Steff Bell says managing conflicts of interest within your charity boardroom doesn't have to awkward

If you are a trustee of a charity or board member of a third sector organisation, you’ve likely come across the term "conflict of interest" banded about, but what is it and does it matter?

We very often receive queries from board members about this issue; sometimes it is clear-cut. An example may be a board member offering to do some work for the charity for payment, trustees will have to decide if they should part of the decision to give them the work? Or when should a trustee that has been appointed to a board for a particular reason, a representative of a user group for example, they perhaps shouldn't be part of decisions affecting that particular group.

Then there are the murkier ones. What if one of the trustees is good friends with the manager, or maybe they are an employee of a similar charity…the list is endless. In other words, there lots occasions where a trustee may not be 100% able to put the interests of the charity first.

Identifying conflicts of interests matters from the perspective of making sure the organisation is making decisions with integrity, but also from the perspective of protecting the trustee in question from undue scrutiny. How a conflict of interest is dealt with (actual or otherwise) requires the mantra: identify, prevent, manage.

If your charity is a Scottish Charitable Incorporated Organisation then your constitution must state a procedure for dealing with a conflict of interest (do check it carefully, it might be quite prescriptive as to what kinds of conflict of interest). Even if your governing document does say something about it, has your board had an honest discussion about what conflicts of interest might affect you, and agreed collectively how they should be handled?

This discussion can be a little awkward so it helps to have a good plan of action, some suggested solutions and an individual that can facilitate the topic to ensure everyone feels listened to; people can often get defensive when ambushed. It’s important to recognise also that this discussion does not have to be facilitated by the chair, in fact it’s sometimes better that it isn’t.

An identified conflict of interest isn’t a personal attack, it’s the first step to ensuring that the organisation is protecting the reputation and integrity of itself and its trustees. An added bonus of preventing conflicts of interest becoming an issue is that it also helps the cohesiveness and confidence of the board to operate well.

For most boards a conflict of interest is inevitable, how it is responded to it is critical. Having a register of trustees interests completed and reviewed annually, declaring interests as a standard agenda item, and having a procedure written down can prevent most interests from becoming a conflict. It’s managing this process that requires a little more nuanced awareness and care. Not just the chairperson but all the trustees should be seeking to foster a culture of openness and supportiveness.

Our view is that managing interests safely, starts with your board having shared values and understanding of your charity’s purpose. That might sound trite but over the years of observing boards, it continues to be the case that where there are problems of unaddressed conflicts of interest or loyalty it can be drawn back to trustees not being suitably inducted, and there being little time given to reviewing everyone’s understanding of their individual and collective roles.

Take time to induct and support one another, be honest and open with each other. It is the responsibility of all the trustees to ensure that you start and continue with your shared interests at the heart of your decision-making. Get that right and collectively there is nothing you can’t handle.

Steff Bell is a senior development worker at EVOC (a partner in the TSI in Edinburgh) and a member of the Scottish Third Sector Governance Forum