United States Government Accountability Office

GAO Report to Congressional Requesters

FOREIGN 

ASSISTANCE 

U.S. Democracy 

Assistance for Cuba 

Needs Better 

Management and 

Oversight 

November 2006 

 

GAO-07-147 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2006

FOREIGN ASSISTANCE

U.S. Democracy Assistance for Cuba 

Highlights of GAO-07-147, a report to Needs Better Management and Oversight 

congressional requesters 

U.S. law authorizes aid for

nonviolent democratic change in 

Cuba. From 1996–2005, State and 

USAID awarded grants totaling $74

million to support such change. A

presidential commission recently

recommended increasing funding

for these efforts. 

This report examines (1) agency

roles in implementing this aid and 

selection of grantees; (2) types of

aid, recipients, and methods of 

delivery reported in 2005; (3) 

oversight of grantees; and (4) data 

about the impact of this aid. 

To address these objectives, we

analyzed the activities and internal

controls, and USAID’s oversight

and management of, 10 grantees

with about 76 percent (in dollars) 

of total active awards for Cuba 

democracy aid. Our review focused

on USAID because State’s first 

awards were not made until mid2005. 

What GAO Recommends

GAO recommends that State and

USAID work jointly to improve 

interagency communication about 

Cuba assistance, and that USAID 

improve its management and 

oversight of grantees. 

State and USAID officials said that 

they were taking steps to improve 

interagency communications. 

USAID said it was taking steps to 

improve the agency’s management,

monitoring, and evaluation of

democracy assistance to Cuba. 

The Department of State (State) and the U.S. Agency for International 

Development (USAID) implement U.S. democracy assistance for Cuba 

through an interagency process. However, communication between these 

agencies was sometimes ineffective, most critically about grantees’ on-island 

activities. About 95 percent ($62 million) of USAID’s total awards were made

in response to unsolicited proposals; however, after 2004, both USAID and 

State used formal competition to select grantees. 

Dissidents in Havana said that U.S. assistance provided moral support and 

enhanced their ability to work for democracy. In 2005, the 10 grantees we 

reviewed delivered humanitarian and other aid, training, and information to 

human rights and political activists, independent librarians and journalists, 

and political prisoners and their families. Assistance shipped to Cuba 

included food, medicine, clothing, office equipment and supplies, shortwave 

radios, books, and newsletters. Grantees also conducted international 

advocacy for human and workers’ rights in Cuba and planned for a future 

democratic transition. Given the Cuban government’s repressive policies and 

opposition to U.S. democracy assistance, grantees employed a range of 

discreet delivery methods that varied in terms of security, flexibility, and 

cost. The U.S. Interests Section in Havana, Cuba, a State post, has played an 

important role in distributing the aid provided by some grantees. 

Internal controls—both over the awarding of Cuba program grants and 

oversight of grantees—do not provide adequate assurance that the grant 

funds are being used properly and that grantees are in compliance with 

applicable laws and regulations. Preaward reviews of grantees were not 

always completed before awards, and USAID did not follow up adequately 

after awards to correct weaknesses in grantee policies, procedures, and 

accounting systems identified by these reviews. In addition, standardized 

grant agreements did not provide sufficient details to support program 

accountability or the correction of the weaknesses identified by preaward 

reviews. The Cuba program office also did not adequately manage at-risk 

grantees and lacked formal review or oversight procedures for monitoring 

grantee activities. We performed limited testing for 10 grantees and 

identified questionable expenditures and significant internal control 

weaknesses with 3 grantees that USAID had not detected. 

The Cuban government’s active opposition to U.S. democracy assistance 

presents a challenging operating environment for State and USAID. Although 

USAID and its grantees have some evaluation and anecdotal information 

about program results, they have focused on measuring and reporting 

program activities, such as the volume of food, medicine, or books sent to 

Cuba. USAID recently took several steps to collect better information about 

program results, such as increasing staff expertise and meeting more 

regularly with grantees. 

www.gao.gov/cgi-bin/getrpt?GAO-07-147. 

To view the full product, including the scope 

and methodology, click on the link above. For 

more information, contact David Gootnick at 

(202) 512-3149 or gootnickd@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 5

U.S. Assistance Supports Civil Society; Most Awards Were Based 

on Unsolicited Proposals 8 

Grantees Provided Assistance and Information to Recipients Using 

Several Methods; USINT Played Active Role 19 

Monitoring and Oversight of Cuba Program Grants Did Not Provide 

Adequate Assurance That Funds Were Used Properly 26 

Some Data Available about the Impact of U.S. Assistance 37 

Conclusions 44

Recommendations for Executive Action 44 

Agency Comments and Our Evaluation 45 

Appendix I Objectives, Scope, and Methodology 48 

Appendix II Comments from the Department of State 53 

Appendix III Comments from the U.S. Agency for International 

Development 56 

Appendix IV GAO Contacts and Staff Acknowledgments 58 

GAO Contacts 58 

Staff Acknowledgments 58 

Tables 

Table 1: U.S. Policy Framework Identified in the Commission for 

Assistance to a Free Cuba’s 2004 Report 8 

Table 2: Key Roles and Responsibilities for U.S. Democracy 

Assistance for Cuba 9 

Table 3: State and USAID Program Activities for Cuba Democracy 

Assistance 13

Table 4: State and USAID Cuba Democracy Assistance Grantees 

and Awards, 1996–2005 15 

Page i GAO-07-147 Cuba Democracy Aid
Table 5: Assistance to Individuals and Groups in Cuba in 2005 20 

Table 6: Recipients of U.S. Democracy Assistance in Cuba in 2005 23 

Table 7: Internal Control Standard Deficiencies Observed at Three 

Grantees, March–April 2006 36 

Table 8: Evaluations of USAID’s Cuba Democracy Assistance, 

1996–2005 39

Table 9: State and USAID Grantees and Awards that GAO 

Reviewed 50

Figure 

Figure 1: Modifications in Total Authorized Length and Amount for 

12 USAID Cuba Democracy Assistance Agreements, 

November 1997 to May 2006 18 

Abbreviations 

DRL Bureau of Democracy, Human Rights, and Labor 

IRS U.S. Internal Revenue Service 

NED National Endowment for Democracy 

NGO nongovernmental organization 

OMB Office of Management and Budget 

RFA request for application 

USAID U.S. Agency for International Development 

USINT U.S. Interests Section, Havana, Cuba

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page ii GAO-07-147 Cuba Democracy Aid
United States Government Accountability Office

Washington, DC 20548 

November 15, 2006 

The Honorable Jeff Flake 

Vice Chairman 

The Honorable William D. Delahunt 

Ranking Minority Member 

Subcommittee on Oversight and Investigations 

Committee on International Relations 

House of Representatives 

The Cuban government systematically restricts nearly all political dissent,

denying its citizens basic rights to free expression, association, and 

assembly. The Cuba Democracy Act of 19921

 and the Cuban Liberty and 

Democratic Solidarity (LIBERTAD) Act of 19962

 authorized the President

to provide assistance and other support for individuals and independent 

nongovernmental organizations (NGO) to promote peaceful, nonviolent 

democratic change in Cuba through various types of democracy-building

efforts. From 1996–2005,3

 the U.S. Agency for International Development 

(USAID) awarded 40 grants or cooperative agreements totaling $65.4 

million4

 to support the development of civil society in Cuba. In 2005, the 

Department of State (State), through its Bureau of Democracy, Human 

Rights, and Labor (DRL), awarded four grants totaling about $8.1 million 

to support a range of democracy assistance activities for Cuba. In 2004 and 

2006, the Commission for Assistance to a Free Cuba5

 recommended 

increasing funding for this type of assistance. 

