Order Code RS22032
Updated May 23, 2005
CRS Report for Congress
Received through the CRS Web
Foreign Aid: Understanding Data Used to
Compare Donors
Larry Nowels
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division
Summary
There are various views on how to total U.S. spending on foreign aid and how U.S.
transfers compare with those from other major donors. For the United States, the size
of the foreign aid budget is frequently measured in terms of annual appropriations
approved for international assistance programs, using either the Foreign Operations
Appropriations bill total, or a slightly modified calculation that includes foreign aid
funds enacted in appropriation measures other than Foreign Operations. In comparing
the United States with other international aid donors, the most common source of
information is the Development Assistance Committee (DAC) of the Organization for
Economic Cooperation and Development (OECD). There are significant scope and
methodological differences, however, between U.S. appropriations figures and those
used by the DAC. This report explains those differences and discusses other issues
related to the debate over how much wealthy countries contribute to international
development and what share U.S. resources represent.
The humanitarian tragedy caused by the Indian Ocean tsunami in late 2004 elevated
the discussion of a broader issue regarding how much the world’s wealthiest nations
contribute to foreign aid and disaster relief, and how United States’ aid compares with the
transfers of other countries. Because of varying definitions of what constitutes “foreign
assistance,” there is frequent confusion over what is the precise U.S. foreign aid budget
and some controversy over how to compare U.S. levels with those of other donors. A
fundamental point of misunderstanding stems from the substantial differences in both
scope and methodology between what Congress annually appropriates for foreign
assistance and how the OECD’s Development Assistance Committee (DAC) presents data
comparing aid performance of 22 donors, including the United States.
U.S. Foreign Aid Budget
Many regard the annual Foreign Operations appropriations bill, together with
relevant supplementals, as the most reliable figures to use when assessing how much the
United States spends on foreign aid. The Foreign Operations measure combines most
Congressional Research Service ˜ The Library of Congress

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economic, military, and multilateral assistance accounts into a single spending bill, and
is a useful “proxy” for the size of the American foreign aid budget. Nevertheless, it does
not represent the precise total of U.S. foreign assistance for two reasons. First, the
Foreign Operations measure includes funding for the Export-Import Bank (Eximbank),
an export promotion program that is not defined by the Office of Management and Budget
(OMB) as “foreign aid.” Secondly, Foreign Operations does not include appropriations
for international food assistance programs that are funded in the Agriculture spending bill.
In Table 1, Foreign Operations appropriations have been adjusted to correspond to
the more precise OMB accounting of “foreign aid” funding, excluding the Eximbank and
adding international food aid. In most years, “foreign aid” appropriations are somewhat
larger than amounts provided in Foreign Operations spending bills. This is because
funding for international food aid usually runs higher than resources for the Eximbank.
Further, some assistance programs, such as international HIV/AIDS activities funded by
the Centers for Disease Control, are not counted in either “foreign aid” or Foreign
Operations appropriations.
Official Development Assistance
While Foreign Operations appropriations, or the adjusted figures shown in Table 1,
are the most common ways within the U.S. government for measuring the size of
American foreign aid, they represent a methodology that is unique to the U.S. budgeting
system. To overcome discrepancies and inconsistencies among donor budgeting
processes, the Development Assistance Committee of the OECD, has established
common definitions and methodologies for member countries to report amounts of
Official Development Assistance (ODA). For over 30 years, the DAC has been regarded
as an authoritative source of government international aid spending and the standard to
use in comparing assistance provided by the world’s major aid donors.
Table 1. U.S. “Foreign Assistance” Appropriations
(billions of dollars)
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
TOTAL
14.03
12.83
12.71
13.35
15.64
16.36
16.33
16.66
24.92
39.89
23.67
Non-Military
11.01
9.56
9.40
9.97
12.13
11.37
12.31
12.43
18.52
33.60
18.17
Sources: House and Senate Appropriations Committees and CRS calculations. Amounts include Foreign Operations
appropriations, less Export-Import Bank funds, plus international food assistance provided in Agriculture spending
measures. FY2003-FY2005 include large supplementals for pre-Iraq war requirements, Iraq reconstruction, aid
supporting the global war on terror, and tsunami and Darfur humanitarian relief.
