How would you feel if someone told you that your interests were conflicted?
That your personal relationships or professional interests stood in the way of you making an unbiased decision?
Many people react with defensiveness or shame.
“I’m not like that…”
“I would never be anything but unbiased…”
“I’m trustworthy!”
Even…
“How dare you suggest that!?”
The trouble with this reaction is that it misses the point. Conflicts of interest are not solely about what is – they are about what could be. Perception is everything; reality is secondary.
In my governance training, I set out a useful tool (the Larry Lens) for deciding whether or not something is a conflict of interest. The test is NOT “Is the person doing something wrong?”, or “Would the person do something wrong?” or even “COULD the person do something wrong?”
No, it’s: “Imagine Larry. He has it out for your charity. Maybe he’s a disgruntled former service user, ex employee or disappointed donor. What could he do with this information? Could he use it to make people believe that something is off? What would people who didn’t know the context think about what’s happening?”
If the answer when you look through the Larry Lens is anything other than “Nothing bad”, then it’s a conflict that you need to manage.
We live in an online, volatile and vicious world. Anything can be blown up beyond all recognition and be used to ruin lives and careers, even entire charities. So we need to stop thinking about conflicts of interest as Ensuring We’re Not Doing Anything Wrong and start thinking about it as Ensuring No-one could even Suspect or Imply that We’re Doing Anything Wrong.
Trustees often assume that others will attribute good intentions to them because they’re volunteers. But they won’t. The world doesn’t work like that (anymore?). You have to assume the worst, because so will the people reacting to the next big social media frenzy.
If you struggle with applying the Larry Lens, you can sense-check it with people outside the organisation. Get one of you to play devil’s advocate. Feed it into ChatGPT and ask it to think about how it could be used against you. But whatever you do, don’t assume that everything will be ok – or that you can shut down criticism by being offended by the implication.
Now, this is not to say that real conflicts don’t happen, because they do.
For example, a Trustee who was going to benefit from a service contract awarded actively argue to the Board as to why that contract should be awarded- this is a breach, because any interest must be entirely excluded from all and every discussions about it.
Or a Chair and a CEO with a close personal relationship who used their influence with each other to push their desired outcomes: a breach because not only was the conflict there, but it wasn’t properly managed.
Or a Board largely made up of the CEO’s friends and family, who then wouldn’t hold the CEO to account.
But I’ve also seen situations where there is genuinely no abuse but where things still look dodgy.
Like where a charity invites a corporate partner’s FD to join their board, shortly before a long-term funding arrangement is agreed. Despite the agreement being outside their authority, the timing of the decision looked suspicious.
Or where a Trustee becomes the CEO, but no-one knows that they have followed carefully all due process requirements and sought permission from the Charity Commission.
Or where a new service that perfectly fits the needs of a service user Trustee is introduced and to which they quickly subscribe, despite that new service being a decision made at the operational level in which the Trustee has played no part.
The thing is, dealing with conflicts of interests is actually super easy. Beyond honesty and integrity, transparency is the key to everything.
Obviously, having the right policies and systems in place, and following them rigorously is essential. Imagining how things could be misunderstood should help to highlight where – even if you’ve followed all the rules, you shouldn’t take this decision. But the last – essential – step is to publish it.
Publish everything about how you’ve handled the situation properly: in your annual report, on your website, at your AGM. Openly explain and set out anything that could look a little off so that no one can use this against you.
Then think long and hard about whether you can effectively manage the conflict, or whether the decision cannot be properly managed and the person affected should step down.
Felicia Willow is Director of Interims for Impact (interimsforimpact.co.uk) and Willow Charity Consulting (www.willowcharityconsulting.co.uk), specialising in governance, strategy and crisis. In addition to providing interim leaders for charities going through change, she is an expert in charitable governance and undertakes dozens of governance reviews, Board development and Trustee advice for charities each year. Get in touch via LinkedIn or book a call through the Interims for Impact website.