At your request, this report examines (1) the roles and objectives of the 

agencies implementing U.S. democracy assistance targeted at Cuba, and

 1

Pub. L. No. 102-484, Div. A, Tit. XVII, Sec. 1705, 22 USC 6004. 

2

Pub. L. No. 104-114, Sec 109, 22 USC 6039, commonly known as the Helms-Burton Act. 

3

Unless otherwise noted, all annual references are to the U.S. fiscal year (Oct. 1–Sept. 30).

4

The total includes modifications to awards made during 1996–2005. 

5

In October 2003, the President established the Commission for Assistance to a Free Cuba

to identify measures to help bring about an end to the Castro dictatorship and U.S.

programs that could assist an ensuing transition. The Secretary of State chairs the 

commission, which includes the Assistant to the President for National Security; the 

Secretaries of Commerce, Homeland Security, Housing and Urban Development, and 

Treasury; and the USAID Administrator. 

Page 1 GAO-07-147 Cuba Democracy Aid
the funding, characteristics, and selection of the grantees6

 receiving 

awards under this program; (2) the types, amounts, and recipients of this 

assistance in 2005 and the methods used to deliver it; (3) USAID’s 

monitoring and oversight of these grantees; and (4) the availability of data

to evaluate whether U.S. assistance has achieved its goals. We plan to 

issue a classified version of this report that provides additional 

information about the methods used to deliver U.S. assistance to Cuba, 

steps taken to reduce losses of assistance shipped to the island, and some 

of the recipients of U.S. assistance in Cuba. 

In conducting this review, we analyzed selected characteristics of the 34 

grantees that received one or more of 44 State or USAID awards for this 

assistance from 1996–2005. We also analyzed the reported activities, 

assistance delivered, and management and internal controls for 10 USAID 

grantees with 14 awards active in 20057

 (representing about 76 percent of 

total State and USAID awards for Cuba democracy assistance in terms of 

dollars). We focused our review on USAID because State did not award its 

first grants until mid-2005 and on grantees with several years experience

working with USAID on Cuba democracy assistance. At USAID and State

in Washington, D.C., and at the offices of grantees in our sample in 

Washington, D.C., and Miami, Florida, we analyzed key records and 

interviewed agency officials and grantees to understand U.S. and agency 

assistance objectives and the processes used to select and monitor 

grantees and evaluate program. At the Departments of Treasury (Treasury) 

and Commerce (Commerce), we discussed export licenses required for 

this assistance. We also interviewed officials at the National Endowment 

for Democracy (NED), a private nonprofit corporation funded through 

State’s annual appropriation that supports democracy promotion in Cuba 

and other nations. We conducted fieldwork in Havana, Cuba, working out 

of the U.S. Interests Section (USINT), a State post. In Havana, we 

interviewed U.S. officials, leading dissidents, and foreign-embassy officials 

 6

This report refers to NGOs that received either grants or cooperative agreements as 

grantees. Under a grant agreement, the grantee is free to implement an agreed-upon 

development program without substantial agency involvement. Under a cooperative 

agreement, the grantee has a significant amount of independence in carrying out its 

program, but the agency is involved in selected areas deemed essential to meeting program 

requirements and ensuring achievement of program objectives. These areas include 

approval of work plans, designation of key positions and approval of key personnel, and 

approval of monitoring and evaluation plans.

7

The 14 awards consist of 1 State grant, 1 USAID grant, and 12 USAID cooperative

agreements. 

Page 2 GAO-07-147 Cuba Democracy Aid
and observed post activities. We conducted our work from August 2005 

through November 2006 in accordance with generally accepted 

government auditing standards. See appendix I for a more detailed 

explanation of our scope and methodology. 

U.S. democracy assistance focused on Cuba is implemented through an 

interagency process led by State and USAID. However, we found that 

communication between these agencies about the implementation of this 

assistance was sometimes ineffective. Most critically, since USAID does 

not have staff in Cuba, the agencies had not established routine 

communication links between USAID and USINT about the 

implementation and monitoring of on-island activities. To support 

independent civil society groups and individuals, State and USAID 

awarded 44 grants and cooperative agreements between 1996 and 2005 to

three types of grantees: (1) democracy and human rights NGOs focused 

specifically on Cuba, which received about 51 percent ($37.3 million) of 

the assistance; (2) democracy and human rights NGOs with a worldwide 

or regional focus, which received about 39 percent ($28.7 million); and (3) 

universities, which received about 10 percent ($7.6 million). About 95 

percent (about $61.9 million) of USAID’s awards were made in response to 

unsolicited proposals.8

 All four of State’s awards and the remainder of 

USAID’s awards were made competitively. USAID modified over twothirds of its 40 awards, increasing the estimated program cost almost 

eight-fold—from about $6 million to about $50 million—and extending 

program completion dates by an average of about 3 years. 

Results in Brief 

USAID reported that its Cuba program had provided a wide range of 

democracy-related assistance from 1996–2006. Dissidents in Havana said 

that this assistance provided moral support and enhanced their ability to 

continue their pro-democracy work. The 10 grantees that we reviewed in 

detail delivered significant amounts of humanitarian and material 

assistance,9

 as well as training, and information. The recipients of this 

 8

An unsolicited proposal is submitted to the agency independently by the organization 

applying for funding. The agency may choose to make a noncompetitive award based on

this proposal. In contrast, standard grant or cooperative agreements are usually awarded 

competitively to organizations responding to an agency request for applications or

proposals. See GAO, Foreign Assistance: USAID Relies Heavily on Nongovernmental 

Organizations, but Better Data Needed to Evaluate Approaches, GAO-02-471 (Washington, 

D.C.: Apr. 25, 2002). 

9

Material assistance includes shortwave radios, DVD players, cameras, and office 

equipment and supplies.

Page 3 GAO-07-147 Cuba Democracy Aid
assistance included Cuban human rights activists, political dissidents, 

independent librarians, journalists, and political prisoners and their 

families. The grantees reported using several methods to deliver assistance 

to the island. According to grantees and U.S. officials, these methods 

involve different security, flexibility, and cost considerations. Some 

grantees have taken steps to reduce the risk of loss—due to theft or 

confiscation by the Cuban government—of assistance shipped to Cuba. 

