Managing conflicts of interest: how updated guidance affects academy trusts
The Charity Commission (Commission) updated its guidance on identifying and managing conflicts of interest in a charity (Guidance) on 22 April 2026.
The update follows a consultation by the Commission about how it could further improve or clarify points of potential confusion.
In this article, Joanne Davison, partner and head of our sport, education and charities team and Jessie Melroy, solicitor in our sport, education and charities team, consider the amended Guidance and highlight some key takeaways for academy trusts (Trusts).
What is a conflict of interest?
Identifying and managing conflicts of interest is an important (and ongoing) duty of trustees. Conflicts of interest might arise in a number of circumstances, including when a trustees’ links and relationships outside of the Trust impact their ability to act in the Trust’s best interests. The Guidance describes conflicts as either “financial” or “loyalty” based.
The Guidance outlines that “financial” conflicts arise when a trustee (or a person/organisation connected to them, known as a “Connected Person”) could receive money (or something of monetary value) from a decision that the trustees make. In these circumstances, the trustee will have a conflict between the Trust’s best interests and their own interest. The size of the benefit does not matter – even if it is small, it is still a financial conflict.
On the other hand, a “loyalty” conflict can happen where a Trust’s decision involves a Connected Person. If a trustee's loyalty to the Connected Person could influence their decision-making, a conflict may arise. “Loyalty” conflicts may also arise where Trust’s merge if there is an overlap of trustees, and not enough independent trustees to manage the conflict.
It is very important that conflicts are carefully managed. Failing to do so could result in a decision being rendered legally invalid, resulting in a loss to the Trust and the trustees. The Commission may also regard the lack of conflict management as evidence of misconduct or mismanagement.
Why were the changes made?
The revised Guidance follows a finding by the Commission that compliance cases in relation to alleged private benefit for trustees and those connected to them, linked to unmanaged conflicts, rose by nearly a quarter in one year (with a 23% rise). The Commission conducted a risk assessment and found that the main cause of such cases was not deliberate wrongdoing, but a lack of awareness. As such, the Commission released shorter and more precise Guidance to help flag the key considerations and steer trustees in the right direction.
The key changes
The Commission’s new Guidance is shorter, clearer and provides common examples explaining when a conflict arises. The updated Guidance does not seek to change the legal framework surrounding conflicts of interest.
The Commission expects a proactive approach to tackling conflicts. In particular, the Guidance flags the importance of including relevant provisions within governing documents to tackle conflicts.
In addition, the Guidance makes clear that any trustee subject to a financial conflict should, as a minimum, leave the meeting whilst the discussion takes place. The Trust should also have a robust conflict of interest policy with conflicts addressed on the agenda of every meeting and minutes evidencing who declared conflicts and why. Trusts should also consider whether a quorum can still be formed (and decisions validly passed) once any conflicted trustees have removed themselves.
If you need legal support in relation to the Guidance, do not hesitate to contact Joanne Davison on [email protected] or 0191 211 7958.