Conflicts of interest: the importance of transparency in the community and voluntary sector

What are conflicts of interest?

Conflicts of interest in this context arise where a board member of a voluntary and community organisation’s personal interests seem to conflict with the interests of the organisation which they govern.

The law says that where an organisation is a registered charity, the board as charity trustees are under a legal obligation to act in the best interests of the charity. They should not generally benefit from their position on the board and their primary loyalty must be to the charity.

Dealing with conflicts of interest

Conflicts can not always be avoided completely but the important point to remember is that transparency is central to the effective management of a conflict of interest. If a board member realises that they have a direct or indirect personal interest which is in conflict with or may be perceived to be in conflict with the organisation’s interests, they must declare it.

It is vitally important that the organisation have a policy on conflicts of interest so that all board members act consistently and conflicts can be successfully managed.

Help from NICVA

NICVA’s governance and charity advice team have recently drawn up a new advice note on conflicts of interest to help organisations in the voluntary and community sector identify how to prevent conflicts of interest arising and how to act appropriately if a conflict of interest does develop.

The advice note:

• defines conflicts of interest,
• puts the topic in context by giving the legal background to conflicts of interest
• includes some suggestions on how organisations should deal with conflicts of interest should they arise, and
• includes a sample conflict of interest policy that organisations can use.