Conflict of Interest Policy Template for Charities

Conflicts of interest are one of the most common governance issues the Charity Commission deals with. They are not, in themselves, a problem — almost every charity will face them at some point, especially small charities run by people who are active in their local community. What matters is that trustees recognise conflicts and handle them properly. A written conflict of interest policy is the practical tool that makes this happen consistently, rather than relying on trustees to remember the right thing to do in the moment.

What is a conflict of interest?

The Charity Commission defines it precisely. In its guidance CC29, it states:

"A conflict of interest is when what is in the charity's best interests conflicts with, or may conflict with: your personal interests, or the interests of people or organisations connected to you."

The key phrase is "or may conflict with." A conflict does not have to be active to matter — the potential for a conflict is enough to require it to be declared and managed.

Common examples in small charities:

• A trustee's company tendering for charity work
• A trustee who is also a paid employee or a relative of one
• A trustee being a member of another organisation the charity is partnering with or funding
• Decisions about paying a trustee for goods or services

The trustees' legal duty

Managing conflicts is not optional good manners — it flows from a core legal duty. The Charity Commission is unambiguous:

"As a trustee you must make decisions based only on what is in your charity's best interests. This is one of your legal duties."

A conflict of interest threatens that duty because it introduces a competing interest into the decision. A policy is how trustees protect the decision from being affected.

Is a conflict of interest policy a legal requirement?

For most charities, having a written policy is strongly recommended good practice rather than a strict legal requirement. The Commission's guidance says: "You should have a conflict of interest policy to help you" — the language is recommendatory, not mandatory.

There is one important exception. If your charity is a company, and you need to make a decision that involves a conflict (for example, paying a trustee), the Commission notes that you "must amend your Articles of Association to add these rules before you make the decision." So for charitable companies, the governing document rules are effectively required before acting on certain conflicts.

In practice, almost every well-run charity has a policy regardless of legal form, because funders, auditors, and the annual return process all expect one.

The five steps the Charity Commission recommends

CC29 sets out a five-step approach to handling conflicts of interest. Your policy should be built around these:

1. Identify the conflict. Trustees should actively look for conflicts before each decision, not wait for one to be obvious. A standing agenda item at every trustee meeting is the simplest way to do this.

2. Declare the conflict. The conflicted trustee tells the rest of the board. Many charities keep a register of interests that trustees update at least annually and at the point any new conflict arises.

3. Consider removing the conflict. Sometimes the cleanest option is to remove the conflict entirely — for example, by not entering the arrangement that creates it.

4. Manage the conflict. Where the conflict cannot be removed, the board manages it. Usually this means the conflicted trustee does not take part in the discussion or the vote on that item, and leaves the room if the conflict is serious.

5. Record the conflict. The minutes must record who declared what, how the conflict was managed, and the decision reached. This is the evidence that the board acted properly.

For more on how to record decisions correctly, see our guide to trustee meeting best practices.

Conflicts that involve paying a trustee

The most sensitive conflicts are those where a trustee, or someone connected to them, stands to be paid by the charity. The default position in charity law is that trustees are unpaid — see our guide on whether charity trustees can be paid for the detail.

Where a payment is allowed, the Charity Commission is clear that authority is needed first:

"You must have authority (legal permission) before making any payments to trustees or people connected to them."

The statutory route for paying a trustee for goods or services is section 185 of the Charities Act 2011, which requires (among other conditions) a written agreement, an amount that "does not exceed what is reasonable in the circumstances," and that the paid trustees are a minority of the board. A conflict of interest policy should cross-reference your charity's process for handling these payments.

Template

Here is a practical template you can adapt for a small charity:

Conflict of Interest Policy — [Charity Name]

Approved by trustees: [Date] Review date: [Date — typically 12 months later]

1. Purpose. This policy sets out how the trustees of [Charity Name] identify and manage conflicts of interest, so that decisions are made only in the charity's best interests.

2. What is a conflict of interest. A conflict of interest arises when a trustee's duty to act in the charity's best interests competes, or may compete, with their personal interests or the interests of someone connected to them.

3. Declaring interests. All trustees will complete a register of interests on appointment and review it at least annually. Trustees will declare any new or relevant interest as soon as they become aware of it.

4. Conflicts at meetings. Conflicts of interest will be a standing item at the start of every trustees' meeting. A trustee with a conflict relating to an agenda item will:

• declare the conflict;
• not take part in the discussion or vote on that item; and
• where the conflict is serious, leave the room for that item.

5. Serious conflicts. Where a conflict is significant and recurring, the trustees will consider whether the arrangement causing it should be ended, or whether the trustee should step down.

6. Payments to trustees. Any proposal to pay a trustee, or a person connected to a trustee, will follow the relevant legal authority (such as section 185 of the Charities Act 2011 or the charity's governing document) and will be recorded in full.

7. Recording. The minutes of each meeting will record any conflict declared, how it was managed, and the decision reached.

8. Review. This policy is reviewed annually by the trustees.

Common mistakes

Treating conflicts as accusations. Declaring a conflict is not an admission of wrongdoing — it is what a responsible trustee is supposed to do. A culture where people are reluctant to declare is the real risk.

No register of interests. Relying on memory means conflicts get missed. A simple, regularly updated register removes the guesswork.

Not recording the management of the conflict. If the minutes do not show that the conflicted trustee withdrew, there is no evidence the board acted properly — which is exactly what an auditor or the Commission will look for.

For a complete view of your governance obligations, see our charity compliance checklist or work through the charity governance code self-assessment.

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This guide applies to charities registered in England and Wales. This is general guidance, not legal advice.

Sources

• Manage a conflict of interest in your charity (CC29) — GOV.UK
• Payments to charity trustees: what the rules are — GOV.UK
• Charities Act 2011, section 185 — legislation.gov.uk
• Charity Governance Code 2025 — Principle 5: Decision making (identifying and managing conflicts of interest)