The Unique Role of Philanthropy in Anti-Corruption (Part 1)

As a general rule, private foundations are less active in anti-corruption and governance than in spheres such as culture, education, health and entrepreneurship, to name a few. One exception is the Chandler Foundation, established in 2013, with a vision of building cultures of integrity and high trust across government, the market, and communities. I spoke recently with Director of Integrity Programs Leslie Tsai to learn about one of the Foundation’s efforts: engaging the International Monetary Fund (IMF) to advance anti-corruption reforms. 

Though one of the world’s most critical economic institutions, the IMF took some time to embrace the importance of anti-corruption. The IMF established a baseline for addressing governance with its 1997 Guidance Note “The Role of the IMF in Governance Issues.” In the 2018 “Review of 1997 Guidance Note on Governance - A Proposed Framework for Enhanced Fund Engagement,” the Fund undertook a “more systematic, effective, and candid engagement with member countries regarding those governance vulnerabilities, including corruption, that are judged to be macroeconomically critical,” seeking “to strengthen the global fight against corruption by promoting governmental measures that prevent private actors from offering bribes or providing services that enable the proceeds of corrupt acts to be concealed”.

That document, under the IMF’s Governance and Anti-Corruption program, informs that Fund’s Governance Diagnostics, “in-depth, country-tailored assessments of corruption and governance vulnerabilities.” Since 2018, the IMF has finalized 21 country reports, conducted by a legal team focused on governance and anti-corruption. While the recommendations in Governance Diagnostics are not mandatory, a handful of the recommendations are sometimes incorporated into IMF programs as loan conditionalities. 

One challenge, Tsai notes, was how to get the “ground knowledge” of local governance deficiencies into the hands of the IMF. While the IMF usually interfaces with the government, citizens and civil society organizations are best positioned to share the realities and actual impact of IMF-recommended legal and policy reforms. However, in Tsai’s view, the IMF’s engagement with civil society is often surface level, typically prioritizing the government’s perspective. This is where the Chandler Foundation comes in. Tsai explained that Chandler’s understanding of the IMF took some “research and navigating” to establish, but now the Foundation leverages its power, connections, and reputational capital to be a neutral broker in approaching the IMF, to raise awareness of Governance Diagnostics with civil society, and to elevate the voices of those groups to bring reform recommendations to the IMF’s attention.

Tsai offered Zambia as a case in which this behind-the-scenes process played out: civil society had been advocating for an access to information law for almost a decade, but had not been passed. Such a law was also an unmet requirement for Zambia to join the Open Government Partnership (OGP) and develop a National Action Plan (NAP). However, when the IMF included the passage of the law as a loan conditionality, the law was soon proposed and ratified.

The Foundation next commissioned a report by TI-Zambia that assessed implementation progress of the IMF’s Governance Diagnostic recommendations, which found that while the access to information law passed, it has had no impact on the ground, due to the lack of regulations and guidelines for accessing information under the act. The NAP thus offers another opportunity for the government to get access to information about reforms right, Tsai says. As Zambia develops its NAP through a multistakeholder process, including the government, civil society, and the business community, these stakeholder groups are working together to ensure that reforms like access to information are achieved and have impact across society.

As Tsai points out, many IMF-recommended anti-corruption reforms remain voluntary, since an IMF program “can only have so many conditionalities, and most focus on fiscal policy and macroeconomics.” But with time, given that the Governance Diagnostics are quite thorough, she thinks an increased push can be made to tie long-term macroeconomic stability to governance reforms, citing increased emphasis on debt, procurement, and beneficial ownership transparency. She also believes that an increased focus on governance will help limit the need to make drastic cuts in social safety net spending, cushioning the burden of adjustment, in turn overcoming citizens’ resistance to IMF loans.

Marc Schleifer

Governance, Democracy and Economic Development Expert