USINT has distributed increased amounts of some types of democracy 

assistance since 2000. 

USAID’s internal controls over the awarding of Cuba program grants and 

the oversight of grantees do not provide adequate assurance that the grant

funds are being used properly or that grantees are in compliance with 

applicable laws and regulations. We found that some preaward reviews of 

grantees were not completed before grant awards, and USAID did not 

follow up adequately to correct deficiencies identified by these reviews. In 

addition, the standardized language in grants and cooperative agreements 

lacked the detail necessary to support program accountability and the 

correction of grantee deficiencies identified during preaward reviews. The 

Cuba program office did not adequately identify, prioritize, or manage atrisk grantees and did not have critical review or oversight procedures in 

place to monitor grantee activities. We performed limited testing on 10 

grantees and identified questionable expenditures and significant internal

control weaknesses with 3 grantees that USAID had not detected. The

program office also lacked adequate policies and procedures for reviewing 

grantees’ compliance with cost-sharing provisions in grant agreements. 

Additionally, USAID does not appear to routinely follow prescribed 

closeout processes to identify and recover inappropriate expenditures or 

unexpended funds. These weaknesses in agency policies and procedures 

and in program office oversight allowed the significant internal control 

deficiencies we found at 3 grantees to go undetected and increased the 

risk of fraud, waste, abuse, and noncompliance with laws and regulations 

in the USAID program. We referred the problems we identified at these 3

grantees to the USAID Office of Inspector General. 

Some information is available about the impact or results of U.S. 

democracy assistance targeted at Cuba. State and USAID face a difficult 

operating environment that presents monitoring and evaluation 

challenges. For example, USAID does not have staff in Cuba and under 

Cuban law it is illegal for Cubans to cooperate with U.S. democracy 

assistance activities. In this context, USAID and its grantees have 

conducted some evaluations—such as an assessment of some independent 

NGOs in Cuba receiving U.S. assistance. However, although some 

Page 4 GAO-07-147 Cuba Democracy Aid
anecdotal information about program results is available, evaluations 

generally have been limited in number and scope. Instead, USAID and 

grantees have largely focused on measuring and reporting program 

activities, such as the volume of humanitarian assistance or the number of 

books sent. Starting in mid-2005, USAID initiated several efforts to collect 

better information about results, such as increasing staff expertise and 

requiring intermediate program evaluations when grants are modified. 

In summary, U.S. efforts to support democratic change in Cuba face 

several challenges. Some result from the difficult operating environment, 

while others result from managerial weaknesses in the program. To 

enhance the implementation of U.S. democracy assistance targeted at 

Cuba, particularly in the context of the Commission for Assistance to a 

Free Cuba’s call to increase funding for these efforts, this report 

recommends that the Secretary of State and USAID Administrator work 

jointly to improve communication between responsible State and USAID 

bureaus and offices and that the USAID Administrator work to improve 

USAID’s management and oversight of grantees.

In commenting on a draft of this report, State and USAID officials said that 

they had begun taking steps to implement our recommendations. State and 

USAID officials also provided technical comments, which we have 

incorporated where appropriate. 

Conditions in Cuba—a hard-line Communist state that restricts nearly all

political dissent—pose substantial challenges to implementing, 

monitoring, and evaluating democracy assistance. USAID does not work 

cooperatively or collaboratively with the Cuban government, as it does in 

most countries receiving U.S. democracy assistance.10 The United States 

and Cuba do not have diplomatic relations, and the United States 

Background 

Conditions in Cuba Pose 

Substantial Challenges for 

U.S. Assistance 

 10In commenting on a draft of this report, the Principal Assistant Secretary of State for

Democracy, Human Rights, and Labor Affairs noted that State provides democracy 

assistance in several countries where it does not work cooperatively or collaboratively 

with the national governments. 

Page 5 GAO-07-147 Cuba Democracy Aid
maintains an embargo on most trade. USINT staff is restricted to Havana.

11

USAID does not have staff in Cuba, and Cuba program office staff have 

been unable to obtain visas to visit the island since 2002. Additionally, the 

range of Cuban partner organizations is significantly limited by U.S. law, 

which generally prohibits direct assistance to the Cuban government and 

NGOs with links to the government or the Communist Party. 

Cuban law prohibits citizens from cooperating with U.S. democracy 

assistance activities authorized under the Cuban Liberty and Democratic 

Solidarity Act, punishable with prison terms of up to 20 years. Tactics for 

suppressing dissent include surveillance, arbitrary arrests, detentions, 

travel restrictions, exile, criminal prosecutions, and loss of employment. 

Neighborhood committees (known as Committees for the Defense of the 

Revolution) monitor residents’ activities; those identified as dissidents are 

subject to intimidation (acts of repudiation), including psychological and 

physical violence. Independent groups, dissidents, and activists face 

constant harassment and infiltration by Cuban government agents. In 2003, 

the Cuban government arrested and sentenced 75 leading dissidents and 

activists to terms of up to 28 years in prison.12 The Cuban government 

accused some of these individuals of receiving assistance from USAID 

grantees. A Cuban human rights group known as Damas de Blanco

(Ladies in White), formed after the 2003 crackdown, consists of dissidents’ 

wives, mothers, and sisters who peacefully protest for the unconditional 

release of political prisoners. 

There is no free press in Cuba, and independent journalists are harassed 

and imprisoned.13 The Cuban government also substantially restricts and 

controls the flow of information, routinely monitoring international and 

domestic telephone calls and fax transmissions. As of 2006, only about 

200,000 Cubans out of a total population of 11 million had been granted

 11By agreement with the Cuban government, USINT is limited to 51 U.S. personnel. These 

officials are supported by more than 200 Cuban contract employees.

12As of August 2006, about 60 of the 75 dissidents remained in prison. According to State

officials, several of those released conditionally from prison went into exile. 

13Reporters Without Borders’ Annual Worldwide Press Freedom Index for 2006 ranked

Cuba 165th out of 168 countries—just below China and Burma and just ahead of Eritrea,

Turkmenistan, and North Korea. 

Page 6 GAO-07-147 Cuba Democracy Aid
official access to the Internet.14 The use of satellite dishes, radio antennas, 

fax machines, and cellular telephones is restricted due to high costs, laws, 

and the threat of confiscation. The customs service also routinely 

monitors mail, freight shipments, and visitors’ baggage for materials with 

political content. Further, the government routinely jams all external, nonCuban broadcasts, including the U.S. government-supported Radio and TV

Martí broadcasts. 

Commission Recommends 

Increased Assistance and 

Identifies U.S. Objectives 

The Commission for Assistance to a Free Cuba was established by the 

President to identify measures to help end the Castro dictatorship and 

identify U.S. programs that could assist an ensuing transition. The 

commission’s May 2004 report15 recommended providing an additional $36 

million to USAID, State, and other agencies’ grant programs supporting 

Cuban civil society, as well as $5 million for worldwide public diplomacy 

initiatives. The report also recommended the creation of a transition 

coordinator for Cuba at State, a post created and filled in 2005. 

