Lack of Transparency by NGOs Undermines Trust and Weakens Activism
The role of civil society, especially under nonprofit and non-government organizations (NGOs), is enormously important to serve as a counterweight to state and corporate institutions, to help represent public interests and fill the gaps to defend vulnerable sectors of society, at risk communities, and other important causes which do not have a profit motivation. This role of course has become doubly important today, as the world is reeling from the devastating impact of the coronavirus pandemic, with millions sick and facing health risks, and hundreds of millions out of work and struggling to survive from one day to the next.
The nonprofit sector tends to be regarded positively by the public and the media – and why shouldn’t they? When properly managed, these mission-oriented charitable advocacy organizations can play a vital role in building healthy communities by providing critical services that contribute to economic stability and mobility, and in theory help strengthen the public interest by placing a check on both government and corporate misconduct.
Although most nonprofits begin with good intentions, unfortunately as with any organization run by human beings with distinct interests, agendas, and weaknesses in strategy and decision-making, they are prone to the same sorts of abuses and corruption we see at government and private sector levels. The only difference is that there are few controls of oversight, and no authoritative watchdog to keep an eye on the watchdogs.
Many people commonly attribute a higher level of integrity to the NGO/nonprofit sector simply by nature, but the fact is that this industry is a financial behemoth with profound transparency issues. According to the Urban Institute, more than 1.56 million nonprofits were registered in the US in 2015, contributing nearly $1 trillion to the economy, comprising 5.4% of the country’s GDP and 10% of employment. Globally the numbers are even more staggering, as international NGOs employ nearly 19 million paid workers, not to mention countless volunteers, and spend about $US15 billion on their projects each year, about the same as the World Bank.
Given that most of this money comes from donations, both large institutional grants as well as small contributions from individual supporters, what happens when the administrators of the nonprofits behave unethically? What recourse is there for corruption and misappropriation of donations or other cases of bad behavior by NGOs?
There are several recent cases exposed to the media, of NGO corruption which bear closer examination.
Recently the New Humanitarian was able to leak a 70-page draft report into abuses by the NGO and aid sector being committed in the Democratic Republic of Congo. The draft report, which was authored by three international consultants and two Congolese researchers on behalf of Adam Smith International, interviewed more than 400 people. It’s findings are quite damning – from corruption within the Ebola response to how women and girls are subjected to sexual exploitation. It also details how donor funds are siphoned off and how aid recipients ultimately lose out.
The New Humanitarian notes how “networks of fraudsters have embedded themselves within humanitarian organizations and introduced a dizzying number of corrupt practices that impact everything from the recruitment of staff to the procurement of supplies and the delivery of aid. UN agencies in particular are cited.”
There was also the infamous scandal of the Red Cross in 2010, when an investigation by NPR and ProPublica accused the organization of bungling its response to the earthquake in Haiti. The ProPublica headline that hooked readers was “How the Red Cross Raised Half a Billion Dollars for Haiti and Built Six Homes,” followed by further coverage by Salon, TIME, and the Washington Post.
More recently, the media has reported on quite shocking misconduct by the British charity giant Oxfam. With millions of dollars sent to nonprofit annually from government and other public authorities alongside individual donations, Oxfam was in 2018 hit with numerous allegations that staff on its missions to Haiti, Liberia and Chad engaged in regular and systemic sexual abuse of members of the local communities, many alleged to be underage. An internal investigation was later carried out by the organization following the expose, with a broad apology entitled ‘We Are So Sorry’ issued not by the organization itself, but later by its supporters.
The Oxfam “wake up call” reputationally damaged the organization potentially to permanent state; the ‘industry’ however, went about their respective business as usual.
Here in 2020, we find another developing story of a sprawling nonprofit allegedly engaged in misconduct.
The long-running bitter dispute between South Korea and Japan over historical issues, namely the reconciliation over the issue of the role of “comfort women” in World War II, has become a topic of great controversy – but not over the historical issues themselves but instead the mismanagement by individuals who are accused of abusing their position at advocacy nonprofits for personal, political, and financial goals.
It has been reported that Mihyang Yoon, the former President of the Korean Council for Justice and Remembrance for the Issues of Military Sexual Slavery by Japan, recently used her high public profile to win an election for a congressional seat, has been accused of funneling a vast majority of donations to her organization on personal spending. These funds, which were meant to support the living expenses of the remaining 17 former comfort women survivors, were instead found to be used to host lavish parties, buy and sell real estate, and cover personal expenses. Instead, according to one report in the Korean media, less than 3% of the organization’s funding actually went to caring for these surviving women, many of whom are forced to live in uncomfortable cramped quarters.
There has even been some unusual news regarding the suicide of an employee at one of the victims’ shelters, with some suggesting involvement in money laundering. There remain many open questions, and while investigations are ongoing, there are increasing calls for the Korean tax authorities to enforce stricter regulations to demand greater transparency from the NGO sector.
The alleged misconduct of the Korean Council is precisely a problem because it appears that the activists have made themselves a professional cottage industry and found a way to earn significant income from their positions, which is a wholly separate and different mission from the original cause for which they are raising funds. This kind of conduct damages trust in the nonprofit sector and takes away an important role of these organizations as being able to operate in public interest. As the news has begun to spread internationally, we must ask ourselves – Are these practices endemic in the non-profit sector?
In the wake of the pandemic, which has not only brought a public health crisis to the doorstep of almost every nation, but also economic devastation, the role of NGOs is as important as ever. But without proper oversight and higher standards for accountability, civil society is not going to be able to fulfill its role, and in fact can cause even worse damage to the very communities they are intending to help.
It is a critical mission to root out and shed light upon corrupt practices cross-sector, even when these practices are observed to be taking place in the nonprofit sector. We can expend significant increases in charitable donations and spending from both the public and private sector in the years to come as we begin the long road toward recovery from the pandemic.
Now, more than ever, it’s important that Watchdogs remain vigilant and demand transparency.