Foreign aid transparency amid politicization

Motivation In recent years, foreign aid donors have tried to become more transparent, often by sharing information digitally. However, the politicization of individual aid projects has resulted in biased reporting, raising doubts about the legitimacy of aid in general. We therefore examine whether increased transparency leads to greater government effectiveness and public trust. Purpose Government agencies typically assume that greater transparency in public administration improves understanding of bureaucratic actions, thereby fostering trust in the government. In foreign aid, openness is believed to enhance public confidence and improve the effectiveness of governments. However, recent public and political reactions to the disclosure of aid information cast doubt on these optimistic assumptions. Approach and methods Using our sender‐mediator‐receiver model of a “fragile transparency loop,” we analyse how communication breaks down in German foreign aid. First, we focus on Germany as a donor that shares information through a digital transparency portal, examining the sender side. Second, we investigate the mediator side by conducting a qualitative content analysis of German online media articles. Third, we examine the receiver side by disaggregating the German public into several subgroups. Findings Our empirical findings suggest that, while donors assume a virtuous transparency loop, the reality can resemble a fragile transparency loop that is easily disrupted. The government may withhold information; mediators may spread misinformation; and the public may not receive information neutrally. These dynamics explain why, despite increasing transparency, donors may not achieve the intended increases in government effectiveness and public trust. Policy implications Donors should find a balanced approach to foreign aid transparency that upholds democratic accountability while avoiding information overload. Aid bureaucracies should tailor their disclosure to serve different audiences, including professionals with development expertise and the wider public, who may have preconceptions or be uninformed about foreign aid.