Local authorities will often face conflicts of interest because of the different roles they have, for example as the provider of statutory services or the planning authority. A decision to dispose of land, in particular, is one where these different roles can interact and present the local authority with a conflict of interest that must be managed. For example, because it may stand to benefit from the decision to dispose.
For example, a local authority (which is also the planning authority) is trustee of a large recreation ground and children’s play area located in one of its wards, which is held on charitable trust. The local authority has been paying out of its corporate funds the maintenance and upkeep of the land. A decision to close the play area and sell part of the land will provide the charity with the funds it needs to maintain the recreation ground. This means the local authority can stop subsidising the charity from public funds.
In this example, the local authority faces a conflict of interest:
because it stands to benefit from the disposal – disposing of the land will enable it to stop subsidising the charity
because it is the planning authority which will make decisions on how the land can be developed
A conflicts of interest policy You should set up a separate conflicts of interest policy, to guide how the local authority will make decisions when it is conflicted. The policy should be appropriate to the types of charities the local authority is trustee of, and the ways in which the local authority could be conflicted. For example, a more detailed policy may be suitable where the local authority is trustee of several public facilities, or where one or more facility is significant in terms of its value, size, community use or public interest. A local authority’s usual conflict of interest policy, that applies to its role as statutory authority, does not apply to its role as charity trustee. Identifying and managing conflicts of interest The first step is to make sure the local authority identifies that it is conflicted. Then, think about how you will manage the conflict when you make your decision. This should be in line with the charity’s conflicts of interest policy. For example, by appointing new unconflicted trustees alongside the local authority so that on this occasion they (not the local authority) make the decision. If you cannot manage the conflict of interest, you must have authority from the Charity Commission before you can make the decision. Your decision must be in the charity’s best interests. If you need Commission authority, you will need to show how you have reached this conclusion. Read the Commission’s guidance about conflicts of interest. Get professional advice about managing conflicts if you need it.