Conflicts of interest
Risk and control
Conflicts of interest exist in all organisations. A conflict of interest is any situation where a personal interest could, or could appear to, prevent an individual from making a decision only in the organisation’s best interests. Remember, directors and trustees are under a legal obligation to act in the best interests of the organisation.
Examples of conflicts of interest might be if a board member (or a person connected to them, such as a close relative, business partner or company):
- receives payment from the organisation for goods or services, or as an employee;
- makes a loan to or receives a loan from the organisation;
- owns a business that enters into a contract with the organisation;
- uses the organisation’s services; and
- enters into some other financial transaction with the organisation.
The Code for Sports Governance also defines how such conflicts can occur. They can arise where there is a conflict between the interests of the organisation and those of a director, staff member or other volunteer, or those of another body with which the individual is involved.
Sports bodies, in particular membership organisations, often face situations that could be described as conflicts of loyalty. These conflicts arise because, although the affected board member does not stand to gain any personal benefit, their other interests could influence their decision making.
For example, a board member’s loyalty to the organisation could conflict with:
- loyalty to the club, region or constituent group that voted them onto the board;
- their membership of a section of the sport, for example, being a member of the women’s section of a club;
- an associated organisation, which may have nominated them;
- another sports body of which they are a board member or employee; and
- a member of their family or another connected person or organisation.
To manage conflicts of interest in a transparent and systematic way, sports organisations should develop a policy that sets out how potential conflicts will be identified and handled.
Preventing conflicts of interest from affecting decision making is a legal requirement and, having identified a conflict of interest, board members of an organisation must consider the issue so that any potential effect on decision making is eliminated. It is also a matter of ethical leadership as would be expected by stakeholders. How a board prevents the conflict from affecting decision making will depend on the circumstances.
If your sports organisation is a registered charity, you will want to follow The Charity Commission’s advice on conflicts of interest.
The Charity Commission’s Essential Trustee guide (CC3).
- Individual trustees should always declare any conflicts of interest which affect them.
- Any failure to declare a conflict of interest is a serious issue.
- The trustee body should consider whether serious conflicts of interest should be removed or require authority.
- Affected trustees should not participate in any decis