U.S. Agency for International Development: An Overview

Updated September 12, 2017December 2, 2019 U.S. Agency for International Development: An Overview Background Figure 1. USAID-Implemented Program Funding by Region: FY2016 The U.S. Agency for International Development (USAID) is the leadinglead international humanitarian and development arm arm of the United States government. Its programs also support the support U.S. political and strategic aims of the United States by providing assistance to strategically important and conflict countries, and assist U.S. commercial interests by furthering the economic growth of developing countries and building these countries’ capacity to participate in world trade. In FY2017, USAID is responsible for over $20 billion in appropriations, representing more than one-third of the International Affairs 150 budget function and more than half of total foreign assistance encompassed by the State, Foreign Operations Appropriations (SFOPS) and international food aid appropriated under the Agriculture Appropriations. USAID’s annual appropriations come from 14 different budget accounts—most “solely-owned” and some shared with the Department of State—making any calculation of its current budget somewhat imprecise. We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity. USAID Mission Statement USAID maintains more than 60 country and regional missions that design and manage a wide range of projects, most intended to meet specific development objectives as formulated in a Country Development Cooperation Strategy. Most projects are implemented through some form of grant, cooperative agreement, or contract by one of thousands of potential development partners—such as U.S. nonprofit private voluntary organizations and other nongovernmental organizations (NGOs), U.S. for-profit contractors, universities, international organizations, and foreign partner governments, civil society, and the private sector. In FY2016, the most recent year in which detailed data is available, USAID provided assistance to over 120 countries, including 74 of the 84 low and lower-middle income countries. Foreign aid allocations reflect both recipient needs and U.S. foreign policy priorities. Suggestive of the strong foreign policy purpose behind many USAID activities, the top 10 recipients of USAIDimplemented funds in FY2016 were Afghanistan, Ethiopia, Syria (for refugees), South Sudan, Kenya, Jordan, Nigeria, Pakistan, Iraq, and Democratic Republic of Congo. In FY2016, about 52% of USAID funds attributable to countries and regions went to sub-Saharan Africa and 17% went to the Middle East and North Africa (Figure 1). Source: USAID, https://explorer.usaid.gov and CRS calculations. Of FY2016 funds attributable to a specific sector (Figure 2), 41% went for health programs and 20% for humanitarian efforts. Since the early 1990s, health programs have consistently been the largest USAID assistance sector, bolstered since 2004 by billions of dollars in transfers from the Department of State’s President’s Emergency Program for AIDS Relief (PEPFAR). Humanitarian aid, too, has increased significantly in recent years, particularly in response to the 2004 Indian Ocean earthquake and tsunami, the 2010 Haiti earthquake, and the 2014 Ebola epidemic. Figure 2. USAID-Implemented Program Funding by Sector: FY2016 Source: USAID, https://explorer.usaid.gov and CRS calculations. USAID Under the Trump Administration Administrator Mark Green was sworn in August 7, 2017. While no new policies have been announced under his https://crsreports.congress.gov U.S. Agency for International Development: An Overview leadership, in testimony he cited accountability, focusing on what works, incentivizing local capacity-building and implementation, and leveraging partnerships with the private sector among his guiding principles. Prior to Administrator Green’s confirmation, the Trump Administration proposed an FY2018 budget that would cut USAID funding by nearly 40%. Congress is likely to modify the Administration’s proposal, but account and programs cuts could have a major impact on how USAID is able to address operational challenges. Challenges USAID faces numerous challenges in the process of fulfilling its mission, in part due to the setting in which it often operates—developing countries. Among the continuing and new challenges that observers have noted and the Congress may track closely are the following: Reform. A March 2017 executive order seeking a comprehensive plan to reform government and reduce the workforce requires agencies to propose efficiencies and program cuts. It remains to be seen whether any proposed changes will complement the so-called USAID Forward reforms undertaken during the Obama Administration, which sought to improve the way USAID did business, or take a markedly different approach. The congressional role in approving executive-initiated reforms is unclear at this point as well. USAID Status. The Administration reorganization effort has stimulated multiple reform proposals from NGOs, including calls for making USAID the coordinator of all government humanitarian and development assistance, for the absorption of USAID into the Department of State, and for creation of an entirely new aid agency, among others. Deputy Secretary of State Sullivan has said absorption into State is not planned. Any change in USAID’s institutional status must have congressional approval. Local Solutions. Under USAID Forward, the agency sought, with variable success, to push an increasing amount of assistance through local entities—15.9% of mission program funds in FY2016, down from a high of 18.6% in FY2015. Ensuring accountability for use of U.S. taxpayer dollars by local governments, civil society, and private business in at times corrupt societies requires special efforts to mitigate risk, including a need for more personnel and funding in order to monitor local entities and build their capacities. Sustainability. How can USAID ensure that project efforts are maintained by local governments and organizations after U.S. financial and technical support ends? One USAID response is the Local Solutions initiative that seeks to build “country ownership” for development objectives. Another is more domestic resource mobilization efforts— projects to develop a government’s capacity to collect revenue to support development. Sustainability is increasingly viewed as a measure of aid effectiveness. missions are insufficiently staffed, especially in crisis countries. Despite an increased number of USAID Foreign Service Officers in recent years, the agency still faces shortages of specific skill