If a trustee's building firm has just quoted for the hall repairs, or your treasurer also chairs the community group applying to you for a grant, you have a conflict of interest to manage. That is not a scandal — it is normal. Small charities recruit trustees precisely because they are well connected locally, so overlapping interests come with the territory. What matters is not whether conflicts exist, but whether your board spots them and handles them properly.
A charity conflict of interest policy is a short document that sets out how trustees identify conflicts of interest and conflicts of loyalty, declare them, remove them from decision-making, and record how each one was handled. If your charity does not have one yet, you are not in breach of any statute — but the Charity Commission expects every board to manage conflicts, and a written policy plus a register of interests is how you prove you do.
This guide explains exactly where the law stands, what a good policy contains section by section, how a conflicted decision should look in your minutes, and where to get a free template — including a declaration of interests form — without signing up for anything.
Is a conflict of interest policy legally required?
No Act of Parliament requires a charity to have a written conflict of interest policy. The precise position has three layers, and it is worth being clear about each.
First, the underlying legal duty. Every trustee must act only in the charity's best interests and must not put themselves in a position where personal interest and trustee duty conflict, unless the conflict is properly authorised and managed. For charitable companies this is reinforced in statute: directors owe a duty to avoid conflicts of interest (Companies Act 2006, section 175) and a duty to declare any interest in a proposed transaction or arrangement (section 177). A decision tainted by an unmanaged conflict can be challenged, and any unauthorised benefit a trustee receives may have to be repaid to the charity.
Second, the Charity Commission's expectation. The Commission's guidance Conflicts of interest: a guide for charity trustees (CC29) sets out a five-step approach it expects all boards to follow: identify the conflict, declare it, consider removing it, manage it, and record it. CC29 is guidance rather than statute, but the Commission treats serious failures to manage conflicts as evidence of misconduct or mismanagement.
Third, the Annual Return. The Charity Annual Return for 2023–26 asks charities completing it whether they have each of 13 named policies — and "trustee conflicts of interest" is one of them. Answering "no" is not an offence, but it is a signal to the regulator, and to funders who increasingly ask the same question. Our pillar guide to what policies a charity needs covers the full list.
So the honest summary: not legally compulsory as a document, but the duty it evidences is legal and personal to each trustee, and the regulator expects to see it. For a document that takes an hour to adopt, it carries unusual weight.
What counts as a conflict of interest in a charity?
CC29 defines it directly: "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" — wording that covers financial conflicts and conflicts of loyalty alike. In practice, treat perceived conflicts with the same care as real ones: public trust is the asset at stake, and a conflict that merely looks unmanaged can do the damage of one that is.
Real examples from small charities:
- A contract with a trustee's company. The village hall needs rewiring and a trustee is an electrician. Direct financial conflict — manageable, but only with the statutory conditions met (see below).
- A grant to a trustee's other charity. Your grant-making charity receives an application from a youth club where one of your trustees is also a trustee. This is a conflict of loyalty even though no money reaches the trustee personally.
- Dual trusteeship or dual roles. A trustee also sits on the parish council your charity negotiates with over a lease, or is married to your charity's only employee. Loyalty pulls in two directions.
- Connected persons. Conflicts do not stop at the trustee. For the trustee payment rules, section 188 of the Charities Act 2011 defines connected persons to include a trustee's child, parent, grandchild, grandparent, brother or sister; the trustee's own spouse or civil partner, and the spouses or civil partners of any of those relatives; business partners; and companies or institutions the trustee (or those people) control or hold a substantial interest in. A good policy uses the same broad net for declarations.
Conflicts of loyalty are the ones small charities most often miss, because nobody is being paid. CC29 is explicit that they count and must be managed the same way.
What your conflict of interest policy must include
A strong policy for a small charity fits on two or three pages. These are the sections it needs, and what good looks like in each.
1. Purpose and who is covered
One short paragraph: the policy exists so that decisions are made only in the charity's best interests and can be seen to be. State plainly who it applies to — all trustees, co-opted committee members, and senior staff who influence decisions — and that it extends to the interests of connected persons, using the Charities Act 2011 section 188 categories as the working definition.
2. Definitions with examples
Define both a conflict of interest (personal or financial benefit) and a conflict of loyalty (competing duty to another organisation or person), and give two or three examples drawn from your charity's actual life — the sorts of situations above. Trustees follow policies they recognise themselves in; abstract definitions get ignored.
3. Declarations of interest
Two mechanisms, both essential. Every trustee completes a written declaration of interests form on appointment — build it into your trustee welcome pack — and updates it at least annually and whenever anything changes. And "declarations of interest" appears as a standing item at the top of every board agenda, so conflicts specific to that meeting's business surface before the relevant item, not during it.
4. The register of interests
Name a keeper — usually the secretary or chair — and list what the register records: employment and business interests, directorships, other trusteeships, significant shareholdings, and relevant interests of connected persons, each entry dated. Say who sees it: all trustees as of right, your independent examiner or auditor on request, and the Charity Commission if it asks. Many charities also state whether members or the public may inspect it; there is no general legal right, so decide and write it down.
5. Handling a conflict in the meeting
This is the operational heart, and it should read as three verbs: declare, withdraw, minute. The conflicted trustee declares the interest as soon as it is apparent. What happens next depends on the type of conflict. For a financial conflict — the trustee or a connected person stands to benefit — CC29 is firm: the trustee leaves the discussion, takes no part in the decision, and is not counted in the quorum for that item. There is no discretion for the others to wave it through. For a conflict of loyalty with no benefit involved, the handling can be proportionate: the un-conflicted trustees decide whether the trustee must withdraw or may stay for some or all of the item, and record their reasons. Check your governing document too: many constitutions and model articles impose their own, sometimes stricter, rules on conflicted trustees and quorum, and the policy must not be more lenient than they are.