Table 2. U.S. Official Development Assistance (ODA)
Disbursements
(billions of dollars)
CY95
CY96
CY97
CY98
CY99
CY00
CY01
CY02
CY03
CY04
CY05
7.37
9.38
6.88
8.79
9.15
9.96
11.43
13.29
16.32
19.00
—
Source: Development Assistance Committee, Organization for Economic Cooperation and Development.
CY2004 is preliminary and subject to change.

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But as can be seen by comparing foreign assistance appropriations figures with
ODA totals for the United States published by the DAC (Table 2), there are significant
differences. In all years, the difference in total U.S. appropriations and U.S. ODA is
several billions of dollars, and in a few years, appropriations are roughly twice the level
of ODA. Several factors explain these differences:
ODA excludes military aid. The DAC collects and reports only non-military, grant and
low-interest loan assistance to developing nations. U.S. foreign aid appropriations
include large amounts of military aid, ranging between $3 billion and $6.4 billion over
the past 10 years. In Table 1, an estimate of the amount of non-military appropriations
is shown, figures that more closely align with ODA data. Further, of the roughly $22
billion appropriated for Iraq reconstruction in FY2003 and FY2004, approximately $2.6
billion for Iraqi national guard and military equipment and training will not be counted
as ODA. For this reason alone, ODA will always be substantially less than total U.S.
foreign aid appropriations.
ODA represents net disbursements. Official Development Assistance is reported as
net disbursements, a method that is closest to the U.S. budgeting term of “outlays.” U.S.
appropriations represent the amount of money committed in a particular year, much of
which may not be disbursed, or “outlayed” for several years. This means that ODA
figures will usually lag a year or two behind actions taken by Congress in foreign aid
appropriations. For example, in FY1996 foreign aid appropriations declined from the
previous year, while the U.S. ODA level rose by 27%. The ODA figure most likely
reflected a large appropriation in FY1995 for multilateral development bank (MDBs)
contributions that did not disburse until calendar 1996. Conversely, the significant
increases in foreign aid appropriations beginning in FY2003, including large sums for
Iraq reconstruction, are only partially reflected in the ODA disbursement data for
calendar 2003 and 2004, and will not likely have a large impact until calendar 2005.1
The net disbursements measure takes into account recipient repayments to donors for
previous ODA concessional loans which are subtracted from new ODA expenditures for
a particular year. Because the United States has maintained a largely grant aid program
for over two decades and has forgiven most debt owed by many aid recipients, the net
basis for reporting U.S. ODA is not a significant factor. For other donors, however, it
may have a substantial impact.
ODA excludes aid provided to higher-income countries. Economic aid extended by
the United States and other donors to countries with per capita GNPs of more than
$9,205 and to transition economies in Central Europe and the former Soviet Union are
not counted as ODA. Consequently, U.S. foreign aid appropriations of over $1 billion
per year since 1991 for Russia and the former eastern bloc have not been included in
ODA figures. Moreover, in 1997, because of its rising income level, the DAC moved
Israel out of the ODA list of countries. This partially explains the sharp drop in U.S.
ODA disbursements in CY1997, and between $600 million and $1.2 billion in annual
economic assistance to Israel has not been counted as ODA in more recent years.
1 For purposes of ODA accounting, only $1.5 billion of Iraq reconstruction funds disbursed in
calendar 2003, with another $2.9 billion included in calendar 2004. The balance of the
approximate $15 billion non-military portions of Iraq reconstruction will disburse in CY2005 and
beyond.

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ODA includes some funds not counted in “foreign aid” appropriations. Certain,
relatively small amounts of international programs funded out of domestic and defense
appropriations rather than Foreign Operations appropriations are counted as ODA. For
example, humanitarian, disaster, and civic aid included in annual DOD appropriations
($59 million in FY2005) and Department of Health and Human Resources and the
Centers for Disease Control appropriations for international HIV/AIDS, malaria, and
tuberculosis ($607 million in FY2005) are included in ODA figures reported to the DAC.
