According 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?
Leadership: The key anti-corruption variable
A study of corruption within an INGO’s operations in Southern Africa (over a seven-year period) highlights the impact leadership can have on the issue. In the first four years, the INGO recorded just four cases of corruption. In Year 5 however, the number suddenly spiked, with 34 cases being recorded in that year alone. The surge continued, with a total of 67 (known) cases taking place over the next three years: an increase of 1,600% (see Figure 1).
So what caused this sudden spike? The only change was the appointment of a new country director (see Figure 2).
The natural assumption from this is that the country director must be the cause of the up-surge. While technically correct, rather than being part of the actual ‘problem’, the new country director turned out to be part of the ‘solution’!
A simple shift in perspectives
The change in leadership had actually brought with it a rethinking of the way corruption was viewed. Instead of treating it as an overhead – as is traditionally the case – the new country director viewed anti-corruption related costs as programme related. In other words they were seen as an essential direct element in securing a positive development outcome.
This re-definition led to a change in focus, with a number of key anti-corruption and accountability related initiatives being implemented in the six to twelve months leading up to the corruption surge (see Figure 3).
The result of this was the spike in corruption cases reported (in Year 5). Also of interest was the fact that further analysis indicated that the surge related to an increase in detection rates; as opposed to a proliferation in the underlying corruption level.
When surveyed (in Year 7), staff overwhelmingly stated that corruption within the INGO had dramatically declined. The overwhelming reason given for this: “management is now serious”!
Turning a corruption threat into an opportunity
One of the 34 cases of corruption uncovered in Year 4, was a long running fraud scheme involving multiple staff members. Taking two years to finalise, the issue was taken as an opportunity to showcase (to stakeholders) the organisation’s attitude to corruption.
By dealing with it in a proactive, open and transparent manner, the organisation was able to transform a potentially serious threat, into a strategic opportunity. The result was a triple-helix effect which:
- Created a strong deterrent – by sending a clear message to staff on the consequences of acting corruptly, resulting in a decrease in the level of internal corruption;
- Increased accountability and deeper engagement with beneficiaries – by confirming that the organisation held itself, and – more importantly – its staff, accountable; and
- Signalled to donors that it was an ethical and trustworthy organisation – by showing them that it acted in accordance with its stated values (two of which included ‘courage’ and ‘accountability’).
Rather than having a negative impact on the organisations reputation, it had the opposite effect, with the same donor deciding to substantially increase its budgetary support the following year. Their rationale: they would rather support an organisation that was genuinely committed to dealing with such issues, rather then ones whose mantra was ‘corruption is not an issue for us’!
The challenge to both NGO leaders, and the broader NGO and NFP (not-for-profit) sector is: are they prepared to emulate the above approach?
I invite NGOs, activists, anti-corruption advocates and others to share their perspectives on how NGOs (and NFPs) can truly embrace anti-corruption practices, and imbed them into their organisations. Are their examples of other successful, cost-efficient and effective anti-corruption practices that NGOs can embrace? If so, what are they?
About the author: Jeremy Sandbrook is the Chief Executive of Integritas360, a global social enterprise that helps charities and NGOs/NFPs ‘corruption-proof’ themselves. An internationally recognised anti-corruption expert, he has spent the last decade working in the international development sector, predominantly in Africa, Europe and Australasia. Jeremy also lectures on the topic at the University of Sydney’s Centre for Continuing Education.