Advice from General Synod Legal Advisory Commission on Conflicts of Interest
The General Synod Legal Advisory Commission has issued the Legal Opinion, Friends Charities: Conflicts of Interest, (“the Opinion”) following the publication of Conflicts of interest: a guide for charity trustees” (CC29), (“the Guidance (CC29)”), by the Charity Commission in 2014, (the latter is applicable to England and Wales). Though it does not mention such charities specifically, the general tenor of the Guidance (CC29) has raised concerns in some minds as to whether it is appropriate for the incumbent and churchwardens of a church to continue to act as trustees of a “friends’ charity” or whether their role should be relegated to one of being invited to attend and speak at meetings but withdrawing prior to any decision or vote being taken. A further concern is whether a trustee of a friends’ charity may also properly serve on the relevant PCC.
A number of churches find it beneficial to establish “friends” groups, registered as charities, as a means of providing financial and other support such as the volunteering of time for fundraising, and events organisation. Some of these “provide a vehicle for building up a supporter base for church buildings amongst those who, while not necessarily interested in their religious purposes, nevertheless value them as heritage and community assets”.
Friend’s charities exist independently of the relevant Parochial Church Council (“PCC”), which has the duty to maintain the church and its churchyard; legal ownership of the church and its churchyard is vested in the incumbent, whilst “in the churchwardens is vested the property in the plate, ornaments, and other movable goods of the church”, Canon E1 §5.
The Opinion comments:
“[t]he constitution of such friends’ charities often provides for the incumbent or priest-in-charge and the churchwardens to be trustees of the charity by virtue of their office, recognising that the only way that such organisations can further their charitable objectives is through the PCC applying the charity’s funds to maintain and implement repairs and improvements to the church and churchyard (subject to the grant of any necessary faculty)”.
In this context, there is a potential ‘conflict of loyalty’, in which the loyalty of a “friends’ trustee”, or their duty to another person or organisation, could prevent that trustee from making a decision solely in the best interests of the “friends charity”. Following from the Guidance (CC29), concerns have been expressed as to whether it is appropriate for the incumbent and churchwardens to continue to act as trustees of a friends’ charity or whether their role should be relegated to one of being invited to attend and speak at meetings but withdrawing prior to any decision or vote being taken. A further concern is whether a trustee of a friends’ charity should also properly serve on the relevant PCC.
The Opinion summarises the two opposing schools of thought in paragraphs  and , and at  recognizes “it is a general principle applicable to all trustees, and others in a fiduciary position, that persons must not put themselves in a position where their duty to the relevant body may conflict with some personal interest (a ‘conflict of interest’) or some duty owed to another body (a ‘conflict of loyalty’), (see Aberdeen Railway v Blaikie (1854) 1 Macq 461, per Cranworth at 471; and Boardman v Phipps  2 AC 46 at 124 B-C, per Lord Upjohn).
Paragraph 6 continues: “[I]n the case of a charitable body, it is important that its trustees act only in the interests of the charity and take their decisions solely in the interests of furthering its charitable purposes” and explores possible situations in the light of the Guidance. It states inter alia:
“when an incumbent of a church or members of a PCC act as trustees of a related friends’ charity, they have to make sure that they act solely in the interests of that charity and not of the PCC. It is important, however, to view that fiduciary duty in the light of the similarity, if not the identity, of the charitable objectives of both bodies…
“In the case of an incumbent or PCC member participating in a decision of a friends’ charity, the duty to each body should coincide. In our view, it is sufficient, in order to address any conceivable conflict of loyalty, for a PCC member to declare that membership to the friends’ charity and to disclose the nature of any decision that the PCC may already have arrived at relevant to the decision which is being considered by the friends’ charity”.
The Opinion concludes:
“. For the future, it may be sensible for the governing constitutional documents of a friends’ charity to include some provision expressly recognising the inherently close relationship between the charity and the relevant PCC and expressly recognising the need to make the declaration and any disclosure referred to in paragraph 6 above.
Alternatively, before a PCC considers supporting the establishment of a friends’ charity, it may wish to consider the simpler route of using a restricted fabric repair fund within the PCC’s control associated with the establishment of a committee of its own (which could include persons who are not members of the PCC) to promote the church building and its fabric as a heritage and community asset.
In the case of an incumbent or PCC member participating in a decision of a friends’ charity, the Opinion comments:
“We are not aware that PCC representation on the board of a friends’ charity has given rise to any difficulties in the past. Rather, it reflects the realities of the PCC’s role, recognising the inherently close relationship between a friends’ charity and the relevant PCC, and engendering confidence in subscribers to friends’ charities that their donations are likely to be applied in a timely and effective manner for the benefit of the church and its fabric. Indeed, some subscribers might be deterred from membership of, or contributing to, a friends’ charity if it did not appear to have the support of the church, as evidenced by the incumbent and churchwardens being trustees of the friends’ charity”.