sets—for example, contract officers and program officers to meet the needs generated by the on-going effort to work more closely with local government and private sector partners, and agricultural specialists to develop and implement Food Security Initiative projects. Staff retention, especially of foreign nationals, and lack of language and skill training are continuing human resource concerns. Program Flexibility. Congressional funding mandates, specifying amounts for health, biodiversity, and other sectors, account for as much as two-thirds of USAID’s annual program budget. These, plus a host of presidential initiatives, are viewed by many observers as restricting the ability of USAID mission personnel to program project activities in accordance with development professional and partner country priorities. Some critics believe that many legislative conditions further stymie flexibility—most food aid, for example, must be provided in the form of U.S. produce and shipped on expensive U.S. freighters instead of purchased with cash near a food emergency site. Scaling-Up. Innovations in science, technology, and development practice are usually tested with pilot programs in one province in one country. Seeing successful ideas from pilot through to maturity and making them work at the country, region, and international level likely requires a long-term funding horizon, programming flexibility, and mechanisms to spread ideas throughout the agency. Each of these elements represents a challenge in the current aid policy and planning process. Evaluation. To improve its learning process, USAID has required more project evaluations and has established improved indicators by which it can measure project progress. The next step and challenge for the agency is to ensure that lessons learned are applied to future projects so that actual change results in how things are done. Security. Security concerns in non-permissive environments, such as South Sudan and Afghanistan, raise obstacles to successful project implementation, including restricted access to local projects for monitoring purposes and finding contractors willing to take the risk of establishing a local presence. Even in “normal” countries, security concerns have often caused the co-location of USAID in isolated and extremely secure U.S. embassies that discourage the interaction with local government and private sector considered necessary by many observers for successful development programs. For further background on the agency, see CRS Report R44117, U.S. Agency for International Development (USAID): Background, Operations, and Issues. Curt Tarnoff, Specialist in Foreign Affairs Human Resources. A 2015 study of the stress faced by USAID staff suggests that employees are overburdened and https://crsreports.congress.gov IF10261 U.S. Agency for International Development: An Overview strategically important countries and countries in conflict; leading global efforts to alleviate poverty, disease, and humanitarian need; and assisting U.S. commercial interests by furthering developing countries’ economic growth and building these countries’ capacity to participate in world trade. reduction mandate, 72 of the 78 World Bank-determined low- and lower-middle-income countries received assistance in FY2018, with about 50% of USAID funds attributable to specific countries and regions in sub-Saharan Africa (Figure 1). Figure 1. USAID-Implemented Program Funding, by Region and Sector: FY2018 USAID is responsible for the implementation of more than $20 billion in combined annual appropriations, representing more than one-third of the funds provided in the State, Foreign Operations (SFOPS) appropriation and international food aid provided in the Agriculture appropriation. USAID’s annual appropriations come from 14 budget accounts—most “solely owned” and some programmed collaboratively with the Department of State—making any calculation of its current budget imprecise. (For more on SFOPS, see CRS Report R45763, Department of State, Foreign Operations, and Related Programs: FY2020 Budget and Appropriations.) “On behalf of the American people, we promote and demonstrate democratic values abroad, and advance a free, peaceful, and prosperous world. In support of America’s foreign policy, the U.S. Agency for International Development leads the U.S. Government’s international development and disaster assistance through partnerships and investments that save lives, reduce poverty, strengthen democratic governance, and help people emerge from humanitarian crises and progress beyond assistance.” — USAID Mission Statement (2019) USAID maintains more than 60 country and regional missions that design and manage a range of projects, most intended to meet specific development objectives as outlined in a Country Development Cooperation Strategy. Most projects are implemented, through a grant, cooperative agreement, or contract, by one of thousands of foreign and U.S. development partners—such as nonprofit private voluntary organizations and other nongovernmental organizations (NGOs), for-profit contractors, universities, international organizations, and foreign governments. In FY2018, the most recent year for which detailed data are available, USAID provided assistance to more than 120 countries. Foreign aid allocations reflect both recipient needs and U.S. foreign policy priorities. The top 10 recipients of USAID-implemented funds in FY2018 were, in order of funding, Jordan, Afghanistan, Nigeria, Ethiopia, South Sudan, Syria, Yemen, Democratic Republic of the Congo, Iraq, and Kenya. Reflecting USAID’s poverty Source: Foreign Aid Explorer and CRS calculations. Since the early 1990s, health has consistently been the largest USAID sector, bolstered since 2004 by billions of dollars in transfers from the Department of State’s President’s Emergency Program for AIDS Relief (PEPFAR). Humanitarian assistance has also increased in recent years, particularly in response to both the emergence of new natural and human-induced humanitarian crises, and ongoing protracted crises. (For more information on U.S. responses to humanitarian crises, see CRS In Focus IF10568, Overview of the Global Humanitarian and Displacement Crisis.) USAID Under the Trump Administration USAID Administrator Mark Green was sworn in on August 7, 2017. Under his leadership, and in response to Administration directives aimed at making federal agencies more efficient, effective, and accountable, USAID has pursued a series of internal reforms, branded as USAID Transformation. Reforms are focused in three target areas—process and programs, organizational structure, and workforce