As these mature, the wise founder realises the need for the organisation to be less reliant on them. This usually involves them increasingly sharing control and ultimately enabling the organisation to thrive after the founder moves on.

Conversion to a charity, perhaps with a trading subsidiary, is often a good move during this transition. It establishes the organisation as the founder’s legacy with fixed charitable purposes and enables increased access to funding and tax efficiencies.

Sadly, this enlightened, altruistic approach is not yet the norm. Too many trustees (whether founders or not) see the charity as “theirs” and don’t manage conflicts of interest and loyalty properly as a result.

The Commission contends that many trustees don’t know what continues a conflict and, even if they do, they don't manage the conflict properly. The updated guidance offers a clear perspective on what is a conflict of interest or loyalty, that serious or complex conflicts should avoided altogether and that lesser conflicts should be declared and managed.

The regulator is clear that conflicts of loyalty (including friendships) should be treated just as seriously as financial conflicts. The guidance is robust in establishing that serious or complex conflicts should removed either by the conflicted trustee(s) resigning or by not going ahead with the proposal. Other conflicts can be managed, usually by the conflicted trustee(s) not taking part in the discussion or decision making in which they have a conflict, and sometimes by getting authority from the Commission.

The guidance is also pragmatic. For example, it recognises that user/beneficiary trustees can help their fellow trustees understand the perspectives of the charity’s users especially when thinking about decisions that affect beneficiaries. But it maintains that such involvement should not give such user trustees better access or other advantages over any other beneficiary.

Overall, we think the update is helpful. The guidance is shorter, clearer and well balanced. It is a vital ballpark against abuse of charities for personal gain.

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Want to find out more? Contact us at julian@almondtreeconsulting.co.uk to discuss your organisation’s needs.