ODA reports data on a calendar year, not fiscal year basis. The timing for passage
of Foreign Operations measures can have a significant impact on amounts reported to the
DAC. If a Foreign Operations bill is enacted several months after the beginning of the
new fiscal year,2 but passed on time (before September 30) the following year, it is
possible that rapidly disbursing appropriations, such as contributions to the MDBs, from
two fiscal year appropriations will be included in a single ODA calendar year total.
Comparing ODA Transfers of Major Donors
DAC statistics published annually compare donors in a number of ways: total dollar
amounts; aid as a percent of gross national income (GNI); aid dollars per capita; grant
composition; multilateral contributions; income level of recipients; purposes of aid; etc.
The most commonly cited comparisons are the total volume of ODA disbursements and
ODA disbursements as a percent of GNI.
The fact that the United States, as illustrated in Figures 1 and 2, is the leading donor
in terms of volume, but the last donor in terms of GNI percentage, sharpens a continuous
debate over whether the U.S. provides an appropriate share of international ODA. Those
who argue that the United States is the largest provider of foreign assistance emphasize
the volume of ODA disbursements as the most relevant indicator, pointing out that U.S.
ODA in 2004 represented 24.2% of the $78.6 billion in total DAC disbursements.
Moreover, the 2004 figures, they emphasize, do not yet fully reflect significant new U.S.
foreign aid initiatives for HIV/AIDS programs and the Millennium Challenge Account
that will push ODA levels higher in the coming years.
They further reject the exclusive focus on public or government-transferred aid,
noting that private transfers — in the form of direct investments and aid from non-
governmental organizations (NGOs) with funds raised through charitable contributions
— have become far more significant sources of development financing over the past two
decades. In 2003 (the most recent year available), the DAC reports that private flows of
Official Development Finance (ODF) from DAC countries totaled $192 billion,
compared with $69.7 billion from public sources. At the very least, those calling for
consideration of charitable donations made by private citizens to NGOs for overseas
activities maintain that they should be an additional indicator of a country’s international
development commitment. According to DAC figures, the United States accounted for
$6.3 billion of a total of $10.2 billion in grants by private NGOs in 2003. (Many analysts
believe, however, that the DAC figures significantly understate the amount of U.S.
2 Foreign Operations appropriations the past three years have been signed into law between
December and February, several months after the beginning of a new fiscal year.

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private donations.) Adding these
Figure 1. ODA Volume from Major
figures to the total volume of ODA
Donors, 2004
would push the United States even
$19
United States
$8.86
Japan
higher as the leading donor. Some
France
$8.48
$7.84
United Kingdom
also believe that personal
$7.5
Germany
remittances of immigrants working
Netherlands
$4.24
Sweden
$2.7
abroad should also be included in
$2.55
Spain
Canada
$2.54
calculations of financial flows to
Italy
$2.48
$2.2
Norway
developing nations. The Department
$2.03
Denmark
$1.47
Australia
of State estimates that in 2003,
$1.45
Belgium
$1.38
remittances from workers living in
Switzerland
$1.03
Portugal
the United States totaled $28 billion.
$0.69
Austria
$0.66
Finland
$0.59
Ireland
Greece
$0.46
Moreover, some believe that
Luxembourg
$0.24
$0.21
there are many in-kind and
New Zealand
intangible contributions that are
0
$3
$6
$9
$12
$15
$18
billions of dollars disbursed
difficult to quantify in monetary
terms. The United States plays a
particularly large role in some of
these activities, especially where American military assets are used for transportation,
logistical support, and security of aid workers in emergency and conflict situations. They
point to the Indian Ocean tsunami disaster in which the U.S. military played a critical
role in the delivery of urgently needed relief supplies. Much of the expense associated
with the military’s efforts will not be reflected in U.S. ODA figures. Aside from the
money issue, some policymakers emphasize that a discussion about aid burden sharing
should not be about the quantity of ODA. The focus, they contend, should be about the
quality of development programs and government policies, especially in the area of trade,
that provide benefits to poor
Figure 2. ODA as % of GNI, 2004
countries far beyond the value of
0.87%
Norway
ODA.
