The Charity Commission has issued updated guidance on conflicts of interest. In this article, Faiza Mathaker, an Associate Solicitor in our Charity and Not-for-Profit Team, reviews the update.
Managing conflicts of interest remains one of the most critical governance hurdles charities face today. For this reason, in May 2026, the Charity Commission published a vital piece of guidance for trustees on how to identify and manage conflicts of interest in a charity. This guidance follows the press release in April 2026, where the Charity Commission emphasised that trustees must always act in the best interests of their charity by ensuring that their personal interests do not influence their decision-making.
The Charity Commission has highlighted that there is a high level of unmanaged conflicts of interest in the third sector which increases the risk of financial abuse in charities. The figures speak for themselves. The Charity Commission’s first ever Charity Sector Risk Assessment found that “cases involving the alleged abuse of charitable status for private benefit … had risen by almost a quarter (23%) in a single year”. It is expected that this figure will increase for subsequent years.
The aim of this guidance is to help trustees mitigate and manage any conflicts of interest.
A conflict of interest arises when a trustee’s personal interest/interest of a connected person/organisation conflicts with the interest of the charity. The Charity Commission has identified the two types of conflict of interest as:
- Financial conflicts- this is where funds/services are received by a trustee or connected person; and
- Conflict of loyalty- this is where a trustee’s duty could affect their judgement.
The Charity Commission does not necessarily view all conflicts of interest whether that be financial or loyalty based as a sign of improper behaviour on the part of the trustee/s. What the Charity Commission has stressed is the early identification and management of any potential/actual conflict of interest. There is no doubt that poor management can lead to conflicts, therefore, the Charity Commission has outlined a 5-step action plan on how to manage conflicts.
Step 1: Identify the conflict
Any potential or actual conflicts should be actively considered by the trustees.
Step 2: Declare the conflict
Once a conflict has been identified, it must be disclosed to the board as soon as possible. The disclosure should be made prior to any discussion taking place.
Step 3: Consider whether the conflict can be removed
The trustees should discuss and consider ways in which the conflict can be eliminated altogether.
Step 4: Manage the conflict
If the conflict cannot be eliminated/removed, then the trustees should consider ways in which it can be managed carefully.
Step 5: Record the decision
It is imperative that the trustees keep a clear written record explaining how the decision was reached and how the conflict was managed.
The Charity Commission has recommended that a formal conflict of interest policy is maintained and that their register of interest is regularly monitored.
Conflicts of interest are a normal part of governance; the challenge is not to eliminate all conflicts; but, to identify and manage them effectively. By following the recommended five-step approach, not only can the trustees protect themselves by identifying and managing conflicts, but they can also maintain the public trust both in their charity and in the third sector generally.
Should you require any further information or advice on conflicts of interest or the responsibilities of trustees, please do not hesitate in contacting Khalid Sofi (Khalid.Sofi@LBMW.com) Faiza Mathaker (Faiza.Mathaker@LBMW.com) or Nicholas Thompson (Nicholas.Thompson@LBMW.com) in our Charity and Not-for-Profit department.