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Document Abstract
Published: 2012

Developing an NGO corruption risk management system: considerations for donors

Corruption risk management is an essential investment in NGOs’ institutional capacity development
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NGOs are often on the front line of aid delivery, managing a significant proportion of aid funds; therefore, the risk of corruption in NGO operations is a significant concern. This report distills good practices for NGO corruption risk management systems.

The authors indicate that most agencies conduct some form of mandatory risk appraisal as part of the overall situation analysis, but often there is insufficient guidance on how to conduct a corruption risk assessment.

To manage corruption risks, the paper recommends the following:
  • conduct a risk analysis for the specific location, sector and type of programme
  • strengthen NGOs’ internal systems for corruption risk management
  • have better monitoring and whistle-blowing mechanisms for both NGOs and donors
  • have nuance donors’ zero-tolerance policy approach
  • establish due diligence measures through NGO selection criteria

Major conclusions include:
  • corruption risk management should be promoted as an essential investment in institutional capacity development and therefore a necessary programme cost serving the overall goal of securing positive development outcomes
  • donors are advised to secure more resources for conducting field visits and inspections, particularly of in-country implementing operations and local partners
  • both donors and NGOs at all capacity levels are advised to survey their staff to identify the most common corruption risks and dilemmas encountered in their work, and strive to develop guidelines to meet those needs
  • if corruption is indeed uncovered, sanctions proportional to the scope and seriousness of the offence need to be applied and publicised

Still, the document makes a point that the choice is not between accepting and not accepting corruption risks, but rather, how much risk is acceptable and how much investment should be made in risk mitigation measures.
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Authors

M. Trivunovic; J. Johns√łn; H. Mathisen

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