Produced by Julie Garland-McLellan, Consultant at AltoPartners Australia and non-executive director and board consultant based in Sydney, Australia.

Contribution by Scott Eversman, a Partner at The Inzito Partnership / AltoPartners UK and focuses on Energy Transition, Industrial, Aerospace & Defence, and Private Equity. He specialises in recruitment of Chairs, Chief Executives, Non-Executive Directors and other Board and senior operating roles. Scott is also the founder of BlackSwanPilot, an AI-driven predictive governance platform whose Predictive Governance OS framework has been added to Inzito’s board resilience advisory. Scott holds an MA in International Relations from the University of Southern California and a Certificate in Business and Climate Change from the University of Cambridge. He is based in the UK.

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The Director’s Dilemma - September 2026

This month our real-life board dilemma concerns a board that has benefitted from a conflict of interest and has an issue with record-keeping.

Mason chairs a not-for-profit board that operates a large facility in a regional town. As with many large towns, there is a small cadre of people who run the larger local businesses and feature on many of the boards and committees that underpin the effective functioning of the community and its economy. One of Mason’s directors owns and operates the only commercial laundry in the region. Mason’s board recently approved the renewal of the contract. It was a moot point as there is no local competition and the contract came to the board because it exceeded the value that management were authorised to award without three quotes. Two companies from other towns were invited to quote but declined because they said the transport was going to make them uncompetitive.

The director has always been a staunch supporter of the cause and spoke up when the contract came to the board to inform his peers that the contract was priced at cost, with no profit margin, because he didn’t want to profit from the transaction. Now a grant-giving organisation has asked the board to list any related party transactions and to warrant that they represent good value and were made in good faith and for a proper purpose. The minutes merely state that the board approved the contract. How can Mason provide the required warranties and better handle this conflict in future?

Julie’s Answer

You can’t document yourself out of a problem that you behaved yourself into. Mason’s board has prized efficiency over effective record-keeping. That has to stop. Now.

First Mason should check the register of interests. Do any of his directors have interests that are relevant but not recorded on the register? He should also read through the conflict of interest policy and make sure that it matches the board’s behaviour. Any mismatch may be addressed by either changing the policy or the behaviour.

Then he should check the decision register and consider if any directors had an interest (actual, potential, or perceived – not just monetary). It is likely that the laundry decision is not the only one to be concerned about.

Next he should look at the minutes to see if interests were declared and managed in accordance with the policy. For decisions where the minutes record good practice, Mason can provide a list with dates and meeting numbers and warrant these to the grant-giving body. For decisions where the minutes lack evidence, Mason should go back to the relevant papers and look for evidence that the process did ensure good value, good faith, and proper purpose. If he finds it, he can add it to the list and make the warranty.

For the laundry contract decision, the statement that other providers self-declared as uncompetitive is good evidence. The conflicted director’s declaration – even if not minuted – adds further weight to the evidence. Independent checking of laundry list prices or charges to other customers would also help.

Mason should gather available evidence on all the decisions then call an ad-hoc meeting to consider the list and resolve that, in the directors’ professional judgement, there is sufficient evidence to extend the warranty.

In future, Mason needs to ensure that board decisions record any interests and the way that these were managed to ensure good value, good faith and a proper purpose.

Scott’s Answer

Same dilemma, different regulatory frameworks.

Mason’s situation is fundamentally the same in both the USA and UK jurisdictions: a transaction that may be reasonable, supported by documentation that is not. Both systems require disclosure of conflicts, approval by independent decision-makers, clear documentation, and transparency with funders. The practical solution is also the same: assemble the missing evidence, obtain written support for pricing and procurement decisions, and approve a new resolution with the conflicted director excluded. The objective is to strengthen the record, not rewrite history.

The key difference is how compliance is enforced.

The UK framework is principles-based. Guidance such as CC29, the Charities SORP, and the Nolan Principles focus on demonstrable integrity and sound governance, with regulatory intervention reserved for significant failures. The US framework is more rules-driven. IRC §4958 can impose personal excise tax liabilities, Form 990 requires public disclosure, and state laws often prescribe approval procedures. In simple terms, the UK asks whether the board can demonstrate it acted appropriately; the US asks whether specific legal requirements were met and, if not, who bears the consequences.

The most useful lesson comes from the US safe harbour approach.

The §4958 rebuttable presumption requires independent approval, market comparison data, and contemporaneous documentation. These requirements closely mirror the governance standards expected under UK guidance. A UK board adopting these disciplines strengthens its position under CC29, while a US board following UK-style governance principles is likely to satisfy the safe harbour requirements.

The bottom line is the same in both jurisdictions.

Whether scrutiny comes from the Charity Commission, the IRS, or a funder, the question remains: can an independent reviewer see clear evidence that the conflict was identified and managed appropriately? Good governance depends not only on making the right decision, but on creating a record that proves it.