Of all the problems donors have to deal with when giving to programs in the Third World, one of the most prevalent is corruption. It’s bad enough that your gift might not do what it is intended to do. The aid might be siphoned off by crooks.

Writing in the New Yorker, Patrick Radden Keefe uses two poles for examining how developing countries can deal with corruption: Singapore, where tough-minded prime minister Lee Kuan Yew made sure that his island nation would be free of bribery and theft, and Afghanistan, where far too much aid has made its way to warlords and thieves.

Keefe is a fellow at the Century Foundation, a liberal think tank that used to be known as the Twentieth Century Fund until it outlived the twentieth century and had to rename itself. (The fund’s founder, Edward Filene, suggested that the think tank he created would spend itself down after his death, but of course the donor was ignored.) He does not make the move I would expect a liberal would make, namely arguing that corruption could be eliminated if donors had really tight and costly controls and lots of double and triple checking. Instead he is more resigned to letting the crooks have their way.

Most of Keefe’s article is a profile of Sarah Chayes, a former reporter for the Christian Science Monitor and National Public Radio, who, after doing some reporting from Afghanistan in 2001, decided to leave journalism for nonprofits, and in 2002 set up an organization called Afghans for Civil Society in collaboration with Qayum Karzai, brother of Afghanistan president Hamid Karzai. Qayum Karzai was what Chayes calls a proxy and what our parents would call a fixer and our grandparents would call a native guide: the guy who knows everyone and knows who has to be paid to get projects off the ground.

“The soldiers and civilians who flooded into Afghanistan after the fall of the Taliban did not know how to (or in some cases, care to) engage with the local population except through their designated fixers,” Keefe writes, “the fixers ended up controlling the apertures through which key members of the international community perceived the conflict.” According to Keefe, Chayes was shocked (shocked!) to discover that much of the business of Afghans for Civil Society consisted of giving large packages of currency to dubious people. She resigned and decided in 2005 to set up a soap factory to put Afghan women to work making useful products.

Keefe doesn’t discuss Chayes’s soap factory, or even give its name, but the company is called Arghand, and you can buy their soaps here.  Chayes discusses the creation of the company in a 2007 piece in the Atlantic, which she ought to update. In her article, Chayes discusses her frustration with the U.S. Agency for International Development, which committed hundreds of millions for development of “indigenous enterprises” that never seemed to be created. She got her business off the ground with the assistance of a few small foundation grants and the aid of the Canadian International Development Agency.

Rather than discuss how Chayes set up her social enterprise, Keefe focuses on all the corruption Chayes saw. In her view, during the height of the war in Afghanistan, couriers every day flew into Kabul International Airport with millions of dollars in cash, which was then diverted to the United Arab Emirates, “where the new Afghan elite invested in real estate and Bentleys.”

Chayes decided to launch a one-woman war against Afghan corruption, which ultimately led to her becoming an adviser to Joint Chiefs of Staff chairman Admiral Mike Mullen. She declared that “corruption, in army-speak, was a force multiplier for the enemy,” since she believed many recruits for the Taliban joined the enemy because of the persuasive corruption of the Afghan government in general and Hamid Karzai and his very large family in particular. She called on America’s military to limit aid to crooks and that Americans “should work with Afghan prosecutors to pursue criminal charges against those who were particularly shady.” She found that the military was willing to help in a limited degree, but would not do anything that would interfere with the prosecution of the war.

Let’s leave Afghanistan and ask a more general question. What should grantmakers do to prevent corruption? Here Keefe quotes two great political scientists. Samuel P. Huntington once declared “the only thing worse than a society with a rigid, over-centralized dishonest bureaucracy is one with a rigid, over-controlled, honest bureaucracy.” Singapore, a relatively small country, may have civil servants who are honest, but by all accounts it is one of the most bureaucratic countries on the planet.

James Q. Wilson addressed the issue of corruption in a 1968 article in the New York Times Magazine which is, unfortunately, not available online, except for these sentences, which Robert Klitgaard quoted in Containing Corruption:

The problem with corruption is that it threatens to become The Problem of Corruption. Moral issues usually obscure practical issues, even when the moral question is very small and the practical matter is very great.

The great problem with trying to ensure the recipients of your grants are honest is that it gives another excuse for risk-averse program officers not to do anything. Of course aid should be cut off for people who abuse it. But that shouldn’t be an excuse for denying grants to groups that deserve them, particularly ones that don’t know foundation-speak.

I would also assume that private groups could do a better job in avoiding aid to criminals. In particular, it is probable that religious charities know people in the Third World who deserve aid and respect the principles of the Bible. I bet that World Vision and Samaritan’s Purse deal with more honest people than the Agency for International Development does.

Fighting corruption is a worthy goal. But we shouldn’t use the problem of corruption as an excuse for institutional paralysis.