Over a little more than a year, GlobalGiving combined staff visits, formal evaluation, third-party observer reports called visitor postcards, and internet feedback from local community members to create a nuanced, evolving picture of a community-based youth organization in Western Kenya that had received $8,019 from 193 individual donors through the GlobalGiving website.
Initially, youth in Kisumu were happy with the organization. Among other things, the founder used the money to fund travel and equipment for the local youth soccer team. But the first tip-off that something was going wrong came when a former soccer player complained through GlobalGiving’s online feedback form that “currently the co-ordinator is evil minded and corrupt.” The view that the founder had begun stealing donations and was stifling dissent among his members was expanded upon by other community members, visitors to the project, and a professional evaluator.
Commenters give them a hard time, with some justification. There was no accountability – the conman got away with it and it’ll happen again.
In most cases – not all, but mostly – early warning signals are ignored. This can be for one of two main reasons: donor agency staff may be involved in the scam – all too common; or it is just easier to ignore it. As long as the reports look good, life can go on, money can be disbursed and the back donor can be kept happy. And court cases can drag……………
And if you can’t ignore it? Build capacity! I think of one case of an independently documented fraud that was ongoing for at least a year involving a six figure sum – US, not Hong Kong. Result? Capacity Building for the recipient NGO and continued funding.
So what can funding agencies do to deal with such fraud? The preventative measures are obvious – professional assessments of programme and management ability; coordination with other donors; not being shy about spot check audits. It’s amazing how rarely this all takes place.
When you suspect something? Independent audits; swift action; DON’T keep everybody in the loop. If guilty? Stop funding, obviously (but it needs to be pointed out, believe me); make a report to the police or anti-corruption bureau; consider suing for compensation. In one case I suggested to colleagues that we send a file to the police. The shock on their faces was something to behold. Needless to say, no file was prepared and sent.
Global Giving are on the right track by looking for ways of gathering and triangulating information as best they can. And they are almost alone in talking about it publicly. For that they deserve our respect and support.
But, without a registered office in the country, most post facto actions are beyond them, the accountability never happens and the scams keep coming. And if I was an individual donor looking to give, that would cross the Global Giving platform off my list.
UPDATE: The full paper detailing the Kenya case study, by Marc Maxson and Joshua Goldstein, can be downloaded at Global Giving’s blog