Foreign Aid 101 Revised Edition

8/6/2019 Foreign Aid 101 Revised Edition

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Foreign aid 101: A quick and easy guide tounderstanding US oreign aidRevised edition


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Global poverty poses a challenge to the security, prosperity, and values o the US. Right now, nearly 40 percent o the worlds population2.7 billionpeoplelive in poverty, struggling to survive on less than $2 per day. 1

But these arent just numbers; these are real people, and most o them arewomen and girls. All over the world people like Jacqueline Morette (pictured),

a 41-year-old Haitian armer, are making the move rom daily subsistenceto providing a better li e or themselves and their amilies. Married with twochildren, Morette is the president o the United Womens Association o Pouill, a local group that helps women armers in central Haiti produce more

ood on their land and process it or sale. Ox am and other organizationshave worked with the armers o Pouill over the past ew years. As a result o Jacquelines capable leadership and better access to arm advice and credit,incomes have risen or women in the association.

US oreign aid has supported Morettes e orts in the fght against povertyand instability. 2 Today, aid rom the US is moving beyond just sending ood towomen like Morette and toward supporting their e orts to produce more oodand escape poverty or good.

Foreign aid 101 is designed to provide a actual overview o US oreign aid,dispel common myths about aid, and describe current re orms to make sure aidis a better tool to help people like Morette break their own cycle o poverty.


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Foreign aid 101 | Ox am America 1

Contents

A short history o US oreign aid 2

Why does the US give oreign aid? 3

How much does oreign aid cost? 5

What is the US doing to make oreign aid more e ective? 7

How the US can ensure that oreign aid leads to broad-based growth 10

Why does Ox am care about oreign aid? 11

Learn more 11Glossary 12

Notes 13

Opposite: Jacqueline Morette (pictured during a visit to an Iowa arm) runs an association o womenarmers in rural Haiti, which has received support rom USAID and private groups like Ox am. With Morettes

leadership and support rom oreign assistance, the women in the group are now earning higher incomes,which they can use to invest in their amilies utures. Sarah Peck / Oxfam America

Ox am America is an international relie and development organization that creates lasting solu-tions to poverty, hunger, and injustice. Together with individuals and local groups in more than 90countries, Ox am saves lives, helps people overcome poverty, and ghts or social justice. Ox am

America does not receive money rom the US government.

To learn more, visit ox amamerica.org/re ormaid .


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2 Ox am America | Foreign aid 101

A short history o

US oreign aidFollowing World War II, US leaders realized that Americas security and prosper-ity are interconnected with the rest o the world, and that they had a duty to helppeople in Europe with their recovery rom war. For those reasons, in 1948 the UScreated its rst major oreign aid programthe Marshall Planto rebuild Europeseconomy and sa eguard against radical ideologies taking root.

In 1961, Congress passed the Foreign Assistance Act in response to PresidentJohn F. Kennedys request to uni y all economic aid e orts under the jurisdictiono a single agency, the US Agency or International Development (USAID).

A single agency or development meant that expertise could be maximized; USAIDassembled hundreds o experts, including technically trained economists, engineers,scientists, doctors, agricultural specialists, nutritionists, and teachers, to carryout development programs directly. USAID rose to prominence or its technicalexpertise, but rom the early 1990s onward, the agencys capacity su ered a steepdecline. As a result o downsizing, USAID shi ted rom directly employing technicalassistance to managing grants and contracts.

President George W. Bush began a process o rebuilding US oreign aid and intro-duced several notable re orms: He created the Millennium Challenge Corporation(MCC) to better enable countries to meet the needs o their own citizens; hedeveloped the Presidents Emergency Plan or AIDS Relie (PEPFAR), which pavedthe way or the Global Health Initiative (GHI); and he began to restore sta nglevels at USAID through the Development Leadership Initiative (DLI).

E orts to ensure that oreign aid works to reduce global poverty and human su er-ing have accelerated under President Barack Obama. In 2010, President Obamaannounced a new US Global Development Policy, recognizing that governmentsand citizens in poor countries shouldnt be merely recipients o aid, but ull partnersin the process. The policy also outlines new tools or measuring programs to makesure they meet their goals, so both American taxpayers and poor people a ectedby US policies abroad can see where aid dollars are going and or what purposes.In keeping with this policy, US agencies are working to implement re orms thatpromise to improve the quality and impact o US aid dollars.