6. Serious conflicts and trustee benefit
The policy should recognise that some conflicts cannot be managed by withdrawal alone because they involve a trustee (or connected person) benefiting from the charity. Payment for goods or services is possible under sections 185–186 of the Charities Act 2011 only if all the statutory conditions are met: a written agreement, remuneration that is reasonable, a prior decision by the other trustees that the arrangement is in the charity's best interests, paid trustees (with their connected persons) remaining a minority of the board, and nothing in the governing document forbidding it — and section 186 bars the trustee being paid (or connected to the person paid) from taking any part in the decision. Payment for simply being a trustee, or any benefit outside the statutory or governing-document authority, needs the Charity Commission's prior consent — the process is set out in CC11, the Commission's guidance on paying trustees. The policy should say that where authority is in doubt, the decision waits.
7. Record-keeping
State that every declared conflict, and how it was handled, is recorded in the minutes of the meeting concerned, and that the register of interests is retained and refreshed annually. If the Commission ever asks how a decision was reached, these records are your answer. An unauthorised benefit that comes to light may have to be repaid by the trustee, so the records protect individuals as much as the charity.
8. Adoption and review
Close with the date the board adopted the policy, the named owner, and the next review date. One line each.
Download our free charity conflict of interest policy template (Word) — openly licensed, written for small charities in England and Wales, and yours to adapt with no sign-up.
A note on templates, because searchers reasonably expect the regulator to provide one: CC29 used to include model documents, but the Commission withdrew its template annexes, and the guidance now points to the Chartered Governance Institute, whose versions sit behind a free-subscriber sign-up. NCVO publishes a free sample declaration of interests form among its governance sample documents. Our template above bundles the policy and the declaration form together under an open licence, so you can adapt both freely.
How conflicts should appear in your minutes
CC29's final step — record — lives or dies in your minutes. For any item where a conflict was declared, the minutes should record four things: who declared what interest; that the trustee withdrew from the discussion and decision (or why the others decided withdrawal was unnecessary); that the meeting remained quorate without them; and the decision itself with its reasons.
A serviceable minute reads: "Jo Patel declared an interest in item 6 as a director of Patel Electrical Ltd, one of three firms quoting for the rewiring. She left the meeting at 7.42pm. The remaining five trustees, still quorate, compared the three quotes and resolved to accept the quote from Hartley & Co as best value. Jo Patel returned at 7.55pm." Nothing more is needed — but nothing less will do, because a minute that is silent on a known conflict looks like concealment years later. Chairs carry most of this in practice; our guide to chairing a charity meeting covers how to call the standing declarations item and manage a withdrawal without awkwardness.
Adopting the policy properly
A policy nobody adopted protects nobody. Tailor the template to your charity — real examples, the right keeper for the register, any stricter rules your governing document imposes — then put it to the board, resolve to adopt it, and record the resolution in the minutes. Give it an owner and a review date in the document itself. Then make it operational: add "declarations of interest" as a standing agenda item, issue the declaration form to every current trustee, and open the register.
The quiet failure mode is drift: declarations gathered once in 2023, a review date nobody diarised. Trustee Meetings keeps your policies, owners and review dates alongside your agendas and minutes and resurfaces each policy when its review falls due — free to try, no card needed.
Common mistakes
These are the failures that actually appear in Commission casework and independent examiners' letters, not hypotheticals:
- Treating the declaration form as the policy. A stack of signed forms with no rules about withdrawal or minuting manages nothing.
- Covering only money. Policies that ignore conflicts of loyalty miss the most common small-charity conflict: the trustee with two hats and no payment in sight.
- The one-off declaration. Interests declared at appointment and never updated. Circumstances change; the register must too.
- Staying for the discussion. A conflicted trustee who abstains from the vote but dominates the debate has affected the decision. Withdrawal means the discussion as well.
- Forgetting connected persons. The contract is not with the trustee — it is with her husband's firm. Section 188 exists precisely because this is the oldest workaround in the book.
- Silent minutes. The conflict was handled impeccably in the room and recorded nowhere. If it is not minuted, it did not happen.
- Assuming small sums are exempt. The section 185 conditions have no de minimis threshold. A £300 job for a trustee's company needs the same authority as a £30,000 one.
- Not reading the governing document. Some constitutions bar conflicted trustees from counting in the quorum, or prohibit trustee payment entirely. The policy cannot override them.
How often to review it
Review the policy at least every three years, and refresh the register of interests annually — a simple way is to re-circulate the declaration form each year with the annual return paperwork. Trigger an early review when a trustee joins or takes on an outside role, when the charity starts trading or contracting in new ways, after any incident where a conflict was handled badly (which may also need consideration as a serious incident), when your governing document changes, or when the Commission updates CC29. Logging the review as an action with an owner and date keeps it from evaporating; that is exactly what Trustee Meetings is built to do, and our free conflict of interest policy template carries a review box on its final page to prompt it.
Conflicts of interest sit alongside the other governance basics every board revisits: start with our pillar guide to what policies your charity actually needs, see how declared conflicts and withdrawals are handled in the room in how to chair a charity meeting, build the declaration form into your trustee welcome pack, track policy reviews with a trustee action log, and round out your compliance set with our guides to a charity risk management policy and a charity safeguarding policy.