The commission’s July 2006 report16 recommended providing $80 million 

over 2 years to increase support for Cuban civil society, disseminate 

uncensored information to Cuba, expand international awareness of 

conditions in Cuba, and help realize a democratic transition. The report 

also recommended subsequent annual funding of at least $20 million until 

the end of the Castro regime. These funds would be in addition to current 

funding for State and USAID democracy assistance programs and Radio 

and TV Martí.17

State and USAID officials said that the commission’s 2004 report provides

the policy framework for their agencies’ respective grant programs (see 

table 1). 

 14Reporters Without Borders’ October 2006 report Going Online In Cuba: Internet under 

Surveillance said that Cuba is one of the world’s most backwards countries regarding

Internet usage—with less than 2 percent of its population online—and that Cuban 

authorities have implemented an unjustified system of control and surveillance over

Internet use. 

15Commission for Assistance to a Free Cuba, Report to the President (Washington, D.C.: 

May 2004). 

16Commission for Assistance to a Free Cuba, Report to the President (Washington, D.C.: 

July 2006). 

17The President’s 2007 budget requests $36 million for Radio and TV Martí, both of which 

broadcast Spanish-language news and current affairs programming to Cuba. 

Page 7 GAO-07-147 Cuba Democracy Aid
Table 1: U.S. Policy Framework Identified in the Commission for Assistance to a 

Free Cuba’s 2004 Report 

Strategies 

• Empower Cuban civil society

• Break the Cuban dictatorship’s information blockade

• Deny resources to the dictatorship 

• Illuminate the reality of Castro’s Cuba 

• Encourage international diplomatic efforts to support civil society and challenge the 

Castro regime 

• Undermine the regime’s succession strategy

Source: The Commission for Assistance to a Free Cuba’s May 2004 report to the President.

State and USAID lead interagency efforts to provide democracy assistance

to independent civil society groups and individuals in Cuba. However, we 

found weaknesses in the communications between State and USAID 

regarding the implementation of this assistance. State and USAID made 

awards to three types of grantees: Cuba-specific NGOs, NGOs with a 

worldwide or regional focus, and universities. Prior to 2004, all USAID 

awards were based on unsolicited proposals. In 2004–2005, USAID and 

State used a competitive process to select grantees. Since the program’s 

inception, USAID extended the amount and length of about two-thirds of 

the 40 grants and cooperative agreements it awarded. 

Since 1996, State and USAID have led the implementation of U.S. 

democracy assistance focused on Cuba. We observed weaknesses in 

communication between responsible State and USAID bureaus and 

offices. 

U.S. Assistance 

Supports Civil 

Society; Most Awards 

Were Based on

Unsolicited Proposals 

State- and USAID-Led 

Interagency Process 

Implements U.S. 

Assistance 

State’s Office of Cuban Affairs (under the Bureau of Western Hemisphere 

Affairs) and USAID’s Cuba program office (under the Latin America and 

Caribbean Bureau) have led the implementation of assistance programs 

that support the development of democratic civil society in Cuba, 

coordinating their activities primarily through an interagency working 

group. This working group also includes representatives from the National 

Security Council, Commerce (Bureau of Industry and Security, Foreign 

Page 8 GAO-07-147 Cuba Democracy Aid
Policy Controls Division), and Treasury (Office of Foreign Assets 

Control).18

USAID has funded democracy assistance grants and cooperative 

agreements for Cuba since 1996. USAID’s Cuba program is overseen by a

director and one junior officer. In 2005, State initiated a grant program for 

Cuba democracy assistance through DRL. Headed by an assistant 

secretary, DRL leads U.S. efforts to promote democracy, protect human 

rights and international religious freedom, and advance labor rights 

globally. The Director of U.S. Foreign Assistance (who serves concurrently

as the USAID Administrator) is responsible for coordinating State and 

USAID democracy assistance worldwide, with continued participation in

program planning, implementation, and oversight from the various 

bureaus and offices within State and USAID, and is developing a strategic 

framework and procedures to ensure that programs match priorities. 

Table 2 outlines the roles and responsibilities of key executive branch 

agencies in providing democracy assistance to Cuba. 

Table 2: Key Roles and Responsibilities for U.S. Democracy Assistance for Cuba

Organization/location Roles/responsibilities

Interagency Working Group

State and USAID, co-chairs 

Washington, D.C. 

• Provides overall policy direction

• Reviews unsolicited USAID assistance proposals and makes award 

recommendations 

State 

DRL

Office for the Promotion of Human Rights and Democracy

Washington, D.C. 

• Recommends State grant awards 

• Monitors the implementation of State grants 

Bureau of Western Hemisphere Affairs 

Office of Cuban Affairs 

Washington, D.C. 

• Co-chairs interagency working group on Cuba 

• Provides policy guidance 

• Reviews State and USAID assistance proposals 

• Principal liaison within State for USAID program 

 18Organizations that receive federal funds to provide assistance in Cuba must comply with

regulations administered by Treasury and Commerce. Treasury and Commerce officials 

review assistance proposals, provide guidance on U.S. export and asset control regulations, 

and issue licenses to State and USAID grantees. 

Page 9 GAO-07-147 Cuba Democracy Aid
Organization/location Roles/responsibilities

USINT 

Havana, Cuba 

• Provides information on conditions in Cuba

• Reviews State and USAID assistance proposals 

• Delivers some assistance to independent groups and individuals in

Cuba, including assistance provided by USAID- and State-funded 

grantees 

• Conducts a range of other public diplomacy initiatives 

Cuba Transition Coordinator

Washington, D.C. 

• Facilitates implementation of pro-democracy, civil-society building, 

and public diplomacy projects

• Continues regular planning for future transition assistance 

contingencies 

• Coordinates the implementation of overall policy and programmatic 

direction

USAID 

Latin America and Caribbean Bureau 

Cuba Program Office 

Washington, D.C. 

• Co-chairs interagency working group on Cuba 

• Recommends USAID Cuba democracy assistance awards

• Monitors the implementation of USAID grants and cooperative 

agreements 

• Reviews State assistance proposals 

Source: GAO analysis of State, USAID, and other records. 

Note: DRL reorganized in June 2006. State’s Cuba democracy assistance program now falls under 

the new Office of Asia and Western Hemisphere. 

As the table shows, USINT plays an important role in implementing State 

and USAID democracy assistance focused on Cuba. In addition to these 

tasks, USINT administers immigration and refugee programs, maintains 

regular contact with Cuban activists and other embassy officials, and files 

reports regarding human rights abuses. 

Effective internal control requires effective communication with key 

stakeholders who have a significant impact on whether an agency 

achieves its goals.19 However, during our fieldwork in Havana and 

Washington, D.C., we found that communications were sometimes 

ineffective between State bureaus and offices, USINT, and USAID 

regarding the implementation of U.S. democracy assistance focused on 

Cuba. Most critically (given that USAID does not have staff in Cuba and 

the Cuba program office staff cannot visit the island), routine 

 19GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: Nov. 1999), p. 19. 