In the past 50 years, USAID provided democracyand governance assistance to 36 o the 57 nationsthat success ully made the transition to democraticgovernment. Pictured above, a man casts his ballotin Champs de Mars in Port-au-Prince, Haiti, onNovember 28, 2010. Kendra Helmer / USAID


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Why does the US

give oreign aid?Foreign aid is a broad category o assistance that the US provides to oreigncountries. Purposes o these unds include economic development, increasedgovernment accountability, and basic services like vaccines, clean water, education,and microcredit. Foreign aid also includes the money that the US provides to respondto natural disasters and crises. Additionally, the US provides aid or security andmilitary purposes, including e orts to ght drugs and terrorism in other countries. 3

The US provides aid through multiple channels, generally through US nongovern-mental organizations (NGOs) and contractors, but also through local NGOs andbusinesses, regional and multilateral organizations, and occasionally directly togovernments.

Foreign aid is not just about helping people in poor countries. The US gives aid tocountries or many reasons, including the ollowing:

National security Aid can support e or ts to reduce poverty and injustice,which uel social tensions that can destabilize communities and countries andpose risks to all o us.

National economic interests By helping to improve livelihoods, aid can sup-port the generation o demand or US goods and build stable trading partners.

Moral leadership Providing aid in the right ways can help showcase the good-will o the American people

The US provides emergency ood aid like thesesacks o rice and other humanitarian relie where iis desperately needed. But under a new emphasison growth, the US is also helping to build thecapacity o people and their governments to meettheir own needs. Toby Adamson / Oxfam


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Like the layers o an onion, there are many layers o aid (Figure 1):

The international a airs budget, or the 150 account, is the basket o theederal budget that includes the resources to und US activities abroad. In addi-

tion to unds or USAID and overall oreign aid, it also covers the Department o States diplomatic expenditures, such as salaries or embassy sta , expenses or

maintaining diplomatic and cultural relationships, and costs incurred protectingthe interests o US businesses and citizens overseas. Other programs unded inthe international a airs budget include the Peace Corps, contributions to inter-national organizations (e.g., the UN), peacekeeping operations, and agriculturalprograms (e.g., PL 480 Title II and other ood assistance), among others.

Foreign aid is the blanket term or all the assistance the US gives to other countries. In addition to development spending, oreign aid provides monies tomilitary and political allies or strategic purposes. For example, the US provides

oreign aid to Israel and Jordan or their value to US strategic interests in theregion; to Pakistan or its cooperation against terrorism; and to Colombia or counter-narcotics programs. This kind o politically driven aid may help li t peopleout o poverty, but that is not its primary purpose. 4

O fcial development assistance (ODA) accounts or all o cial aid globally,which is tracked by the Development Assistance Committee (DAC) o theOrganization or Economic Cooperation and Development (OECD). 5 A subcat-egory o oreign aid, ODA is mostly development aidspeci cally designed topromote economic growth in poor countries or alleviate su ering rom man-madeor natural disasters. Some political or immediate security activitiessuch asreconstruction e orts in Iraq and A ghanistanmay also quali y as ODA.

Poverty- ocused development aid, 6 which rests within ODA, is speci callydirected toward responding to disasters, improving livelihoods, and creating last-ing solutions to poverty. For example, poverty- ocused development aid helps toincrease maize armers yields in Kenya, prevent amine in Ethiopia, and improvegirls access to primary school in Bangladesh. This aid has helped communitiesin Indonesias Aceh province rebuild their lives a ter the 2004 tsunami and com-munities in Haiti rebuild a ter the 2010 earthquake. At its best, poverty- ocusedhumanitarian and development aid can enhance the livelihoods o amilies aroundthe world, strengthen US moral leadership, and improve security or all o us.

