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Managing Conflicts of Interest in Charities

View profile for Craig Staten-Spencer
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The Charity Commission, the independent regulator of charities in England and Wales has recently published its report following its statutory inquiry into the Birmingham Education Trust (the Trust).

The inquiry looked into a series of concerns at the Trust relating to financial controls, trustee decision making and conflicts of interest.

The Commission opened its statutory inquiry after the Trust repeatedly failed to comply with its legal duty to file the charity accounting information, having only made one such filing and annual return in the period from 1997 to 2020.

The inquiry established that the two trustees of the Trust were in fact husband and wife and it was held that they were unable to manage conflicts of interest due to their close relationship. 

Concerns around conflicts of interest were exacerbated by the fact that one of the trustees was employed as head teacher of the school the Trust was designed to support even though the Trust’s rules prohibited the employment of trustees. 

The trustees two daughters were also employed as teachers at the school and the inquiry found that there was no evidence that the clear conflict of interest had been managed nor that the decisions taken were in the best interest of the charity.

Amy Spiller, head of investigations at the Charity Commission noted that the conduct of the original trustees “fell far below the standard the commission, and the public expect”.  The inquiry led to the removal of the original trustees who have also been disqualified as acting as trustees of any charity.

This case serves as a salutary reminder of the importance of properly managing conflicts of interest within a charity.  This starts with a well drafted conflict of interests policy, including a register to formally record any potential conflicts. 

If you have any questions regarding what amounts to a conflict of interests, how to manage such conflicts or what a conflicts of interest policy should contain then please contact the specialist charity team at Roythornes who will be more than happy to assist you.