Policy Brief January 2011

Foreign Assistance Reform:

Strengthening U.S. Leadership
in Global Development
Problem Recommendations & Actions
The U.S. Government U.S. Government efforts to save lives, alleviate poverty and promote broad-based economic
system for allocating, growth abroad reflect America’s humanitarian spirit and national interests. However, the
managing, delivering efficiency and effectiveness of these efforts needs to be improved. The Presidential Policy
and evaluating Directive on Global Development and the Quadrennial Diplomacy and Development Review
development assistance are major steps forward for modernizing U.S. development assistance, but how they will be
is fragmented across implemented is key to their success. U.S. global development should be guided by clear,
some 27 agencies and strategic goals, streamlined and better coordinated amongst federal agencies, and more
lacks clear leadership. responsive to local priorities. Furthermore, USAID’s leadership and decision-making capaci-
A proliferation of ties must be bolstered if the Administration is truly committed to rebuilding USAID as the U.S.
presidential initiatives, Government’s lead—and the world’s premier—development agency.
congressional • Nominate and confirm any outstanding Assistant Administrator positions at USAID so
earmarks and new that the agency has the leadership capacity to fully engage in the interagency process.
assistance structures • Reach agreement between the executive and legislative branches on the direction and
have emerged as priorities of U.S. global development
workarounds to an • Legislatively require that the U.S. write and make public a U.S. Global Development
outdated aid system. Strategy for approval by the President every four years. The strategy should clearly iden-
The U.S. Agency tify the overarching goals and objectives of U.S. development assistance.
for International • Recognize the Millennium Challenge Corporation’s importance as a tool in the overall
Development (USAID), foreign aid portfolio.
lacks the tools and • Rewrite and authorize a 21st century Foreign Assistance Act that will: (a) give agencies
authority needed more flexibility in exchange for greater accountability to Congress; (b) harmonize priori-
to effectively lead ties among U.S. Government agencies, multilateral institutions and recipient countries;
our development and (c) codify development’s elevated role in U.S. foreign policy.
efforts. Meanwhile, • Ensure proven best practices such as country ownership, consultation with local civil
development priorities society, and gender analysis are integrated throughout development program design,
continue to be entangled implementation and evaluation.
with diplomatic and • Rebuild USAID’s technical and staff capacity in Washington and in the field so it can
security priorities in a adequately respond to development challenges.
manner that undermines • Ensure that development programs work towards lasting and measurable outcomes.
the ability of the
government to achieve
Results
its development goals.
These reforms would cement development’s role as a “strategic, economic, and
moral imperative for the United States” and help ensure a more coherent and
www.InterAction.org
effective use of U.S. development funds. The implementation of these reforms,
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along with the utilization of best practices of international development, will ensure
Suite 210 a better return on U.S. foreign assistance investments and progress towards U.S.
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Background
As the largest coalition of U.S.-based nongovernmen-
tal organizations with members working on the ground in
every developing country, InterAction has long advocated
for greater coherence and coordination of U.S. international
humanitarian and development programs. With more than
27 federal agencies and departments currently administer-
ing foreign assistance, the need to address the fragmenta-
tion that undermines aid effectiveness is more important
than ever.
Congressional efforts
Recent U.S. Government efforts to tackle aid reform
began in 2009 when House Foreign Affairs Committee
Chairman Howard Berman initiated the rewrite of the For-
eign Assistance Act of 1961 (FAA). The FAA is the legisla-
tion that guides the authorities, use, and allocation of U.S.
foreign assistance. Originally enacted in 1961, it has not
been comprehensively reauthorized since 1985. Hundreds
of amendments have been added to the FAA over the years
that contain multiple objectives and priorities. Some of
these conflict with one another while others are simply out-
dated and out of step with the global challenges currently
facing the United States.  In the coming year, Congress
should pass a rewritten FAA or other reform legislation that
codifies elements of the September 2010 Presidential Pol-
icy Directive on Global Development.
Smaller pieces of reform legislation introduced in the
111th Congress include: H.R. 2139, which directs the Pres-
ident to develop and implement a comprehensive national
strategy to further the U.S. foreign policy objective of pro-
moting global development; S.1524, a bill to strengthen
U.S. foreign assistance programs to effectively respond
to 21st century challenges; and S.Res.312, a resolution
expressing the sense of the Senate on empowering and
strengthening USAID.
Administration efforts
State Department
In July 2009, Secretary of State Hillary Clinton announced
the launch of the first-ever Quadrennial Diplomacy and
Development Review (QDDR). Modeled after the Depart-
ment of Defense’s Quadrennial Defense Review, State-
USAID’s QDDR aims to provide the short-, medium- and
long-term blueprint for U.S. diplomatic and development
efforts. The review, which will contain reforms to be imple-
mented over the next four years, is specifically meant to
offer guidance on how the U.S. Government will develop
policies, allocate resources, deploy staff and exercise
authorities. It will also attempt to address the serious imbal-
ance in funding that favors military agencies and leaves
civilian agencies under-resourced, to the detriment of long-
term diplomatic and development objectives.
The QDDR final report and recommendations are
expected in December 2010. InterAction welcomes the ele-
vation of development as a core pillar of U.S. foreign policy,
but is concerned the report will recommend further subor-
dination of development under U.S. diplomatic priorities.
The White House
In August 2009, President Obama demonstrated his
commitment to reform by authorizing a government-wide
review of development policy that culminated in the first-
ever Presidential Policy Directive on Global Development
(PPD). The PPD, finalized in September 2010, shows
renewed official recognition of global development as a
strategic, economic and moral imperative, and an impor-
tant component of U.S. foreign policy. By prioritizing sus-
tainable development outcomes and greater U.S. policy
coherence, the directive has the potential to significantly
improve the way the U.S. Government creates and imple-
ments international development policies.
USAID
USAID Administrator Rajiv Shah has embarked on an
ambitious reform effort, USAID FORWARD, that is chang-
ing the way the agency does business. Some of the key
areas include procurement reform, rebuilding policy and
budget capacity, and strengthening monitoring and evalu-
ation practices. InterAction and its members support the
agency’s steps to strengthen itself to become a more effec-
tive leader in international development.
While considerable steps have been made towards
reshaping the U.S. approach to foreign assistance, how
these initiatives are implemented will determine their ulti-
mate success. InterAction looks forward to continuing to
work with Congress and the Administration to ensure that
reform efforts result in coherent, well-coordinated develop-
ment assistance that prioritizes poverty reduction.