International a airs budget

Foreign aid

O fcial development assistance

Poverty- ocused development aid

Figure 1: The onion layers o aid


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How much does

oreign aid cost? Americans repeatedly overestimate how much money the US government spendson oreign aid. Surveys report that, on average, Americans think the US spends asmuch as 30 percent o the ederal budget on oreign aid, and they think we shouldonly spend 13 percent. 7

In act, the entire international a airs budgetwhich includes diplomacy and de-velopmentis only about 1 percent o the ederal budget. Only hal o that0.55percentis poverty- ocused development assistance. Thats hal a percent o our tax dollars or programs that improve livelihoods and create lasting solutions toworld poverty, a real threat to American security. 8

At $30.2 billion in 2010, the US is the largest bilateral (government) donor o ODA,meaning the US gives the most money overall. But in relation to the size o itseconomy, the US only spent 0.21 percent o its national income on oreign aid in2010. 9 That puts the US in 19th place among other major donors, behind mostindustrialized nations. For comparison, in the same year, Britain contributed 0.56percent (more than twice the US percentage). 10

Myth: The US spends 30 percento the ederal budget on oreignaid to poor countries.

Fact: Foreign aid thats poverty-ocused is less than 1 percent o

the ederal budget. 11

Americans spend as

much on maintainingtheir lawns$30 billionannuallyas the USgovernment spends on

oreign aid.12

Americans spend more oncaring or pets$45 billionannuallythan the USgovernment spendson oreign aid. 13

Americans spend as muchon candy$30 billion annu-allyas the US governmentspends on oreign aid. 14

Figure 2. Less than 1 percento the ederal budget goes topoverty- ocused aid.

FY2010 budget data obtained rom Historical Tableso the Federal Budget, Table 3.1, Outlays by Func-tion and Sub unction: 19622016 (accessed April25, 2011. http://www.whitehouse.gov/omb/budget/Historicals. Sub unction 151, International develop-

ment and humanitarian assistance is used as aproxy or poverty- ocused aid.

International a airs(excluding development and

humanitarian assistance) 0.76%

Medicare, Medicaid,and other health 24%

National de ense 20%

Unemployment, retirement,disability, and other income(excluding Social Security) 18%

Social Security 20%

Other 16%

0.55% International developmentand humanitarianassistance


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Student nurses training to be midwives take theblood pressure o a patient at Faizabad MaternityHospital in A ghanistans Badakhshan province.

Alixandra Fazzina / Oxfam

A ghanistan residents rebuild a road as part o anOx am cash- or-work program. During researchconducted in A ghanistan by Ox am in 2008, someo those surveyed criticized USAID or being toobureaucratic when planning and nancing similar projects. Mohammed Salim / Oxfam

The best and worst o aidTheres always an element o risk in oreign aid: Not all programs succeed. In general, aid thatresponds to local priorities tends to deliver more lasting results. Aid thats supply driven anddoesnt build local capacity tends to have feeting, i any, impact.

When donors do not take into account localneeds and demands and bypass govern-ments and local communities, aid is ine ec-tive and unsustainable and ails to reach thepeople who need it most. In A ghanistan,despite some laudable e orts, US aid is stilloverly reliant on contractors and provincial re-construction teams to deliver assistance rath-er than relying on A ghans themselves. For example, a US- unded highway in the north-ern provinces o A ghanistan is plagued bywaste ul spending and threatens the homeso the people who live in a nearby community.Be ore construction on the road could begin,the $15 million project had to pass throughthe hands o three di erent consulting compa-nies. As a result, not enough money was le tto purchase the materials necessary to build adecent road once expenses and salaries werepaid to each consultant. As one senior USAID

contractor put it: So you have contract a ter subcontract a ter subcontract, which just killseverything. Multiple contracts, then an A ghanguy digging the roadwhy not straight hirethe A ghan?

The 1,000-person community a ected by thisproject has signed a petition complaining thatthe road is substandard. The biggest issue or

residents is that the road is built close to mudhomes. The old dirt road was low and allowedruno to drain away. The new road is builtatop a raised berm, blocking drainage. I aheavy storm strikes, the villagers ear the mudhomes they built with their hands will collapse.They submitted their petition to the governor o Sar-e Pol province, but the governor has nopower over the highway. This program dem-onstrates the problems that occur when aid isnot responsive to the needs and demands o both citizens and their governments.

