Up Next in 2015: Facing Corruption

Corruption is widely regarded as one of the main obstacles to development and progress. The evidence speaks clearly and loudly: Corruption steals up to 20 to 40 percent of public budgets in low income countries, makes essential public services dysfunctional, and corrodes institutions and communities. It especially affects women and the poor. In short, corruption stymies the prospects for equitable human development, and while efforts to tackle it are expanding and accelerating, most anti-corruption work consists of government interventions or NGO initiatives, and thus relies on tax or charity funding.

A much-needed step change in scale and sustainability of anti-corruption will require a paradigm shift in funding strategies. I work for Transparency International, a global NGO network that is continuously scouting for new approaches to escalate and scale-up the fight against corruption, and I am particularly excited about the potential for social entrepreneurship and innovation to take anti-corruption to a completely new level. In fact, anti-corruption work has several characteristics that really add up to a formidable engagement opportunity for social entrepreneurs:

• Strong citizen demand: Surveys consistently show that people regard corruption as one of the top problems affecting their lives and countries, on par with and at times even dominating issues such as poverty, unemployment, terrorism, or global warming.
• Citizens’ readiness to pay: Polls also indicate that citizens are prepared to make some sacrifices for less corruption. According to the Global Corruption Barometer 2009 (the largest global survey of its kind, measuring more than 100,000 households in 100-plus countries), 50 percent of respondents indicated that they would be willing to pay a premium for corruption-free goods.
• Good prospects for self-financing models: Documented losses due to corruption are significant, and several in-depth studies have quantified them as up to 20-40 percent of budgets for public services and public works projects. Even if organizations can prevent just some of these leakages or recoup only parts of the lost resources, there is a chance that related anti-corruption efforts might pay for themselves.
• An agile nature: The fluid nature of corruption means that anti-corruption is required to constantly innovate and adapt to the morphing nature of its nemesis. This requires that we take an agile approach, and stay alert to new challenges and pressure points—skills more commonly associated with lean entrepreneurial ventures than large government agencies.

Ideas to explore and try out

Despite this great potential, there has been no systematic scoping or creative exploration of social entrepreneurship for anti-corruption. Here some initial ideas to get this much-needed brainstorm started:

Collective mirco-insurance schemes could help communities and individuals afford legal counsel and litigation support when particularly egregious instances of corruption hit. If they turn out to be practicable, such insurance models might help with recourse and remedy, and exert a tremendous deterring effect: Potential perpetrators will think twice before defrauding communities with good access to legal firepower for asserting their rights.

Fee-based professional services could enable citizen groups to procure professional accountability and integrity services to run hotlines, audit local budgets, and monitor public works projects. Such mechanisms can complement conventional monitoring mechanisms, which corrupt elites (such as internal fraud investigators) can easily co-opt, and which often make undue demands on citizen time and expertise (via, for example, citizen-led audits). New crowd-funding platforms provide an increasingly conducive infrastructure to overcome what were once prohibitive coordination costs and help organize collective financing efforts. Imagine, for example, a local anti-corruption helpline jointly funded by community members through Kickstarter, Neighbor.ly, or some other platform that bundles small community contributions for worthwhile social causes. Or on the low-tech side, imagine, for example, conventional models of collectively organizing resource-pooling via clubs and associations, which could also provide interesting organizational templates.

Entrepreneurial claw-back and benefits-sharing schemes could incentivise forensic accounts, entrepreneurial lawyers, investigative journalists, inside whistle-blowers, and others to help detect and recoup financial leakages due to fraud and corruption through financial reward. Encouraging whistle-blowers to step forward by offering them a percentage of the related cost-savings or recovered money as incentive for reporting is common practice in several countries already.

Pay-for-success initiatives and social impact bonds could provide predictable compensation for efforts that achieve demonstrable progress on some clearly defined anti-corruption targets but do not prescribe a specific solution. For example, an initiative could aim to reduce incidence of bribe-paying or to increase service satisfaction levels by specific percentages (as ascertained through household surveys), and invite entrepreneurial ventures that offer ethics training or technology-based monitoring services to bid on these projects and receive fixed pay-outs if successful.

Needless to say, some of these might not fly and others may require some policy change before they’re feasible. But even a cursory scan reveals a vast array of opportunities that social entrepreneurs could explore.

Anti-corruption is open for social business and in urgent need of more social entrepreneurship!

Let the ideation and experimentation begin.

Read more stories by Dieter Zinnbauer.