Friday, June 24, 2016

Corruption in NGOs in International Development Work



Context

I’m interested to raise this issue because corruption is a latent problem and will negatively impact the outcomes of the work done by NGOs and many international organisations in international development work. 

Considering the facts that NGOs and international aid play important role in distributing tax payer’s money – such as: NGOs made up 8% of Australian workforce, 3rd largest among US industries, 29.000 full time employers in Kenya, 5.3% of the GDP of the US, and 84% Canadians donate their money (equal to $10.6 billion) to NGOs every year, and 20.5% of total Official Development Assistance (ODA) was channeled to or through NGOs (OECD 2013; OnGood.NGO 2016) – therefore, discussing corruption in NGOs and international development work is important to maintain the credibility and integrity of the – so called – industry.

This short article will only discuss corruption in NGOs in International development work. We know that NGOs are not the only stakeholders in the international development. There are many stakeholders involved such as: UN agencies, governments, bilateral or multilateral organisations, universities, and also profit companies.

Corruption: A disturbing reality in Northern and Southern NGOs.

Corruption is a sensitive issue in the NGO World and most NGOs reluctant to openly discuss it (Sandbrook 2015). NGOs are often reluctant to talk about corruption in their world for fear that it will lead to bad publicity and consequently a loss of funding (Larche 1999: 36). Association of Certified Fraud Examiners (ACFE), (as cited by Sandbrook 2015) states that compare to their counter-parts in developing countries, Northern NGOs had twice chance of uncovering a fraud.

BDO Australia – in their Non Profit Fraud Survey in 2014 – states that 54% of respondents do not report fraud to Police because of concerns relating to the impact of future funding opportunities and damage to the organisation’s reputation (BDO 2014). The findings also reveal that 90% of respondents see fraud as a problem for the non-profit sector as a whole, only 28% of respondents see fraud as a problem for their own organization. In addition, UK National Fraud Authority (2012: 9) finds that fraud against the not-for-profit sector in England, Scotland and Wales is estimated to cost registered charities 1.7 per cent of their income, equivalent to £1.1 billion.

Corruption also happens in Southern NGOs especially in humanitarian operations. According to Transparency International in their report Preventing Corruption in Humanitarian Responses (2014), humanitarian operations are most vulnerable to corruption in the procurement, transport and distribution of medicines, food, building materials and other consumables, particularly in large, rapid-onset emergencies. Important to note that most emergency situations occur in countries where corruption is already widespread (Larche 2011: 38).

How to combat corruption in NGOs?

Holloway (2010: 12-13) argues that in general, there are two ways to combat corruption in NGOs, firstly through encouraging more and more good practices amongst NGOs, and secondly by conducting check and balances that can limit the scope of corruption including: self regulating bodies and improve legal and regulatory environment.



One of the most important things that need to be done by NGOs is to setup the accountability initiatives within their body. Some NGOs, particularly in Nordic countries, have chosen to publicise the results of corruption cases as well as the anti-corruption policies that they have implemented. For example, DanChurchAid (DCA) has a website page detailing corruption cases within the organisation and how they were dealt with (Larche 2011: 37).

Larche (2011: 38) also argues that strengthening community involvement in the implementation and evaluation of humanitarian (and development) programmes improves the ‘acceptance’ of NGOs by the beneficiary population and helps to mitigate against corruption and promote better local governance. *****



References

Holloway, R. (2010), NGOs: Loosing the Moral High Ground-Corruption and Misrepresentation, International Anti-Corruption Conference (IAAC) Papers, available at http://iacconference.org/documents/8th_iacc_workshop_NGOs_Loosing_the_Moral_High_Ground-Corruption_and_Misrepresentation.pdf (accessed 3 May 2016).

Larche, J. (2011), Corruption in the NGO world: what it is and how to tackle it, ODI Humanitarian Exchange, Number 52, October 2011, available at: http://odihpn.org/wp-content/uploads/1999/11/humanitarianexchange052.pdf  (accessed 3 May 2016).

OECD, 2013, ‘Aid at glance: flows of official development assistance to and through civil society organisations in 2011’, Statistics based on DAC Members’ reporting to the Creditor Reporting System database, available at: http://www.oecd.org/dac/peer-reviews/Aid%20for%20CSOs%20Final%20for%20WEB.pdf  (accessed 3 May 2016).

Sandbrook, J. (2015), Corruption: What NGOs don’t want you to know, Integritas 360, available at: http://integritas360.org/2015/03/corruption-what-ngos-dont-want-you-to-know/ (accessed 3 May 2016).

UK National Fraud Authority (2012), Annual Fraud Indicator, available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/118530/annual-fraud-indicator-2012.pdf (accessed 3 May 2016).

OnGood.NGO (2016), Fact and Stats about NGOs Wolrdwide, available at: https://www.ongood.ngo/portal/facts-and-stats-about-ngos-worldwide (accessed 3 May 2016).