Here in the small industrial town of Ocotal, buried deep in the northern mountains of Nicaragua, the good people of Swindon, Wiltshire, are remembered. Running north to south through the centre of the pueblo, with the sweaty, frantic market to the east and a rather unremarkable cathedral to the west, lies Swindon Avenue. A proudly mounted plaque thanks the people of Swindon, England, for financial aid donated over recent decades.

It's a pattern repeated all over the country. Close by, in Matagalpa, Nicaragua's coffee capital, every public rubbish bin thanks Germany for its kind assistance.

Aid to Nicaragua during the Sandinista revolution, which finally toppled the brutal dictatorship of Anastasio Somoza in 1979, was the trendiest of all middle-class causes during the late 1970s. The Frente Sandinista de Liberacion Nacional (FSLN) used the millions raised by support groups and solidarity campaigns the world over to fight the Somoza regime, and once it came into power, to stave off the US-funded Contra forces. That international giving continued throughout the 1980s and was stepped up following Hurricane Mitch in October 1998.

Thanks to this legacy of giving, there is a booming social and non-governmental organisation sector in modern Nicaragua. But it is a sector almost wholly run and controlled by the Sandinistas. In EstelI, a fiercely FSLN ranching town in the north-west, there is a development fund, a human rights centre or an assistance network on almost every street corner - all funded by supporters across Europe, the US and Japan.

At one social centre there, where I took Spanish classes, my group was given revolutionary protest songs to translate as part of the lessons.

"At least 97 per cent of the social organisations here are Sandinista," my profesora told me proudly during an "educational visit" around one of EstelI's many NGOs.

Soon after an FSLN-dominated ruling committee took over, when Anastasio Somoza Debayle fled to Miami in 1979, the Sandinista leadership seized hundreds of properties owned by the middle classes and redistributed them among themselves. They also engineered a similar divide-and-distribute manoeuvre with the international goodwill they had built up during the revolutionary years. When Daniel Ortega, the post-revolution FSLN leader, admitted defeat and handed over power to an opposition coalition following the 1990 elections, the Sandinistas did not hand over to the new government the myriad international contacts and funding channels they had established.

FSLN leading lights fell out of very well-paid political positions straight into very well-paid directorships of charities and NGOs, each funded using their international links.

While Daniel Ortega stayed in politics, many other Sandinista heroes heard the charity call. The second-in-command during the uprising, Tomas Borge MartInez, set himself up as director of his own NGO, Fundacion La verde sonrisa. A former agriculture minister, Jaime Wheelock Roman, became president of the official-sounding Instituto para el Desarrollo y la Democracia (Institute for Development and Democracy). Across Nicaragua there are hundreds of small NGOs, each boasting former and even current FSLN politicians on their payroll.

Arnoldo Aleman of the Liberal Constitutional Party (PLC), the country's president until he was shamed out of power on corruption charges in November 2001, has called for the Nicaraguan NGO sector to be regulated. He wanted organisations to register where their international donations came from, and how the money was spent. The FSLN, however, went wild with protest. The current president, the PLC's Enrique Bolanos, now has a good excuse to keep the charity sector at arm's length - meaning less government co-operation on projects that really need it.

International aid groups working here, such as Oxfam and Save the Children, have no choice but to work with local partisan NGOs; there are no others. Those international NGOs can afford proper audits and monitoring to make sure that money is spent apolitically and correctly. But smaller foundations, funds and solidarity groups cannot do the same.

Unfortunately, without some sort of general regulation, corruption does occur among the charitable organisations. FSLN candidates for alcalde, or municipal mayor, can and do control charities that deliver housing and aid directly to the communities, which then vote for their position.

In September last year, too, the director of a project run by the Catholic aid group Caritas in the northern coffee-producing town of Jinotega was suspended. It was discovered that oil, rice and clothing donated by international agencies were being sold in the local market. There are reports of forged invoices at other charities, and of donations being spent on election campaigns.

During the revolutionary years, donors could give money to the Sandinistas safe in the knowledge that it would be spent towards the general good. But in today's Nicaragua, where both main parties - PLC and FSLN - have shown themselves corruptible, that faith is less justified.

A thriving and effective NGO sector needs regulation and monitoring, wherever it is. It may be true that the PLC government is doing very little towards the needs of the poorest people here. That is no excuse for those organisations which do claim to be helping not to do so accountably.

Those of us who are contributors to such organisations, in Nicaragua and elsewhere, should demand such openness as a condition of our giving.