Aid at its best incorporates local practicesinstead o bringing in outside solutions. Fac-ing one o the worlds highest maternal andneonatal mortality rates, the government o

A ghanistan worked with citizen groups todevelop a community midwi ery program toimprove the chances o both mother and childsurviving childbirth. Along with other donors,the US decided to invest in this A ghan-ledprogram instead o setting up a separateproject. As described by a senior employee o

a major US NGO:

The community midwi ery program is areal success, and [one that] the Ministry o Public Health has really thought through.We [an international NGO] support aresidential training program or communityhealth workers, which lasts or 18 months.The right people are selected or the coursethrough community engagement and mo-bilization to get volunteers. Young mothers

are also eligible, as there is a dormitory withday care acilities. These womentrainedcommunity midwiveshave state-o -the-artknowledge and in ormation about maternalhealth practices. They are placed in healthclinics throughout the country [where they]receive a good salary, as well as support

rom NGOs. The rst year we had to searchhard or volunteers. In the second, we hadhuge numbers o women volunteers, andeven parades o athers and husbands sup-

porting their women to become involved.

The Ministry o Public Health programhas led to an increase in the number o midwives in A ghanistan rom 467 in 2002to more than 2,500 in 2010 17 and increasedthe number o deliveries attended by askilled provider by 50 percent. 18 The coun-trys in ant mortality rate has dropped by anestimated 22 percent since 2003, thanks inpart to better midwi ery. 19

AID AT ITS WORST 15

AID AT ITS BEST 16


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What is the US doing

to make oreign aidmore e ective?Presidents George W. Bush and Barack Obama, in partnership with Congress,have rolled out major initiatives on US oreign aid over the past decade.

The US Global Development PolicyIn September 2010, President Barack Obama issued the US governments rst-ever US Global Development Policy. 20 The policy clari es that the primary purposeo US development aid is to pursue broad-based economic growth as the meansto ght global poverty. More importantly, it o ers a clear mandate that countryownership-that is, leadership by responsible governments and citizens in poor countriesis how the US government will pursue the ght against poverty. Nowthat the policy has been issued, various US government agencies are working toput it into action.

The US has been moving in this direction since the George W. Bush administration.Some o the more promising initiatives in operation that practice a country owner-ship approach include USAID Forward, Feed the Future, the Global Health Initia-tive, and Millennium Challenge Corporation.

USAID ForwardUSAID Forward is a fagship re orm process designed to modernize the agencyand make it more transparent, e ective, and accountable to US taxpayers and topoor people overseas. This initiative re orms outdated procurement policies thatperpetuate a cycle o aid dependence. USAID Forward includes initiatives to hire

or problem-solving skills, rebuild sta technical capacity, obtain eedback throughrigorous program evaluation, budget to better suppor t the agencys policy objec-tives, build a culture o innovation, and strengthen the role o science and technolo-gy throughout USAIDs programs. At the heart o this re orm process is strengthen-ing the local people and institutions that are ultimately responsible or trans ormingtheir countries.

USAID Forward also aims to rebuild the agencys internal capacity, while saving1215 percent in overhead costs associated with contracting. 23 This re orm pack-age is critical to carrying out the US Global Development Policy success ully andsustaining a new way o doing business.

Myth: Providing aid just lets

recipient governments o the hook or taking care o their citizens.

Fact: Donors can provideaid in ways that hold countrygovernments accountable or doing their share. In Rwanda,

or example, as donors gavedirect support to the government,the government increasedits spending in health, while

simultaneously decreasingde ense spending. 21 And in2005, a ter receiving directsupport, the countries o BurkinaFaso, Malawi, Mozambique,Nicaragua, Rwanda, Uganda, andVietnam all stepped up pro-poor spending and scaled up socialservice delivery. 22


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In Malawi, the GHI is helping to address alocal shortage o health care pro essionalsby training nurses who will help Malawi care

or its own citizens and ultimately becomeless reliant on donor unding. The idea to trainnurses was taken straight rom Malawis own

ve-year health plan, developed by citizensand the Malawian government. By working incollaboration with Norway and the World HealthOrganization, the program prevents duplicatede orts and waste ul spending. 26

Feed the Future As recurring ood crises in recent years have reminded the world o the impor-tance o agricultural development to ood security, the Obama administration hasresponded to the challenge through the Feed the Future initiative, because agri-culture is how most o the worlds poor people earn a living. The program aims todeliver aid based on a countrys own needs and priorities, leverage US investments

or maximum outcomes, and ocus on results. Investments in agriculture include localresearch and training on arming methods, irrigation, and nutrition. Done right, theseinvestments can pay o big: every 1 percent increase in agricultural income per capita reduces the number o people living in extreme poverty up to 1.8 percent. 24