Page 10 GAO-07-147 Cuba Democracy Aid
communication links between USAID and USINT had not been 

established. Specific examples include the following: 

• USAID did not receive reports prepared by USINT assessing some 

independent NGOs in Havana, although some of these organizations 

received assistance from USAID grantees. These reports summarize the 

observations made during USINT site visits and also recommended 

adjustments in the level and type of assistance distributed to individual 

NGOs. Given the lack of a USAID presence in Cuba, information provided 

in these reports would improve USAID officials’ knowledge of how some 

assistance is being utilized. 

• USAID’s Cuba program director did not participate in the evaluation and

ranking of democracy assistance proposals submitted to State’s DRL. (He 

had an opportunity to provide comments after State’s review panel had 

met.) The director said that he potentially could have provided important 

“lessons learned” about these proposals, based on almost a decade of 

experience implementing assistance in Cuba. State officials said that the

omission of the USAID Cuba program director from the technical review 

panels was an oversight and that DRL would take steps to ensure USAID’s 

participation on future Cuba panels. 

• USINT officials said that they received limited information from USAID 

about its grantees’ on-island activities, such as specific groups or 

individuals receiving U.S. support. The information these officials had 

about such matters was based on direct contact with some grantees and 

comments from dissidents. More complete information about grantee 

activities would provide a basis for USINT to monitor and report more 

systematically on groups and individuals receiving U.S. assistance. 

• USINT officials said that they had little advance knowledge of the types 

and amounts of assistance that USAID grantees expected them to 

distribute. In addition, they said that some grantee-provided books and 

other materials had been inappropriate or ill-suited for promoting 

democracy in Cuba.20 These officials stated that U.S. assistance would be 

more effective if they had more advance information about—and input 

into—grantee shipments. USAID officials agreed that better 

communication is needed to coordinate these activities. 

 20In some cases, USINT officials declined to distribute such books and materials, according 

to State and USAID officials. In March 2001, State’s Office of Inspector General reported 

similar problems with grantee shipments to USINT. See State’s Office of Inspector General, 

Inspection of U.S. Interests Section, Havana, Cuba, Report Number 01-FP-R-020 

(Washington, D.C.: Mar. 2001).

Page 11 GAO-07-147 Cuba Democracy Aid
In commenting on this report, State and USAID officials recognized the 

benefits of improved interagency communication on Cuba democracy 

assistance and noted that they were taking steps in this direction, such as 

providing USAID program officials with access to classified 

communications between State and USINT. According to the USAID Cuba 

program director, access to classified communications should allow better 

coordination with USINT on grantee shipments to the island. In addition, 

State said that DRL, the Bureau of Western Hemisphere Affairs, the Office 

of the Cuba Transition Coordinator, and USAID would meet regularly to 

share information gathered in quarterly meetings with grantees. USAID 

officials commented that including the Cuba program office in interagency 

working groups and weekly staff meetings of State’s Cuba desk would 

improve operational coordination. Including the Cuba program office in 

communications between USINT and grantees also would benefit USAID 

grantee oversight and management. 

USAID and State democracy assistance generally aims to support 

independent civil society groups and individuals in Cuba. The 1992 and 

1996 acts authorized support for individuals and independent NGOs in 

Cuba, such as sending humanitarian assistance to victims of political 

repression and their families; providing material and other support; 

sending books and other information; and supporting visits and the 

permanent deployment of independent human-rights monitors. The USAID 

Cuba program’s strategic objective is “to help build civil society in Cuba by

increasing the flow of accurate information on democracy, human rights, 

and free enterprise to, from, and within Cuba.” Table 3 summarizes the 

DRL, USINT, and USAID program activities for democracy assistance 

targeted at Cuba. 

U.S. Assistance Is Intended 

to Support the 

Development of Cuban 

Civil Society 

Page 12 GAO-07-147 Cuba Democracy Aid
Table 3: State and USAID Program Activities for Cuba Democracy Assistance 

State 

DRL—Office for the Promotion of Human Rights and Democracy 

• Support human rights and democracy; increase the flow of information on Cuba’s 

transition to a market-based economy and democracy. 

• Support democracy-building by women. 

• Support democracy and civil society organizations in the Afro-Cuban community. 

• Reach out to disaffected youth.

• Support NGO training to promote the peaceful transition to democracy. 

• Provide communications and office equipment to civil society groups. 

• Strengthen and expand independent libraries and promote solidarity with international 

library associations. 

• Promote independent labor organization membership and development; facilitate 

international contacts. 

USINT, Havana, Cuba 

• Maintain regular contact with civil society activists, including independent journalists 

and librarians, human rights activists, wives of political prisoners, and political 

activists. 

• Broadly distribute books, magazines, newspapers, news clips, videos, pamphlets, 

radios, and other equipment to Cubans willing to receive them. 

• Produce more printed material to reduce dependence on unpredictable supply lines. 

• Facilitate printing and distribution of information produced by civil society. 

• Provide Internet access and opportunities for long-distance communications for 

Cuban civil society. 

• Develop, support, and execute training and long-distance exchange programs for 

members of Cuban civil society. 

• Encourage international media and third-country diplomats to increase their 

interaction with Cuban civil society and their reporting of human rights and other 

issues. 

• Facilitate interaction between members of Cuban civil society and civil society 

organizations in the United States and elsewhere. 

• Help improve Radio/TV Martí programming.

Page 13 GAO-07-147 Cuba Democracy Aid
USAID 

Latin America and Caribbean Bureau—Cuba Program Office 

• Build solidarity with human rights activists by providing moral support, information, 

and non-financial material assistance (including laptop computers, printers, fax 

machines, short-wave radios and food and medicine). 

• Give voice to independent journalists by publishing their reports on the internet for 

dissemination worldwide, providing the Cuban people with hard copies of their reports, 

and providing training and (non-financial) material assistance. 

• Defend workers’ rights by alerting the international community to Cuban government 

actions in violation of international standards protecting labor rights. 

• Help develop independent NGOs by providing them with information, training, and 

(non-financial) material assistance. 

• Provide direct outreach to the Cuban people by providing newsletters, books, and 

other informational materials. 

• Plan for transition by holding conferences and publishing studies. 

Source: GAO analysis of State and USAID records. 

Note: DRL reorganized in June 2006. State’s Cuba democracy assistance program now falls under 

the new Office of Asia and Western Hemisphere. 

In implementing their program objectives, State and USAID awarded 44 

grants and cooperative agreements from 1996–200521 to 34 grantees in 

three categories: 

USAID and State Made 

Awards to Three Types of 

Grantees

• Cuba-specific NGOs received awards totaling $37.3 million (about 51 

percent of the total value of the awards); 

• NGOs with a worldwide or regional focus received awards totaling $28.7 

million (about 39 percent of the total value of the awards); and 

• Universities received awards totaling about $7.6 million (about 10 percent 

of the total value of the awards). 

