As we have shown before, the recent controversy surrounding the Captain Tom Foundation highlights the critical importance of transparency, good governance, and proper management of conflicts of interest within charities and social enterprises. Public trust in voluntary sector organisations relies heavily on clear distinctions between personal and organisational interests.
A conflict of interest arises when a person involved in decision-making for an organisation has competing personal, professional, or financial interests that could influence, or appear to influence, their decisions. The onus is on individuals, such as trustees or directors, to declare these conflicts. It is better to over-disclose and manage potential conflicts than to leave them unresolved, risking reputational damage or regulatory scrutiny.
In the context of charities and social enterprises, a connected person typically refers to close family members, business associates, or entities where an individual has a controlling interest. Many funding bodies require that social enterprises have at least three unconnected directors to ensure independent oversight and accountability.
The Charity Commission's investigation into the Captain Tom Foundation revealed governance failures, including unaddressed conflicts of interest, personal benefits to trustees, and blurred lines between private and charitable activities. Key findings included:
These actions deemed "misconduct and mismanagement" by the Charity Commission, damaged public trust not only in the foundation but also in charities more broadly.
To avoid similar issues and maintain public trust Charities and Social Enterprises should follow these simple guidelines:
Cases like the Captain Tom Foundation serve as cautionary tales. They underscore the need for ethical governance, especially when public donations and goodwill are involved. Trust, once lost, is challenging to rebuild. By fostering transparency and accountability, charities and social enterprises can ensure their missions are upheld and public trust is preserved.
We have resources, including template Conflict of Interest policies, which are available to our Silver Members. Charity Commission guidance on managing conflicts of interest can be found here.
Conflict of Interest / Loyalties are something we deal with on a weekly basis, and depending on the conflict and the organisation’s governing document, the answer can vary quite a bit. Some of the types of issue we encounter are:
We are always happy to help our Members with queries about conflict, but our golden rule would always be: Err on the side of caution when deciding if something is a conflict of interest / loyalty, and if your charity is considering an action that could be a conflict of interest, then really consider if you have a god reason to run this risk.
Please contact us if any of the above has raised questions for you personally or the organisation you are supporting.