Reminding trustees of responsibilities for related parties – what to disclose

Why related party disclosures matter

Identifying and managing conflicts of interest are an important part of effective decision making as a trustee. Trustees are required to ensure that any decisions are made in the best interests of the charity, in order to protect both its assets and its reputation. Transparency around related party relationships and transactions is therefore critical.

Failures to appropriately identify, manage or disclose related party relationships are a common area of regulatory scrutiny and can undermine public confidence in a charity, even where transactions themselves are entirely proper. Trustees are collectively responsible for ensuring that relevant interests are declared and assessed and cannot rely on the absence of intent or the low value of a transaction as a defence.

As such, it is important that trustees are comfortable with what constitutes a related party relationship, when transactions must be disclosed, and what information should be recorded internally and reported in the charity’s financial statements.

What is a related party?

Under the Charities Statement of Recommended Practice 2026 (SORP), related parties include not only a charity’s trustees, but also their close family members.

A person’s close family member may include the following: 

• Children 
• Spouse 
• Their spouse’s children 
• Dependents 
• Domestic partner

Related parties also include entities over which a trustee or a close family member exercises control or significant influence, whether directly or indirectly. Trustees should consider the substance of relationships rather than applying a narrow or technical interpretation. Therefore, in assessing this, trustees should look beyond legal form and consider whether the individual has the ability to influence key financial or operational decisions.

Indicators of significant influence may include, for example, holding a senior management or key decision-making role, participating in strategic planning or budget setting, or having the power to influence policy or business direction. Being part of key management personnel, rather than solely holding a formal office such as a directorship or trusteeship, may therefore be sufficient to create a related party relationship.

Transactions with related parties are considered material by their nature, regardless of value. Where a transaction meets the definition of a related party transaction under the SORP, disclosure is required even if the amounts involved are small or the transaction appears to be on normal commercial terms. Careful consideration and documentation are therefore essential for all related party transactions, irrespective of size.

Where disclosure is required, the charity’s financial statements must include a clear and informative note that describes the nature of the relationship, explains the nature of the transactions, and quantifies the amounts involved. The detailed disclosure requirements are set out in section 9.23 of the SORP. Transparent and well drafted disclosures help demonstrate that trustees have acted appropriately, managed conflicts of interest effectively, and safeguarded the charity’s interests. They can also reduce follow up questions from auditors, independent examiners, regulators, funders and other stakeholders.

The SORP provides examples of certain transactions with related parties that do not require disclosure in section 9.21. However, deciding not to disclose a transaction does not remove the need for trustees to properly consider and document that decision.

As a matter of good governance, charities should maintain internal records of all identified related party relationships and transactions, including those assessed as not requiring disclosure. This provides a clear audit trail and protects trustees should the decision later be questioned.

Identifying related party relationships in practice

Related party relationships can be easy to overlook, particularly where they develop over time or arise indirectly. Trustees should ensure that appropriate procedures are in place to identify and manage conflicts of interest on an ongoing basis, rather than treating this as a one-off exercise. Maintaining accurate and up to date records throughout the year significantly reduces the risk of omissions or late disclosures when preparing the charity’s annual accounts.

In practice, this will usually include: 

• a formal conflict of interest policy approved by the trustee board, 
• a centrally maintained register of interests, 
• regular declarations of interest at trustee meetings, and 
• at least annual confirmation or review of trustees’ interests.

The Charity Commission provides detailed guidance on identifying and managing conflicts of interest, which was recently updated in April 2026, therefore trustees should take some time to familiarise themselves with any changes.

As a point of best practice, the charity may also wish to make some of this information publicly available, for example on the charity’s website.

If you have any questions about the changes to the Charity Commission guidance or would like further assistance, please get in touch with our team.