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A Major Factor

by Phil Bartle, PhD

Training Handout

How Charity Caused an Increase in Corruption


In the Factors of Poverty page, we saw that there were five major factors. Among those, dishonesty is our focus here.

How does charity contribute to corruption and how does corruption contribute to poverty?


Corruption, by various names, has a long and less than honorable history. From the earliest cities and kingdoms, civil servants were needed by the aristocracy. Usually the kings were short of cash and they paid little in salaries or nothing, and the civil servants lived (often luxuriously) on bribes and extortion.

So, after ten thousand years, along comes aid. Huge amounts of money coming into a country, and it must be handled by the civil servants. Can we be surprised it gets diverted?

There is an informal assumption that it is their right to collect part of the money as it moves along, and there is much tolerance by the host government and the people for what is, in effect, huge theft.

There is also an amazing tolerance in the aid agencies. It has to do with the pressure on them to spend their budgets and not report corruption

Perhaps because the final recipient should be the public, it is misinterpreted as a crime without victims. Maybe it is because it is seen as belonging to rich foreigners

How does charity contribute to this corruption?

A motto and metaphor we use to communicate the empowerment methodology is "If the coach does the pushups, then the athlete will not get stronger." Getting stronger requires effort, struggle. When aid money comes in too easily, it is not valued very much

If we want aid money to be used correctly for sustainable development, we must make a bit of a struggle for the recipient officials to get it. They need to invest their time and effort in planning its use. Something that takes more effort than it does now.

They must be watched to see if they make correct use of it, and reported through the press if they do not. The law must clearly state there is freedom of access to information, and the media encouraged to pursue investigative journalism.

Aid agencies are in competition with each other to get projects approved and to spend their bugdets. Host country civil servants know this and use it when diverting money for their personal uses.

These issues arise because the mode of providing aid is the charity mode (something for nothing) instead of one which promotes sustainable development.


OK, if charity promotes corruption, how does corruption promote poverty?

In the paper, the five factors of poverty, dishonesty is one of the five. There the emphasis is on the community level.

Here we look at the national level, and here it is pertinent to the way aid is delivered.

The diversion of aid funds for personal benefit is theft. It is a crime. The victim is the country as a whole.

As explained in the module on crime, there is a multiplier effect of this theft.

The theft of an amount of money intended for the public, at the whole economy, can result in up to eight times as much loss to the economy as obtained by the thief.

When new money s spent locally, it is spent again by the recipient. If it is sent overseas it is lost to the economy.

Embezzled money sent to a foregn bank account benefits the country of that bank, not the recipent country of aid.

When the head of a department or ministry buys an expensive sports car for 60 thousand dollars, far more than his annual salary, the sixty thousand dollars benefits the country where the car is manufactured.

Theft from the country as a whole should not be tolerated. It should be seen and treated as a capital crime like treason.


To end the factor of charity (in aid) resulting in more corruption and an increase in poverty, it is necessary to call for a different mode of providing aid. It is no use just saying charity is causing an increase in corruption (therefore poverty) and must be stopped; an alternative must be offered to fill its space.

Aid needs to be given in a way that does not contribute to an increase in poverty. Development assistance projects need to be designed for sustainable development, with penalties spelled out for non compliance, and a real possibilty of those projects being suspended or closed. This means more hands on monitoring and guidance by the donor agencies, which in turn means a new approach to budgets and a different allignmentof expenses.

Both the notion of "no strings attached,"1 and of"low ratio of administrative costs to project execution costs"2 are red herrings and need to be completely rethought. A price must be paid for ensuring there is no corruption and diversion of funds or else a much bigger price will be paid in diversion of funds. Liberal guilt must be eschewed in favor of effective and transparent donor funds management.

This rethinking and restructuring has serious implications for both donor management and host country management, and a separate satellite paper is presented here for each. See: Implications for Donor Management, and Implications for Host Country Management.


To put an end to corruption, a result of the charity mode, contributing to more rather than less poverty, is not merely a matter of fine tuning the way things are currently done. A complete transformation is needed, and a new way of thinking and providing aid is needed.

Old worn slogans, now treated as commandments in the aid industry, such as low administrative costs relative to execution costs, and no strings attached, must be carefully analysed and discarded. This has serious managemnt implications for both the donor and host organizations, which are described more thoroughly in another document.

Simple, but not easy

Footnote 1:
The slang phrase, no strings attached, in the aid industry, means that when a project is designed, the receiving country must conform to several requirements. Those are called strings. Aid recipient countries object to them as interference with their work, and even with their national sovereignty.

Footnote 2:
The ratio of administrative to execution costs is the size of administrative costs in comparison to resources that get to the beneficiaries.

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Last update: 2012.07.12

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