The Glass Box Mandate Why Donors Should Demand a Look Inside the Code

Published on: Fri Nov 01 2024 by Ivar Strand

The Glass Box Mandate: Why Donors Should Demand a Look Inside the Code

Donors and implementing agencies invest substantial resources in monitoring, evaluation, and auditing to provide assurance that funds are used as intended. A significant portion of this effort is dedicated to the ex-post verification of financial data that has been processed by opaque, “black box” software systems.

This reactive approach, while necessary, is inefficient. The primary actors with the leverage to improve this situation are the donors themselves. By shifting to an ex-ante approach—mandating that the systems used to manage their funds are transparent “glass boxes” by design—donors can fundamentally improve the integrity and efficiency of fiduciary oversight across the entire development sector.

The Inefficiency of Reactive Auditing

As we have detailed throughout this series, conducting a forensic audit of an opaque financial system is a complex undertaking. It requires specialist skills to reconstruct processes, interrogate databases, and test for hidden flaws. This is a model that accepts system opacity as a given and then bears the high cost of working around it.

This is a fundamentally inefficient allocation of assurance resources. We are treating the symptom—a lack of trustworthy data from an opaque system—rather than the root cause, which is the opacity of the system itself.

The Donor’s Leverage and Fiduciary Responsibility

Major bilateral donors, multilateral development banks, and large foundations are the most influential actors in the aid technology ecosystem. The funding conditions and due diligence requirements they establish have the power to shape the behavior of both their implementing partners and the software vendors who serve the sector.

This market power comes with a corresponding fiduciary responsibility. To be effective stewards of public and philanthropic funds, donors must extend their oversight to the technological infrastructure through which those funds are managed. Tolerating the use of unauditable “black box” systems is inconsistent with a commitment to maximum accountability.

Core Components of a “Glass Box” Mandate

A “Glass Box Mandate” would involve donors integrating a set of clear, technology-focused requirements into their grant agreements and due diligence processes. This would not be an onerous burden, but a logical extension of existing oversight principles into the digital realm.

At Abyrint, we believe such a mandate should include four core components:

1. Require “Verifiable Systems” by Design. Donors should mandate that any core financial system used to manage their funds meets a defined standard of “verifiability.” As we have previously proposed, this includes features like easily readable configuration tables, forensically sound audit trails, and dedicated monitoring APIs.
2. Mandate Technical Due Diligence in Procurement. The selection process for any new financial system by a grantee should be required to include a formal technical due diligence phase. This assessment must explicitly evaluate the system’s auditability and its ability to be configured to meet the donor’s specific control requirements.
3. Earmark Funds for Technical Assurance. Grant agreements should recognize independent technical verification as a standard and necessary project cost, much like a traditional financial audit. Allocating a small percentage of a program’s administrative budget for this function ensures it is not neglected.
4. Promote Open Standards for Interoperability. To reduce vendor lock-in and enhance long-term data accessibility, donors should encourage the use of systems built on open standards that allow for easier data extraction and integration with other platforms, including third-party monitoring tools.

Conclusion

Donors are in a unique position to transform the sector’s approach to technology risk, moving it from a reactive and inefficient audit posture to a proactive one based on designed-in transparency.

By establishing a “Glass Box Mandate,” they can use their leverage to create a positive feedback loop, incentivizing partners to demand more auditable systems and vendors to supply them. It is the single most powerful step donors can take to ensure that the technology used to deliver aid is a genuine instrument of accountability and trust.