Suneet Sharma: Navigating conflicts of interest in charities

When a trustee proposed creating, and applying for, a CEO role, Suneet Sharma explains how he had to act fast to protect the charity’s integrity and shares practical lessons on navigating conflicts of interest with transparency and care.

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A few years ago, I was a trustee of a small charity. There had been a very soft introduction for the development of a CEO role at the charity previously. However, these were in the very early stages, as we had just brought in our first member of staff.

Shortly after this, I received an email from the chair suggesting the creation of a CEO role at the charity. In addition, they also suggested their candidacy for the role. As many will know, this presented a conflict of interest; a significant one. Suggesting the creation of a role and your candidacy for it as a trustee risks undue influence and trustee benefit. A connected person to them was on the board, who was conflicted as a result. A quick response was necessary. Safeguards also had to be put in place to protect the best interests of the charity.

I started a separate communication with unconflicted trustees on the matter. Together we set out key safeguards - the conflicted trustees were not to be involved in any way in discussions about creating this role or its recruitment, only specific details should be carefully communicated in writing and I would keep updated our conflict of interest register with actioned/agreed mitigations.These ultimately safeguarded our decision making and the charities best interests when we eventually appointed a CEO.

Reflecting on this process I have some key things to keep in mind when you are approaching a conflict of interest:

• Create a conflict-of-interest declaration- the best way to manage conflicts is to horizon scan and anticipate them.

• Check your governing document, it will have details on how conflicts should be handled, though these can vary depending upon its contents. Consider:
- Whether the rest of the unconflicted Board can vote to okay the conflict, if it is suitably low-level.
- Whether you count towards quorum or can vote in a conflicted scenario.

• Check the relevant regulatory guidance.

• If in doubt and the conflict is medium-high risk, depending on the context, seek professional advice.

• If in doubt declare, better to disclose and agree the degree of conflict present, even if it is minor.

• Record any declaration and developments in writing, along with agreed next steps, mitigations and safeguards- you should have a register of conflicts which arose for this.

• Have a conflict-of-interest policy, you never know when you will need it, and once you are aware of a conflict, follow it.

• The conflicted person maybe well be concerned of people’s perception of them when they have to disclose a conflict of interest. Take the sting out of this, and have a standing item on the board agenda at the start of every meeting as common practice. Set the tone that conflicts, where they arise, need to be handled openly and robustly.

• If you have a conflict, you have a duty to manage it properly and transparently, failure to do so is what really damages perception, not only of you but potentially your charity also.

• Consider the annex of worst-case and most likely scenarios and work back from there to help you plan for eventualities.

• Always bear in mind the perception of the public, beneficiaries, employees, volunteers and third parties.

• If you could be seen to be stepping on toes in your approach, whether as the conflicted party or otherwise, acknowledge and plan for this, consider what the best approach would be for all involved given the circumstances.



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