management—and many build on past efforts, including those of the Obama and George W. Bush https://crsreports.congress.gov U.S. Agency for International Development: An Overview Administrations. Underlying the proposed Transformation is the “Journey to Self-Reliance,” the ultimate goal of which is ending the need for foreign assistance by building country capacity to plan, finance, and implement solutions to address development challenges without foreign assistance. While most Transformation reforms are not contingent on congressional approval, some have required congressional notification prior to implementation. Through the notification process, Congress has been able to weigh in on actions and apply “holds” when it deems necessary (holds are nonbinding but USAID generally defers action when holds are in place). Congress has also shaped the reform’s implementation through other oversight functions and funding requirements and restrictions. (For more information on Transformation, see CRS Report R45779, Transformation at the U.S. Agency for International Development (USAID).) Issues for Congress USAID faces numerous challenges in the process of fulfilling its mission, in part due to how the institution has had to adapt to changes in U.S. foreign aid priorities over time. According to authors Kopp and Naland, “The constant battles in Congress and within the administration over how much to spend on foreign aid and how and where to spend it make the agency vulnerable to sharp swings in funding and frequent reorganization.” The challenges that observers have noted and Congress may track include the following: Budget. For the third year in a row, the Administration is proposing cuts of more than 20% to the agency’s annual budget. As Congress has repeatedly not accepted the proposed budget cuts, the disparity between what is requested and what is appropriated has posed a challenge to USAID’s planning and program implementation. The appropriation of significantly more funding than requested—often months into the fiscal year due to Congress’s use of continuing resolutions—can require offices to program large sums of money in relatively short time periods. USAID and the State Department. The Administration’s Transformation effort has renewed a long-standing debate about the USAID-State Department relationship. In crafting the reform agenda, USAID solicited input from a number of stakeholders, which led to multiple reform proposals. These include making USAID the coordinator of all government humanitarian and development assistance, absorbing USAID into the State Department, and creating an entirely new aid agency, among others. As of now, no firm plans exist to drastically modify the institutional relationship, but the debate may continue throughout Transformation’s implementation. USAID was never established in statute; rather, its status in relation to the State Department has been largely shaped by executive orders. As such, USAID’s status could feasibly change without congressional action. Sustainability and Effectiveness. How USAID ensures that project efforts are maintained by local governments and organizations after U.S. financial and technical support ends continues to be of interest to Congress. USAID’s “Journey to Self-Reliance,” related country development plans, and new financing efforts—including greater private sector engagement—are meant to address this challenge. Further, in this Administration and the last, USAID has increased its project monitoring, evaluation, and learning (MEL) requirements for both staff and implementing partners to measure project progress. USAID indicates that its MEL agenda is an iterative process, evolving to incorporate best practices. Human Resources. USAID staff are hired and managed under more than 20 mechanisms. These include direct hire staff (e.g., civil and foreign service) and nondirect hire staff (e.g., personal services contractors and institutional support contractors). USAID has stated that this structure is unwieldy to manage and does not give it enough flexibility to meet the agency’s evolving needs. Further, some experts are concerned that the agency’s increasing reliance on nondirect hire positions has led to a lack of institutional knowledge and higher staff turnover. The USAID Office of Inspector General also found in 2019 that staff responsible for award and contract management often felt overworked, without the time to conduct adequate program oversight. USAID maintains that it is factoring these issues, among others, into its workforce development plan; Congress provides input into USAID workforce issues in annual appropriations legislation. Program Flexibility. Congressional funding mandates, specifying amounts for health, biodiversity, and other sectors, account for as much as two-thirds of USAID’s annual program budget. These, plus any presidential initiatives, may limit USAID missions’ capacity to advance the objectives of their Country Development Cooperation Strategies. Some critics believe that legislative conditions further stymie flexibility and cost efficiency. For example, all funding for USAID Mozambique is congressionally directed or earmarked by presidential initiatives, leaving the mission no discretion to program funds or assign development objectives outside of those mandates. Security. Security concerns in nonpermissive environments raise obstacles to successful project implementation, including restricted access to local projects for monitoring purposes and finding contractors willing to take the risk of establishing a local presence. Security standards passed by Congress following the 1998 bombings of the U.S. Embassies in Kenya and Tanzania required the co-location of USAID personnel in extremely secure U.S. embassies, even in seemingly stable, safe countries. Some observers raise concern that this arrangement can discourage the interaction with local government and private sector stakeholders that many consider necessary for successful development programs. In 2018, USAID joined with the Departments of State and Defense to conduct a Stabilization Assistance Review (SAR), which explores the challenges of and best practices for working in conflict-affected areas. Lessons learned include increasing data use to inform project development and increasing burden sharing among other donors and local actors, among others. Emily M. Morgenstern, Analyst in Foreign Assistance and Foreign Policy https://crsreports.congress.gov U.S. Agency for International Development: An Overview IF10261 Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. 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