Global Health Initiative As the next generation o President George W. Bushs Presidents EmergencyPlan or AIDS Relie (PEPFAR) program, the Global Health Initiative (GHI) worksto strengthen health systems in developing nations, allowing countries ultimatelyto care or their own people and better protecting the world rom global disease

outbreaks. The program provides or a more integrated approach to health that willeliminate duplicative programs and break down unding silos, which means moree ective spending and better results. 25

Nurse Khetase Kapira works in the childrens ward at the KamuzuCentral Hospital in Lilongwe, Malawi. The GHI seeks to supportMalawis health care pro essionals by working directly through publicclinics run by the Ministry o Health, rather than by setting up parallelhealth care systems. Eva-Lotta Jansson / Oxfam


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The MCC undertakes concrete developmentprojects that o er real bene ts to people. In

Honduras, MCC unding was used to nance theconstruction o 300 miles o rural roads, which,combined with armer training, nearly doubled theincome or nearby armers, rom $1,800 to $3,550per year. The MCC also ocuses on lasting policyre orms that have a multiplier e ect ar beyondthe li e o the unding. In Nicaragua, the MCC notonly built roads, but also required the Nicaraguangovernment to set up a permanent road mainte-nance und that keeps the new roads, as well asother roads, in good repair so donors dont have

to come back to repair them.29

Millennium Challenge CorporationPresident George W. Bush introduced the Millennium Challenge Corporation (MCC),a major oreign aid re orm initiative that rewards countries or good governance,economic reedom, and investments in people. The MCC model requires countriesto meet eligibility criteria in those three areas. In return, it provides large, ve-year grants (compacts) toward development projects that are identi ed by a host countryimplementation agency along with representatives rom the host country govern-ment, private sector, and civil society, and that are assessed on the basis o expectedeconomic returns and other technical criteria. 27 For example, Lesotho took steps toimprove economic reedom to become eligible or an MCC compact by passing a lawin 2006 that allowed married women to own property or the rst time. To date, theMCC has signed compacts with 22 countries and provided $7.9 billion in aid. 28

Jos Ordez, a papaya and guava armer in Honduras, has seen thebene ts o better roads. He lives along a recently improved rural roadthat connects to an improved secondary road that, in turn, connectsto a new highway, meaning that he can get his papayas and guavas tomarket quicker and increase his earnings. All these road improvementswere unded by the MCC compact. Millennium Challenge Corporation


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How the US can

ensure that oreignaid leads to broad-based growthThree changes would ensure that US oreign aid leads to broad-basedeconomic growth:

Fully implement the US Global Development Policy, which holds aid account-able or ghting poverty rst and oremost, and measure it to that standard.When aid is used e ectively to ght poverty, it builds a sa er world or everyoneand strengthens US standing and moral authority abroad. When aid is used or short-term security purposeslike military protection, troop morale, popular support, or intelligence gatheringit is unlikely to have a lasting impact on either long-term security or poverty and isnt accountable to recipients because its notdesigned or their needs.

Modernize the outdated laws, strategy, and structure around US oreignaid. Designed in the 1960s, US oreign aid has sometimes been slow, bureau-cratic, and at times contradictory, making it hard to reach the people who needit the most. In some countries the US charges more in tari s than it gives indevelopment assistance. (In Bangladesh, the US gives $80 million in oreignassistance, but charges $500 million in tari s.) 30 Broad re orms, like the USGlobal Development Policy and USAIDs internal re orms via USAID Forward,strengthen the USs hand in addressing global poverty or good. To ensure thatre orm succeeds, the administration and Congress need to x the bureaucraticlogjams that work at cross-purposes and undermine the progress o oreign aid.

Recognize that poor people are in charge o their own utures, and promotecountry ownership as the most e ective path to economic growth. E ective US

oreign aid should be designed to support poor people in their own e orts toescape poverty. The US and other donors dont do development; people de-velop themselves. I the US wants poor governments to lead their people towardpeace, economic growth, and political stability, it must let those governmentsconduct their own development e orts and hold them accountable or results.Likewise, i the US wants to ght corruption, it must support the e orts o peoplein poor countries who are demanding accountability, transparency, gender equal-ity, and results rom their governments.

