Category: NGOs and Charities

NGOs and Compliance Risk – A Road Paved with Good Intentions

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Picture - Road paved with good intentions - Compliance riskA road paved with good intentions! …. When it comes to compliance, are good intentions enough?  The following blog was written for the Compliance Channel, a web TV channel and best practice showroom for ethics and compliance issues.  If you have any comments or opinions on the topic I’d love to hear them.

Are good intentions enough?

Despite their good intentions, when it comes to compliance and the NGO sector, scratch the surface too much and what you see may not necessarily be what you get.  Although ranked as the most trusted sector in the world, NGOs and charities (as with any other organisation) are not immune from compliance risks.  If anything the complexity of the environment they operate in make it even more challenging, as at the heart are a number of unique internal and external compliance risks. More

Why NFPs aren’t comfortable using the ‘F’ Word!

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Photo of Man with covered mouth showing an F

Every year for the past decade, the Not-for-profit (NFP) sector has been voted the most trusted in the world – but just how valid is the ranking when it comes to the ‘F’ word:  fraud and corruption?  Despite the sector’s ongoing reliance on maintaining a high level of public and donor trust, there continues to be a unexplained complacency when it comes to the topic of fraud.

Although acknowledged by most NFPs as a problem for the sector as a whole, when assessing its own organisation, corruption is rarely seen as an issue. Unless NFPs and charities recognise – and start to properly manage – fraud and corruption risk, their reputation and public confidence – built up over many years – could be wiped out overnight. So where does this apparent reluctance to deal with the issue come from?

This article was originally written for the ACFE’s publication The Fraud Examiner.

The Unravelling of an NFP fraud scheme

A recent fraud investigation I carried out for a large international NFP is a textbook example of how fraud can occur in the sector. Despite one of its humanitarian projects being externally audited four times (two external financial audits, a capacity audit and a specific project audit), vague mutterings continued to circulate about improprieties. None of the four audits had highlighted any irregularities.  On the contrary, the capacity audit stated that the project had been “appropriately designed, well planned, and effectively managed,” while the project audit confirmed that all relief items had been physically delivered to all beneficiaries. More

Corruption is perverting NGO missions – but are its leaders up to the challenge?

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Photo of Hands-up to stop corruptionAccording to the UNDP, funds lost to corruption in the Global South are 10 times the amount of official development assistance (ODA), while the World Bank estimates that each year between 20% and 40% of ODA itself is “stolen” by public officials.  It does not end here though, as its pervasiveness and magnitude –  when combined with the risks inherent to the non-profit sector – has now reached the point where corruption is perverting NGO’s missions.  At stake here is the accountability and credibility of the sector as a whole.  But are its leaders up to the challenge?

Acknowledging the elephant in the room

A simple litmus test for this is to ask an NGO’s leadership the following question: ‘Is corruption a problem within your organisation?’  In a 2014 survey of Australian and New Zealand NGOs, while 90% felt that corruption was a problem for the sector, 72% (or three out of four) stated that it was not an issue for their organisations.  In other words, while it was a problem, it wasn’t theirs, but someone else’s! So if most non-profit leaders don’t see corruption as an issue, why should their staff? More

For the Love of the Game: Corruption and Sports NGOs

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Photo - Sports NGOs & Corruption Sport is now the dominating source of entertainment worldwide. Just under the surface though, is a darker, shadier world where corruption (usually in the form of bribery, match-fixing, extortion, doping and money laundering) is common place.  Sports NGOs are particularly vulnerable to these activities, with this article exploring why – and what can be done about it – in more detail.

Sports NGOs and ‘Corruption as usual’

It seems that barely a month passes without yet another report of corruption in sports being splashed across newspaper headlines. In relation to large sports NGOs, these have included: members of FIFA’s executive committee accepting bribes, a former president of CONCACAF being charged with fraud and money laundering, hosting nations paying bribes to win Olympic hosting rights, match-fixing, and the IAAF’s involvement in corruption and cover ups. More

Why Anti-Corruption Programmes Fail

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Photo of drowning person - Why Anti-Corruption Programmes FailCurrently estimated to cost five per cent of the world’s total GDP, or US$2.6 trillion per annum, corruption is now the third largest industry globally and is growing. In response, anti-corruption legislation around the world is being strengthened, with a growing emphasis now placed on enforcement and compliance. Organisations not only need to have an anti-corruption programme in place, but are increasingly required to prove its effectiveness.

The following article was originally published in Ethical Boardroom Magazine Winter 2016 Edition.

Eight mistakes that boards & management need to be aware of when establishing anti-corruption programmes

Unfortunately, a growing number of anti-corruption programmes are failing to meet this new challenge; the most recent being the French industrial group Alstom. Despite having an integrity and anti-corruption programme in place, Alstom was recently fined US$277.3 million to resolve criminal charges relating to a widespread corruption scheme. The scheme involved the payment of at least US$75 million in secret bribes to government officials around the world.

So what went wrong? Why was it that its anti-corruption programme failed and failed so miserably? While there is no silver bullet to guarantee success, there are a number of common pitfalls, which, if avoided, can dramatically decrease the chance of failure.

While not exhaustive, outlined below are the most common mistakes that boards and management need to be aware of when establishing anti-corruption programmes. More

10 corruption risks keeping charities / NGOs awake at night

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Photo of man sleepless over corruptionWorking for a charity or NGO? Getting enough sleep at night? If you’ve answered ‘yes’ to both these questions, then you should be asking yourself how much you really know about corruption risks within the non-profit sector.

The following article was subsequently published by Pro bono Australia.  Titled ’10 Corruption Risks Keeping NFPs awake at night’, it appeared in their Hot Topics section on 15 October 2015.

While Charities are the most trusted institutions in the world …

I’m always surprised when talking with people working in the charity/NGO sectors, at how little many of them know about the inherent corruption risks facing their industry.  While consistently ranked as the most trusted institutions’ globally (topping the Edelman Trust Barometer for the last seven years in a row), the sector faces a number of inherent vulnerabilities that significantly raises its overall corruption risk ranking.  Having a knowledge of these is essential if a charity/NGO is to put an appropriate risk mitigation strategy in place. More