All 34 grantees are U.S.-based, and most are located in Washington, D.C., 

or Florida. Table 4 summarizes State and USAID awards from 1996–2005.

 21In 2000, USAID also awarded PricewaterhouseCoopers $163,000 to evaluate its Cuba

program.

Page 14 GAO-07-147 Cuba Democracy Aid
Table 4: State and USAID Cuba Democracy Assistance Grantees and Awards, 1996–2005 

Dollars in millions 

USAID State Total

Awards Awards Awards 

Type of organization 

No. of

orgs. No. Amt.

No. of 

orgs. No. Amt.

No. of 

orgs. No. Amt.

Cuba-specific NGO 12 17 $37.3 – – – 12 17 $37.3

Regional or worldwide NGO 12 14 20.5 4 4 $8.1 14 18 28.7

University 8 9 7.6 – – – 8 9 7.6

Total 32 40 $65.4 4 4 $8.1 34 44 $73.6

Source: GAO analysis of State and USAID records. 

Note: Total for number of organizations does not add because two grantees received awards from 

both USAID and State. 

Some of the NGOs with a worldwide or regional focus have a relatively 

long history working on Cuba issues. In some cases, these NGOs have 

received grants from NED. From 1984–2005, NED awarded 158 grants 

totaling $13.3 million for democracy assistance for Cuba. Established by 

Congress in 1983,

22 NED is a private nonprofit corporation with the 

purpose of encouraging and supporting activities that promote democracy 

around the world. As part of its global grants program for “opening 

dictatorial systems,” NED assistance to Cuba has focused on providing aid 

to journalists, independent workers’ organizations, and cooperatives, 

while maintaining exile-based programs that defend human rights, provide 

uncensored information, and encourage dialogue about a country’s 

political future. NED’s independent governing board makes decisions 

about which assistance proposals the organization funds. In 2005, using a 

$3 million grant from DRL, NED funded 16 Cuba-related grants totaling 

about $2.2 million. (Four of the 16 grantees also have active USAID grants 

for Cuba democracy assistance.) 

Grantee Selection Was 

Based on Unsolicited 

Proposals until 2004 

Our analysis showed that about 95 percent ($61.9 million) of USAID’s total 

awards were made in response to unsolicited proposals. From 1996–2004, 

USAID made 34 awards ($54.7 million) based on unsolicited proposals. 

The unsolicited proposals were evaluated by the interagency working 

group (see table 2). In 2004–2005, USAID made 5 awards ($3.5 million) 

 22National Endowment for Democracy Act, Pub. L. No. 98-164, Tit. V, 22 USC 4411-4416. 

Page 15 GAO-07-147 Cuba Democracy Aid
based on two requests for applications (RFA). The proposals received in

response to these RFAs were evaluated and ranked by two technical 

evaluation committees that included State and USAID officials. In 2005, 

USAID also made an additional award to a previous grantee for $7.2 

million based on an unsolicited proposal. The USAID Assistant 

Administrator for Latin America and the Caribbean authorized the 

negotiation of awards for both unsolicited and solicited proposals. All 

awards ultimately were approved by an agreement officer in USAID’s 

Office of Acquisition and Assistance. 

In keeping with the Federal Grant and Cooperative Agreement Act,23

USAID policy encourages competitive awards for grants and cooperative 

agreements in most circumstances so that the agency can identify and 

fund the best projects to achieve program objectives.24 USAID’s general 

policy is to award all grants and cooperative agreements competitively, 

seeking applications from all eligible and qualified entities. However, 

USAID policy permits funding unsolicited proposals (without the benefit 

of competition) when certain criteria are met. For example, an unsolicited

proposal may be funded if USAID did not solicit the proposal and it 

presents a unique or innovative approach, fully supports U.S. development 

priorities, and demonstrates a unique capacity for the applicant to carry 

out program activities. In such cases, USAID guidance requires that 

officials explain the circumstances that justify funding these proposals.25

The USAID Cuba program director told us that the interagency working 

group (see table 2) had opposed prior attempts to employ a competitive 

process for selecting grantees. 

USAID’s successful use of competitive solicitations for some awards in 

2004–2005 suggests that the Cuba program could have employed this 

selection strategy for at least some prior awards. A total of 27 NGOs 

responded to USAID’s 2004 and 2005 RFAs. USAID’s technical evaluation

committees found the proposals submitted by 12 of the 27 applicants 

 23The Federal Grant and Cooperative Agreement Act of 1977 (31 USC 6301-6308) 

“encourages competition in making grants and cooperative agreements.” 

24Our prior work also suggests that competition provides substantial benefits to the

government. See, for example, GAO-02-471. 

25Unsolicited proposals are covered by the “Guide to USAID’s Assistance Application 

Process and to Submitting Unsolicited Assistance Applications.” In technical comments on

this report, USAID noted that one advantage of using unsolicited proposals is that 

organizations can submit proposals at any time. 

Page 16 GAO-07-147 Cuba Democracy Aid
“within the competitive range” of the RFAs, and recommended awarding 

cooperative agreements to 6 applicants and asking an additional 6 to 

submit (revised) best and final proposals. Eight of the 12 applicants had 

not received prior awards for U.S. democracy assistance for Cuba. In 

technical comments on this report, USAID officials said that using a 

competitive process will not always result in grantees different from those 

that would be selected using a noncompetitive process. 

All four State awards in 2005 ($8.1 million) were made competitively; two 

of these awards ($4.5 million) were to USAID Cuba grantees. Proposals 

received in response to State’s RFA were reviewed and evaluated by two 

technical committees (panels) that included officials from State’s Western 

Hemisphere Affairs, DRL bureaus, USINT; awards were approved by the 

Assistant Secretary of State for Democracy, Human Rights and Labor. As 

previously discussed, the USAID Cuba program director received copies of 

the proposals for comment but did not participate in the technical panels.

In commenting on this report, State officials said that DRL would continue 

to the greatest extent possible to use a competitive process for Cuba 

grants. State officials also said that DRL’s standard practice is to solicit 

participation by USAID and the appropriate regional bureau on all its 

evaluation panels, and that they will ensure that this policy is followed on 

future Cuba panels. 

Agreements Often 

Modified to Increase 

Funding and Extend 

Completion Dates 

Our analysis showed that USAID modified 28 of the 40 agreements 

awarded between 1996 and 2005 to increase funding, extend program 

completion dates, or both.26 In several cases, these modifications 

substantially altered grantees’ project objectives.27 These modifications 

increased the aggregate value of these agreements nearly eight-fold—from 

about $5.9 million to nearly $50.1 million—and extended the program 

completion dates by an average of about 3 years. Between November 1997 

and May 2006, USAID had modified 12 agreements that we reviewed in 

detail (see fig. 1). These modifications increased the aggregate value of 

these agreements from about $4.8 million to nearly $42.3 million and 

extended the program completion dates by an average of about 4.6 years.

