Transparency International (TI) is a well-regarded organization that works to reduce government corruption world-wide. They define corruption as "the misuse of entrusted power for private gain". Every year, they compile the Corruption Perceptions Index (CPI), which measures how corrupt countries around the world are perceived to be by experts in those countries.
TI does not recommend basing foreign aid decisions on their index. However, I would like to propose that we not send aid directly to governments that have low CPI ratings, since a large fraction of it will presumably not be used for its intended purpose. Instead, I suggest that we provide the aid to non-governmental organizations (NGOs) working in the countries, and monitor the NGOs closely to make sure the money is being used properly. This, of course, assumes that the aid is aimed at improving the lives of the people of the country, and not just at improving US business profits.... But I won't say more about that in this post, since I've talked about it recently. (Check the archives!)
So, how are we doing in this regard? Of the top 80 countries receiving US foreign aid in 2004, all but two of them (Israel and Jordan, who received the 6th and 9th most total aid dollars) have CPI ratings below 5.0 (in the CPI, 10 is a highly clean country, and 0 is a highly corrupt country). I need to do some more research on whether we are sending money directly to these countries or to NGOs operating there, and will post this information if I can find it. (Note: this was done. See spreadsheet on Where we Send Money post.)