Trustee Conflicts of Interest: Lessons from the Island Health Trust Case
The Charity Commission’s July 2025 report into Island Health Trust is one of those real-life cases that quietly show how good intentions can be derailed by poor governance and unchecked conflicts of interest.
So, what actually happened?
Island Health Trust was established to support healthcare on the Isle of Dogs. Its main asset, a health centre leased to a local NHS GP practice, originally generated rental income to pay off the charity’s mortgage. Once the mortgage was cleared in 2014, trustees began to explore redevelopment plans to boost income. That’s where the problems started.
Over £340,000 was paid to SGIS, a consultancy owned by the then Chair of trustees, to project manage the charity’s new strategic direction. Two other trustees and a former associate of the Chair were also paid for related work. The key issue? Those who stood to benefit financially were the same people making the decisions—without independent oversight or prior approval from the Charity Commission.
What the Commission found
The Commission found that these payments were not only excessive but not in the charity’s best interests. The charity had shifted its focus to speculative development projects that didn’t align with its core purpose. Despite legal advice, trustees failed to update the charity’s governing documents to reflect this shift. Complaints from the community were ignored, and the board continued without correcting course.
Eventually, a statutory inquiry was opened. Interim managers were brought in, and legal proceedings were started. In 2021, the former Chair agreed to repay £165,000 and was later disqualified from serving as a trustee or charity manager for seven years.
Why this matters for the rest of us
For the wider charity sector, this is more than a cautionary tale; it’s a prompt to reflect on how conflicts are handled, how decisions are made, and whether governance is keeping pace with ambition.
Here are some takeaways:
- Trustees must always act in the charity’s best interests. When personal gain enters the picture, even indirectly, it undermines trust and legal duties.
- Conflicts of interest need to be recognised and properly managed. That includes stepping back from decision-making when you stand to benefit.
- Trustees can’t receive payments or enter into deals with their charity unless it’s clearly permitted and properly authorised.
- Charities must follow their governing documents and seek legal advice when necessary—then act on it.
- Strong, engaged boards are key. Trustees must be active, informed, and ready to challenge questionable decisions.
- Public trust can be lost quickly. How a charity spends its funds and stays aligned with its mission matters more than ever.
Final thoughts
Being a trustee is both an opportunity and a responsibility. Mistakes can happen, but what matters is how they’re addressed. The Island Health Trust case should make every trustee stop and ask: Are we putting the mission first, and are we managing risk the way we should?