 26USAID modified 17 agreements to increase funding and extend completion dates and 11 

agreements to extend completion dates. Some agreements were modified several times. 

27USAID guidance permits a change of program objectives when modifications are used to

develop an ongoing relationship with a grantee. 

Page 17 GAO-07-147 Cuba Democracy Aid
Figure 1: Modifications in Total Authorized Length and Amount for 12 USAID Cuba

Democracy Assistance Agreements, November 1997 to May 2006 

0246 8 10 12 0246 8 10 12

Source: GAO analysis of USAID award documents as of May 2006.

Total authorized agreement length 

(in years)

Award

Total authorized award amount

(dollars in millions)

Initial authorized length of award in years Initial authorized award amount

Extended authorized length of award in years Additional authorized award amount

+ = total authorized length 

 of award in years

+ = total authorized 

 award amount

Grant 1

Grant 2

Grant 3

Grant 4

Grant 5

Grant 6

Grant 7

Grant 8

Grant 9

Grant 10

Grant 11

Grant 12

USAID policy requires that some modifications and extensions be justified, 

such as those that extend the life of the award and simultaneously either 

increase the total estimated amount of the award or change the program 

Page 18 GAO-07-147 Cuba Democracy Aid
description. Officials must explain why the benefits of continuing the 

assistance activity with the same grantee exceed the benefits of a 

competitive process favored by law and agency policy. USAID Cuba 

program officials stated that they modified existing agreements (rather 

than initiating new ones) to prevent disruption of assistance programs.28

Additionally, officials said that they wanted to avoid the administrative 

burdens associated with awarding new grants or cooperative agreements.

However, USAID procurement officials told us that, whether modifying an

existing agreement or making a new noncompetitive award to the same 

grantee, a similar amount of work is required.29 These officials also 

identified several advantages to closing out awards and making new ones.

Following established closeout procedures, for example, provides 

additional assurance that grantee expenditures to date have been 

appropriate, and end-of-project reports provide important information 

about project accomplishments and failings to date. As discussed in a 

following section, the Cuba program office has decided to require grantees 

to submit interim evaluations when requesting significant project 

modifications or extensions. 

USAID reports that its grantees have provided a wide range of democracyrelated assistance since the Cuba program’s inception. In 2005, the 10

grantees that we reviewed delivered humanitarian and material assistance, 

training, and information to Cuba. In addition, several of these grantees 

worked to increase international awareness of the Cuban regime’s human 

rights record; others planned for a democratic transition in Cuba. 

Recipients of U.S. humanitarian and material assistance, training, and 

information included human rights activists, political dissidents, 

independent librarians, journalists, and political prisoners and their 

families. Grantees employed several methods to deliver these items to the 

island. According to grantees and U.S. officials, these methods involve 

different security, flexibility, and cost considerations. Increasingly since

2000, USINT has distributed some grantee-funded assistance directly. 

Grantees Provided 

Assistance and 

Information to 

Recipients Using 

Several Methods; 

USINT Played Active 

Role 

 28In technical comments on this report, USAID officials said that, in some cases, 

justifications can be quite broad, because USAID has the authority to cite impairment of 

foreign assistance objectives. According to these officials, all modifications and extensions

were appropriately justified and cleared through the interagency review process. 

29In technical comments on this report, USAID officials said that the work associated with 

conducting a competitive process is more intensive and lengthy than a noncompetitive 

process, but confirmed that the justification and approval processes supporting either 

noncompetitive awards or noncompetitive extensions of existing awards are similar. 

Page 19 GAO-07-147 Cuba Democracy Aid
USINT also provides information, electronic equipment, and other support 

to Cubans using its own funding. 

According to data provided by USAID, from 1996 to 2006 the Cuba 

program provided the following assistance: 385,000 pounds of medicines, 

food, and clothing; more than 23,000 shortwave radios; and millions of 

books, newsletters, and other informational materials. In addition, USAID 

reported that U.S. assistance supported journalism correspondence 

courses for more than 200 Cubans, the publication of about 23,000 reports 

by independent Cuban journalists about conditions or events in Cuba, and

visits to Cuba by more than 200 international experts to help train and 

develop independent NGOs. 

Dissidents we interviewed in Cuba said that they appreciated the range 

and types of U.S. democracy assistance, that this assistance was useful in 

their work, and that this aid demonstrated the U.S. government’s 

commitment to democracy in Cuba. Dissidents said they appreciate the 

moral support that U.S. assistance provides, and that this aid enhanced 

their ability to continue their pro-democracy work. 

In 2005, the 10 grantees we reviewed reported activities in four categories: 

(1) providing humanitarian and material assistance and training to 

independent civil society groups and individuals; (2) disseminating 

uncensored information to, within, and from Cuba; (3) increasing 

international criticism of the Cuban regime by highlighting its human and 

workers’ rights violations; and (4) planning for a future transition to 

democracy by sponsoring conferences and publishing studies. Our 

analysis of quarterly reports and other records show that these grantees 

provided substantial assistance in 2005 (see table 5). 

U.S. Democracy-Related 

Assistance Since 1996 

Grantees Provided Four 

Types of Assistance in 2005 

Table 5: Assistance to Individuals and Groups in Cuba in 2005 

Category Reported assistance Description

Humanitariana • About 115,000 pounds of food, medicine, 

clothing, and other assistance

• Unspecified amounts of other 

humanitarian aid, such as assistance for 

hurricane victims 

• Food included canned and dried goods such as soups, tuna, 

bouillon, and powdered milk. 

• Medicines included over-the-counter pain relief medication, 

antacids, and vitamins. 

• Clothing, which sometimes was donated or used, included 

blue jeans, T-shirts, underwear, and sandals. 

Page 20 GAO-07-147 Cuba Democracy Aid
Category Reported assistance Description

Materialb • About 4,900 shortwave radios

• About 27 DVD players 

• About 13 copier/printer/fax machines 

• Video recorders and cameras

• Office supplies

• About 200 flashlights 

• Shortwave radio kits were powered by rechargeable 

batteries, solar cells, or other methods. 

• Office supplies included notebooks, paper, printer 

cartridges, pencils, and pens.

• Other items included video game players, key chains, and 

holiday post cards. 

Training Thirteen exchange visits to the United

States 

Six training seminars in Cuba

Technical and other assistance, such as 

computer and business training 

• One grantee provided materials and training on 

documenting labor rights abuses and filing claims to labor 

rights organizations, for example. 

• One grantee provided leadership and management training 

for activists. 

Uncensored

information

• About 100,400 books, magazines, and 

other reading materials 

• About 1.1 million newsletters and 

pamphlets 

• About 11,600 DVDs and CDs

• 13 Web sites 

• One grantee reported more than 4.4 

million average monthly hits by more 

than 390,000 users 

• One grantee reported an average of 

about 57,000 monthly hits by more 

than 11,500 users 

• Daily, weekly, and monthly e-mails 

containing news, research studies, and 

other informationc

• Regular communication by telephone, 

fax, Internet/e-mail and maild

• Radio/TV programs and interviews, 

including for Radio Martí and Radio 

República. 

