How to Manage Conflicts of Interest on a Board
How to manage Conflicts of Interest on a board means identifying situations where a board member’s personal interests could influence their decisions, declaring those interests formally, and removing the affected person from related discussions and votes. UK governance codes require this for charities, credit unions, housing associations and most voluntary organisations.
Key points:
- A conflict of interest and a declaration of interest are not the same thing
- All board members have a duty to declare interests, even when no conflict exists
- The declaration should be made before relevant agenda items are discussed
- Organisations should keep a written register and review it regularly
Why This Matters for Voluntary Boards
If you sit on a board — whether as a charity trustee, a director of a credit union, housing association or a business improvement district — conflicts of interest are something you will encounter. They are not a sign of wrongdoing. They are a normal part of board life, not least as working lifestyles become more complex and more fractional.
The problem is when they are handled badly. Poor management of conflicts can undermine trust, expose your organisation to legal risk, and — in serious cases — lead to regulatory action.
The Charity Commission for England and Wales is clear that trustees must manage conflicts of interest properly as part of their legal duty to act in the best interests of the charity. Similar expectations apply across the voluntary and community sector, including organisations regulated by the Financial Conduct Authority, such as credit unions.
What Is a Conflict of Interest?
A conflict of interest arises when a board member’s personal interests — financial, professional, or personal — could influence, or appear to influence, how they act in their role.
Common examples include:
- A trustee whose employer is tendering for a contract with the organisation where they are a trustee
- A board member who is a close relative of a job applicant
- A director who has a financial stake in a supplier being considered by the board
- A volunteer who sits on the boards of two organisations with competing interests
The key word is “could.” You do not need to prove that the conflict has actually affected a decision. If it has the potential to do so, it needs to be managed – and our general recommendation is always self-declare if you aren’t sure. In many ways this topic lends itself to the ‘rule’ – better declare than stay silent if you aren’t sure.
(Tip – the NCVO’s governance guidance is a useful starting point for charities and voluntary organisations working through what counts as a conflict)
What Is a Declaration of Interest — and How Is It Different?
This is where many boards get confused.
A declaration of interest is broader. It is a formal statement by a board member of any interest — personal, financial, or professional — that is relevant to their role. This includes interests that may not currently create a conflict but could do so in the future – for example other roles and shareholdings that may not be a direct conflict today, but might become one in future.
A conflict of interest is a specific situation where that declared interest is directly relevant to a matter the board is deciding.
Think of it this way: a declaration is something you record proactively. A conflict is something you manage reactively when it becomes relevant to a specific agenda item.
Good governance requires both. Board members should maintain an up-to-date register of interests, and they should also flag a conflict at the start of any meeting where a relevant item appears on the agenda — even if the interest is already on the register.
(Tip – the Chartered Governance Institute’s guidance on conflicts of interest sets out this distinction clearly and is worth bookmarking for your governance toolkit)
How to manage Conflicts of Interest when they arise
When a conflict is identified during a meeting, the standard approach is:
- Declare it — the board member states their interest clearly at the start of the relevant agenda item
- Record it — the minutes should note the declaration
- Step back — the board member withdraws from the discussion and the vote on that item (this is often called recusing oneself)
- Continue — the remaining board members make the decision without the affected person present
The exact process can vary depending on your governing document, so it is worth checking your constitution, articles of association, or trust deed. Some organisations also require a quorum check once a member has stepped back.
(Tip – for credit unions, the Financial Conduct Authority’s rulebook includes specific obligations around conflicts, which directors should be familiar with)
Keeping a Register of Interests
Every board should maintain a written register of interests. This is not optional for most organisations — it is a governance requirement and, for charities, it is something the Charity Commission expects to see in place.
The register should be:
- Completed by every board member when they join
- Reviewed and updated at least once a year
- Made available to other board members
- Referenced at the start of each meeting
A blank register that never gets updated is worse than useless — it gives the impression of good governance without delivering
Useful Tip: Making Declarations Automatic
One of the most common practical problems boards face is remembering to declare interests at every relevant meeting. People forget. Agendas change. New items get added at short notice.
Governance360’s Declarations of Interest feature is designed to solve this. Board members record their declarations once within the platform. From that point on, their declared interests are automatically associated with every meeting they attend — visible to other members without anyone needing to remember to raise it manually.
It is a small thing that makes a real difference, particularly for volunteer-run boards where governance admin competes with everything else on people’s plates.
Key Takeaways
- Conflicts of interest are normal — what matters is how you manage them, not whether they exist.
- A declaration is not the same as a conflict — declarations are proactive; conflicts are situation-specific.
- Every board needs a register — and it needs to be kept up to date, not just completed at induction.
- The process must be followed and recorded — declaration, withdrawal, minute it.
- Good systems reduce human error — the simpler you make it to declare interests, the more likely people are to do it correctly.
That’s exactly what Governance360 is built around. It’s a board portal designed for smaller organisations — charities, housing associations, credit unions and community groups — where board members are volunteers, not professionals, and simplicity genuinely matters.
If any of the need above feels out of control in your organisation, it might be worth having a look at how other boards like yours are running things differently.
Explore Governance360 — or book a short demo to see it in action.