Cirlene Maria de Souza, 19, makes dolls or sale inConceicao das Crioulas, Brazil. Each doll is mod-eled on a real woman in the communityin thiscase, de Souzas grandmother Julia. A ter decadeso receiving oreign assistance, Brazil is now one o the worlds astest-growing economies and is start-ing to provide oreign assistance o its own.Gilvan Barreto / Oxfam


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Why does Ox am care

about oreign aid?Ox am America is dedicated to ghting poverty around the world. Because wedo not receive US unds, we can independently advocate or re orms that canmake US oreign aid a better tool or development or people in recipient coun-tries. Whether the US ghts global poverty or moral reasons or to improve its ownsecurity, Ox am believes that US oreign aid will only e ectively tackle developmentchallenges when the US designs its aid to ght poverty or its own sake and whenthe US aid system learns to be more driven by demand than supply.

Ox am America advocates or country-led development that strengthens the rela-tionship between people and their governments. Now is the time to support emerg-ing aid re orms and initiatives that are moving in this promising direction. When theUS ghts poverty by treating people as equal partners, everyone wins.

Learn more

Bush, Mary K., and others. Beyond Assistance: The HELP Commission Reporton Foreign Assistance Re orm. HELP Commission, 2007. Available atwww.americanprogress.org/issues/2007/12/pd /beyond_assistence.pd .

The Foreign Assistance Act o 1961. Full text available at www. oreigna airs.house.gov/archives/109/24796.pd . For analysis, see Failing the Cardozo Test,

April 2009. Available at ox amamerica.org/publications/ ailing-the-cardozo-test.

Epstein, Susan B. Foreign Aid Re orm, National Strategy, and the QuadrennialReview. CRS Repor t or Congress R41173. Washington, DC: CongressionalResearch Service, 2011.

Kenny, Charles. Getting Better: Why Global Development Is SucceedingAndHow We Can Improve the World Even More. New York: Basic Books, 2011.

Lugar, Richard G. Embassies Grapple to Guide Foreign Aid. 110th Cong., 1stsession, 2007. A report to the Senate Committee on Foreign Relations. Available

at www.gpoaccess.gov/congress/index.html. Ox am America. Smart Development: Why US Foreign Aid Demands Major

Re orm. February 2008. Available at ox amamerica.org/publications/smart-development.


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GlossaryCountry ownership Country ownership means letting aidrecipients lead their own development agenda. Because

oreign aid doesnt do developmentpeople and countriesdevelop themselvesownership is central to e ective aid. AsKenyan anticorruption activist John Githongo put it, Owner-ship is ni sisi . It is up to us. It is us who own our problems.

And it is us who will come up with the solutions. 31 See alsoOwnership in Practice: The Key to Smart Development,available at ox amamerica.org/publications/ownership-in-practice-the-key-to-smart-development.

Foreign aid Foreign aid is support the US provides to other countries or a multitude o purposes, rom military to diplo-matic to development.

Foreign Assistance Act o 1961 Passed by Congress in

1961, the Foreign Assistance Act created the US Agencyor International Development (USAID) and was intendedto bring reason to the dizzying array o players involved in

oreign aid. A ter decades in which new directives, earmarks,and aid o ces have been added, the act has become acatchall o contradictory messages with no clear purpose. 32

International a airs budget Also known as the 150account or its location in the ederal budget, the internationala airs budget contains the majority o diplomatic, develop-ment, and military aid dollars (but not de ense spending).This account pays or everything rom embassy salariesto ghting drugs in Colombia to childrens health programs.

Millennium Challenge Corporation (MCC) The MCCwas established in 2004 to deliver aid under the premisethat aid is most e ective when it rewards countries or good governance, economic reedom, and investments inpeople. The MCC signs ve-year compacts with responsiblegovernments to und programs that the country itsel identi es through a consultative process.

O fcial development assistance (ODA) The Development Assistance Committee (DAC) o the Organization or Economic Cooperation and Development (OECD) tracks theODA o the OECDs 30 member states, including the US.The DACs total gure or US aid accounts or all aid given or economic development. Sometimes including aid or diplo-matic and strategic purposes as well as development aid,ODA is considered one o the more generous measures o US development assistance.