0.85%
Luxembourg
0.84%
Denmark
0.77%
Sweden
Netherlands
0.74%
Those that argue that the United
0.63%
Portugal
States should provide more foreign
0.42%
France
Belgium
0.41%
aid generally regard ODA as a
Ireland
0.39%
0.37%
Switzerland
percent of GNI as the best measure
0.36%
United Kingdom
Finland
0.35%
of U.S. foreign aid. On this basis, as
0.28%
Germany
0.26%
Spain
a share of national wealth, the U.S.
0.26%
Canada
0.25%
Australia
ranks second to last among 22 major
Austria
0.24%
aid donors. Even if private
0.23%
Greece
0.23%
New Zealand
donations through NGOs are added
Japan
0.19%
0.16%
United States
to the total volume, in 2003 the
0.15%
Italy
percent of GNI would increase to
0
0.2%
0.4%
0.6%
0.8%
1%
% of Gross National Income
0.21, but still place the United States
in the 21st donor position. While
acknowledging the importance of
private direct investment in the promotion of economic growth in poor countries, these
analysts point out that private flows are even more unpredictable than public transfers
and are distributed in a relatively uneven pattern with large concentrations in more
advanced economies, such as India and China. Private direct investment in low-income
countries, they point out, has fallen over the past decade. Likewise, some of these critics

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do not believe that worker remittances should be included in foreign aid calculations due
to the random nature of these transfers and their lack of integration into broad-based
development strategies. Remittances generally come from wages paid to immigrants
worker and should not be seen as charity, according to this view.
Those who advocate higher levels of U.S. foreign aid further contend that if the
volume of ODA is used as a point of comparison, it is more appropriate to measure
American ODA against Europe as a whole rather than individual European countries.
Using this comparison, European Union (EU) countries that are members of the DAC,
having a comparable national income ($10.48 trillion) with that of the United States
($10.98 trillion), provided more than twice the amount of ODA in 2004 ($42.9 billion
vs. the U.S. $19 billion). Using somewhat different terms — ODA per capita — the EU,
with a population 31% larger than the United States, disbursed about $112 per person,
compared with $65 per American.
Some analysts also assert that since the Bush Administration has added
international development as a third “pillar” of U.S. national security, together with
defense and diplomacy, the growing importance of aid to American national interests
should be reflected in higher resource allocations. These critics commend the Bush
Administration for committing to significantly higher foreign aid spending and launching
the HIV/AIDS and Millennium Challenge Account initiatives, but believe the United
States can and should do more. If international development is a key element of U.S.
national security, they argue, the private sector should not be responsible for meeting
these important American national interests in many parts of the world. For them, the
key question is not the U.S. ranking as a donor, but whether the United States
government is spending enough on development aid to achieve its stated national security
goals.
An Alternative Comparison Method
For the past two years, a private U.S. think tank — the Center for Global
Development — has compiled an alternative way to analyze the impact of the policies
of 21 wealthy countries on developing nations. The Commitment to Development Index
takes a far broader approach than using ODA and private flows data to compare
government performance by examining policies on trade, investment, the environment,
migration, security, and technology, in addition to foreign aid. Based on the Center’s
most recent release in mid-2004, the United States ranked tied for 7th among 21 countries
analyzed. The United States, by this measure, scored high on trade and migration
policies that promote development, while scoring low in the areas of aid and the
environment. (The complete results of the Center’s study can be found at
[http://www.cgdev.org/].)
Beyond the analytical results of the Center’s study, it further illustrates the
complexity of measuring the impact of U.S. and other governments’ policies on
promoting development and reducing poverty that go well beyond the comparison of
ODA data, whether it be based on volume or as a percent of national income.

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