Last month, Cats Protection and the 18 cats its former Chair of Trustees owns, made the headlines after the CEO handed in his resignation – citing the cats as his reason for doing so. In this article, we explore and explain the relevant governance issues at the heart of the issues in this case.

Charles Darley has stepped down after a 3 month tenure as interim CEO, after reportedly raising concerns that the Chair was housing 18 cats inside a 3 bedroom flat. Darley was said to have been not only concerned about the cats’ welfare, but also worried about the image that the Chair was setting on behalf of the charity, as well as the charity’s internal governance procedures. The charity is the UK’s largest cat charity, helping an estimated 200,000 cats and kittens each year. 

The Cats

We understand from news reports that Darley requested that the board look into the treatment of the cats, citing Defra’s guidelines that cats must be given their own space (to be able to hide from humans and other cats), drinking bowls, and scratching posts. The board, according to Darley, only partially investigated his concerns, noting that they would seek promises from the Chair not to take in any additional cats. Both the former Chair and the charity have confirmed that the cats are well looked after.

The Governance

As the internal dispute rumbled on, it seems that further concerns were raised surrounding the governance of the charity. Darley reported that the trustees were reluctant to adopt a code of conduct – a document by which the trustees agree to be bound and which sets out the standards expected of them – or an animal welfare audit of cat fosterers. The situation prompted Darley to comment that the most senior trustees must lead by example; they must not advocate one set of standards and live by another. He stated that if there is ever a conflict between a trustee’s duty to the charity, and their own personal position, then the charity must always be put first. 

The charity has confirmed that its trustees follow the Charity Governance Code – the code which sets the principles and recommended best practice for good charity governance – and have committed to an external review of the charity’s governance to ensure the charity is confident in delivering the next 10 years of its strategy. The Chair has since handed in her notice, noting that she did not wish the recent news coverage to detract from the charity’s vital work.

Commentary

The story provides a colourful example of how internal disputes can be disruptive for charities. However, perhaps of greater interest is the interplay between the lives and views of trustees, and their roles at their chosen charities. Doubtless the above issues will resolve themselves in due course, but this news story serves as a good reminder to trustees that the actions they take in their personal lives can be, and often are, intertwined with their roles as charity trustees.

We explore in a little more detail below the key governance issues at play in this case, and the duties and principles charity trustees must be aware of as they navigate the responsibilities a trusteeship brings. 

Integrity

The Charity Governance Code comprises seven principles to help charities and charity trustees develop high standards of governance. It is not a legal or regulatory requirement, however it is highly recommended by the Charity Commission.

Integrity is the Code’s third principle. It sets an expectation that charity trustees will adopt values and apply ethical principles which achieve the charity’s purposes. The Code expects trustees to reflect the charity’s ethics and values in everything they do, and it anticipates that a charity’s leaders will demonstrate the highest levels of personal integrity and conduct. This principle therefore underscores just how important it is that trustees lead by example. 

A major part of the rationale behind the principle of integrity is the significance of the public’s trust and confidence in charities – the board must not only safeguard, but promote, the charity’s reputation by living its values. By extension, boards of trustees must promote public confidence in the wider sector. 

Conflicts of interests

The principle of integrity in the Charity Governance Code, whilst not itself a legal requirement, can be seen at play in the context of conflicts of interests.

Broadly, a conflict of interest is any situation where a trustee’s duties to act in the best interests of the charity conflict, might conflict or might be perceived to conflict with any personal interests or loyalties that a trustee has. There will be a conflict of interest if the trustee’s other interest could, or could be seen to, interfere with the trustee’s ability to decide the issue only in the best interests of the charity. These key principles have been developed in the courts over many years and form a core tenet of charity law.

The duties of charity trustees to avoid conflicts of interests extend beyond the transactional matters one might typically think about. Charity trustees must always take decisions that are in the charity’s best interests, and in doing so they must consider whether their decision could be influenced by any other personal interests, loyalties or even their personal views. In its guidance (CC29) the Charity Commission states:

“A conflict of loyalty could also arise where the religious, political or personal views of a trustee could interfere with the ability of the trustee to decide the issue only in the best interests of the charity.”

If a trustee is concerned that they are facing conflict of interest or loyalty, they must ensure that the conflict is dealt with appropriately. If a trustee’s personal interests means that a decision of the charity will benefit them in some way, they should declare the interest and withdraw from the decision making process. This includes where no financial benefit is involved, but a trustee is concerned that they have a conflict of loyalty. It is essential that such decision-making processes are recorded – particularly if trustees are concerned about managing reputational risk – and for processes in the charity’s governing documents to be followed. 

The Charity Commission has a wealth of resources for charity trustees, including its guidance on conflicts of interest (CC29) and its trustee guide, The Essential Trustee. You might also be interested in our recent free webinar on understanding conflicts of interests, which is available on our Birketts YouTube channel.

If you would like further advice on any of the topics covered in this article, please do not hesitate to get in touch Liz Brownsell, Amy Bradburne or another member of the Birketts Charities Team.