Poverty- ocused development aid The development aidcommunity 33 o ten uses this term to describe US aid thatstargeted rst and oremost toward improving the lives andlivelihoods o poor people. This aid is distinguished rom aidprovided or diplomatic or security purposes.

US Agency or International Development (USAID) Created in 1961 by the Foreign Assistance Act, USAIDwas intended to be the primary vehicle or delivering USpoverty- ocused development aid. USAID was marginalizedand underresourced throughout the 1990s and early 2000s,but sta ng increases begun under the George W. Bushadministration and USAID Administrator Rajiv Shahs USAIDForward agenda are restoring the agencys expertise andleadership.



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Notes1. See Millennium Project, Fast Facts: The Faces o Poverty.

www.unmillenniumproject.org/resources/ ast acts_e.htm.

2. The United Womens Association o Pouill was supported by USAIDsMulti-Year Assistance Program (MYAP) to cross-breed local livestock withanimals rom other regions o Haiti that are better suited to the environmentin Pouill.

3. Connie Veillette, Foreign Aid Re orm: Issues or Congress and PolicyOptions, CRS Report or Congress RL34243 (Washington, DC:Congressional Research Service, 2007), 2.

4. Susan B. Epstein, Foreign Aid Re orm, National Strategy, and theQuadrennial Review, CRS Report or Congress R41173 (Washington, DC:Congressional Research Service, 2011), 3.

5. For more in ormation, see the Development Assistance Committee (DAC)at www.oecd.org/dac.

6. Also known as poverty- ocused development assistance. Bread or theWorld (www.bread.org) and the ONE Campaign (www.one.org) are other advocacy organizations that use the term.

7. WorldPublicOpinion.org, American Public Opinion on Foreign Aid,November 30, 2010, www.worldpublicopinion.org/pipa/pd /nov10/ForeignAid_Nov10_quaire.pd .

8. FY2010 budget data obtained rom Historical Tables o the Federal Budget,Table 5.1, Budget Authority by Function and Sub unction: 19762016accessed March 4, 2011. Estimate or poverty- ocused aid rom ONEsFY10 budget analysis, at www.one.org/c/us/policybrie /3237/.

9. Foreign aid levels are typically measured as a percentage o a countrysgross national income (GNI). The OECD DAC releases these guresannually. See www.oecd.org/document/61/0,3746,en_2649_34447_47515235_1_1_1_1,00.html.

10. Organisation or Economic Co-operation and Development (OECD),Development aid reaches an historic high in 2010, Newsroom, www.oecd.org/document/35/0,3746,en_21571361_44315115_47515235_1_1_1_1,00.html.

11. FY2010 budget data obtained rom Historical Tables o the Federal Budget,Table 5.1, Budget Authority by Function and Sub unction: 1976-2016,accessed MArch 4, 2011. Estimate or poverty- ocused aid rom ONEsFY10 budget analysis, at www.one.org/c/us/policybrie /3237/.

12. Jason Hardin, The Lawn o the Future, News & Record, July 13, 2008,www.news-record.com/content/2008/07/12/article/the_lawn_o _the_ uture.

13. Interview with Michael Scha er author o One Nation Under Dog, aboutwhy Americans spend so much on their pets, Marketplace, AmericanPublic Media, April 8, 20009, http://marketplace.publicradio.org/display/web/2009/04/08/pm_under_dog/.

14. National Association o Con ectioners, available at www.candyusa.com/les/ les/NCA_Con ectionery_Industry_Review_February_2010.ppt.

15. Fariba Nawa, US spends millions building A ghan road to nowhere, Albion Monitor, June 5, 2006, www.albionmonitor.com/0606a/copyright/

a ghanroadgra t.html.16. Ox am eld report, Smar t Development in Practice: Field Report rom

A ghanistan (March 26, 2009), p. 5, available atwww.ox amamerica.org/ les/ eld-report- rom-a ghanistan.pd .

17. Abby Sugrue, A ghan mothers delivered into good hands, Frontlines,(Washington, DC: US Agency or International Development, December 2010/January 2011). www.usaid.gov/press/ rontlines/f_jan11/FL_jan11_

AFmothers.html.

18. Ambassador E. Anthony Wayne remarks at midwi ery ceremonyin Heart, Transcripts and Remarks, Embassy o the United States,Kabul, A ghanistan, April 21, 2010, http://kabul.usembassy.gov/remarks_21042010.html.

19. Abby Sugrue, A ghan mothers delivered into good hands, Frontlines,(Washington, DC: US Agency or International Development, December 2010/January 2011). www.usaid.gov/press/ rontlines/f_jan11/FL_jan11_

AFmothers.html.

20. The White House, O ce o the Press Secretary, Fact Sheet: US GlobalDevelopment Policy, www.whitehouse.gov/the-press-o ce/2010/09/22/ act-sheet-us-global-development-policy.

21. OECD, Evaluation o General Budget SupportRwanda Country ReportJoint Evaluation o General Budget Support 19942004 (2006),www.bmz.de/de/publikationen/reihen/evaluierungen/gemeinscha tsevaluierungen/GBS_Rwanda.pd .

22. See Evaluation o General Budgetary Support: Synthesis Report(Birmingham, UK: Joint Evaluation o General Budgetary SupportIDD and Associates, 2006). Accessed romwww.oecd.org/dataoecd/25/43/37426676.pd .

23. Larry Nowels, Lets be smart about oreign aid in the debates ahead, TheHill, Congress Blog, February 10, 2011, http://thehill.com/blogs/congress-blog/

oreign-policy/143193-lets-be-smart-about- oreign-aid-in-the-debates-ahead.

24. O course, the e ects o investments in agriculture on poverty varysubstantially across contexts, crops, technologies, and so orth. See LucChistianensen, Lionel Demery, and Jesper Kuhl, The Role o Agriculturein Poverty ReductionAn Empirical Perspective. World Bank PolicyResearch Working Paper no. 4013 (2006).

25. See the United States Government Global Health Initiative Strategy, availableat http://www.ghi.gov/resources/strategies/159150.htm. For more about theGlobal Health Initiative, including country plans, see www.GHI.gov.

26. See the Malawi Global Health Initiative Strategy Document, available atwww.ghi.gov/country/malawi/index.htm.

27. Millennium Challenge Corporation (MCC), Guidelines or the ProgramClosure o Millennium Challenge Compacts (Washington, DC: September 8, 2009, Version 2.0) , available atwww.mcc.gov/documents/guidance/guidelines-compact-programclosure.pd .

28. MCC, Congressional Budget Justi cation, Fiscal Year 2012 (February2011), www.mcc.gov.

29. Millennium Challenge Corporation, Honduras Closeout Country Brie ,Honduras Compact: Raising Incomes, Realizing Dreams, November 3,2010, www.mcc.gov/documents/reports/brie -2010002040402-honduras-compact.pd .

30. Mary K. Bush et al., Beyond Assistance: The HELP Commission Reporton Foreign Assistance Re orm (December 7, 2007), 23, available atwww.americanprogress.org/issues/2007/12/pd /beyond_assistence.pd .

31. Statement made at ownership event sponsored by Ox am America, theNewseum, Washington, DC, May 24, 2010. Available atwww.ox amamerica.org/multimedia/video/aid-and-anti-corruption.

32. Ox am America, Failing the Cardozo Test: Why US Foreign AssistanceLegislation Needs a Fresh Start (December 2008). Available atwww.ox amamerica.org/ les/ ailing-the-cardozo-test.pd .

33. See ONE at www.one.org/c/us/policybrie /3666/ and Bread or the Worldat www.bread.org/hunger/global/development-assistance.html.


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Cover: In the months a ter Haitis January 2010earthquake, Marie Carole St. Juste, right, plowedthrough her savings to make ends meet. A busi-nesswoman who ran her own bottled-drinks andpackaged- ood business (known as a boutik inCreole), she lost both her home and her businessin the disaster. St. Juste ound short-term work withUSAID that helped her get back on her eet. Shethen received a grant rom Ox am to reopen her business. It really put joy in my hear t, saidSt. Juste, standing in the entry o her new shop,its walls painted with a resh coat o pink paintacolor she loves. Im on my way. I know Im going tobe able to make it back. With her business, she issupporting hersel , her mother (pictured at le t), her

ather, and two nieces. Toby Adamson / Oxfam

Documents

Foreign Aid 101 Revised Edition