• Books in Spanish included Como Llegó la Noche (How the 

Night Arrived), by Huber Matos; La Fiesta del Chivo (The 

Feast of the Goat), by Mario Vargas Llosa; El Poder de los

Sin Poder (Power of the Powerless), by Vaclav Havel; and 

children’s reading and coloring books. 

• Grantees also published books on Cuba written by Cuban 

activists, such as Vive Boitel (Boitel Lives), by Jorge Luis 

García Pérez; and Ojos Abiertos (Eyes Open), a collection 

of literature, poetry, and art by Cuban writers and artists 

participating in a literary contest. 

• Topics included peaceful democratic activism, Cuban and

U.S. society and history, international politics, and 

transitions to a free market economy. Dissidents and others 

in Cuba said that The Da Vinci Code and Harry Potter titles 

currently are two favorites of adults and children. 

• Magazines contained news and opinion articles written by 

Cuba- and Miami-based activists. 

• Newsletters and pamphlets summarized international and 

Cuba-specific news, events in Cuba, and other issues. 

• Grantees regularly updated Web sites with news and 

opinion pieces, links, and other information. 

• DVDs included recordings of Radio Martí, grantee-produced 

talk shows, recordings of political prisoners’ trials, and 

American children’s movies. CDs included recordings of 

Cuban-American music. 

• Radio program content included music, news analysis and 

commentary, and recorded call-in programs.

Source: GAO analysis of 10 grantees’ quarterly reports submitted to USAID and State, and other records. 

a

Quantities include humanitarian assistance reported in pounds. In addition, some grantees reported 

the quantity or the value of items sent—for example, one grantee reported shipping approximately 

$4,500 worth of humanitarian aid.

b

Quantities of items as reported. In some cases, grantees did not specify quantities of items sent to 

Cuba. For example, one grantee reported that individuals delivered “modest amounts of equipment.” 

c

Grantees’ e-mail distribution lists ranged in size from about 1,500 subscribers in the United States, 

Cuba and other countries, to tens of thousands of e-mail addresses in Cuba. 

Page 21 GAO-07-147 Cuba Democracy Aid
d

One grantee reported an increase in Internet communication following the opening of USINT’s 

computer labs in Havana. 

In technical comments on this report, USAID officials said that the 

purpose for providing novels, video games, children’s coloring books, and

some other items listed in table 5 is to attract Cubans to independent 

libraries and other organizations so that they can review other materials 

on democracy, free markets, and other subjects. 

Eight grantees also reported conducting international outreach and 

advocating for human and workers’ rights causes in Cuba (either directly 

or through subgrantees). Our analysis of quarterly reports shows that 

these grantees were involved in organizing or participating in the following 

types of activities in 2005: 

• conferences and meetings held by groups such as the United Nations 

Human Rights Commission in Geneva, Switzerland, and the Organization 

of American States General Assembly, in Ft. Lauderdale, Florida; 

• meetings with foreign government and political leaders to discuss human 

and workers’ rights in Cuba and possible support for activists; 

• conferences and meetings of civil society groups; 

• press conferences, news releases, and other events related to human 

rights; and 

• mail, e-mail, and letters distributed to foreign government officials. 

One grantee was primarily focused on planning for a democratic

transition. This grantee reported that it commissioned academic studies, 

compiled databases, and organized seminars in the United States and a

Latin American country. These resources were made available in print and 

online. 

Our analysis of quarterly reports and other records shows that the 

recipients of U.S. assistance in 2005 included political prisoners and their 

families, independent librarians, journalists, political parties, labor 

organizations, other civil society groups and activists, and, to a lesser 

extent, the general Cuban public (see table 6). 

Recipients of U.S. 

Assistance Included a 

Range of Cuban Civil 

Society Groups 

Page 22 GAO-07-147 Cuba Democracy Aid
Table 6: Recipients of U.S. Democracy Assistance in Cuba in 2005 

Recipient Reported assistance

Political prisoners and their 

families 

• Six grantees sent humanitarian assistance and other support to political prisoners and their 

families. 

• The Cuban Commission for Human Rights and National Reconciliation estimates there are 

about 300 political prisoners in Cuba, including about 60 of the 75 activists and dissidents 

arrested during the 2003 crackdown. 

Independent libraries • Eight grantees supported independent libraries throughout Cuba. 

• Libraries typically are located in activists’ homes, civic groups, and religious community 

centers; they provide space for adults and children to read, hold discussions, watch television 

and movies, play games, draw and paint. 

Independent journalists • One grantee focused on providing assistance to independent journalists. 

• Other grantees may provide assistance to independent journalists who are also independent 

librarians or family members of political prisoners. 

• One grantee reported that an average of about 30 independent journalists submit news and 

opinion articles and photos for publication online or in print. 

Independent political parties • Five grantees sent assistance to leaders of various political parties in Cuba. 

• Although the Cuban Communist Party is the only official political party in Cuba, a number of 

unofficial, independent political parties also exist. 

Independent labor organizations • One grantee focused on supporting independent workers’ rights organizations in Cuba. Three 

other grantees also reported supporting these groups. 

• The Cuban government permits only one legal labor organization, the Confederation of Cuban 

Workers. 

Other independent civil society 

groups and activists 

• Five grantees sent materials and training to civic groups, religious centers, Cuban writers’ and 

artists’ groups, human rights groups, and other professional organizations. 

Cuban public • Five grantees sent information directly to the Cuban public via Internet sites, e-mails, and radio 

broadcasts. 

• Grantees generally did not estimate how much of the population received assistance through 

redistribution via independent organizations. 

Source: GAO analysis of 10 grantees’ quarterly reports submitted to USAID and other records. 

Note: Individuals may be a member of more than one group—for example, the spouse of a political 

prisoner might also be an independent librarian or journalist. 

According to USINT officials, recipients sometimes give away or sell 

books, magazines, newspapers, or other assistance. According to senior 

USINT officials, these actions may have the unintended effect of 

expanding the reach of U.S. assistance. Senior U.S. officials viewed these 

losses due to confiscation or reselling as an unavoidable cost of providing 

democracy assistance in Cuba’s repressive political and economic 

environment. However, in technical comments on this report, USAID 

officials said that, despite potential benefits of expanding the reach of US 

assistance, selling such assistance is not allowed under USAID policy. 

USAID recently sent an e-mail to its grantees reminding them that they are 

Page 23 GAO-07-147 Cuba Democracy Aid
forbidden to sell or knowingly condone the selling of humanitarian aid or

other assistance by recipients. 

The grantees in our sample reported using several methods to deliver 

humanitarian aid and material assistance, training, and informational 

materials to Cuba. Grantees and U.S. officials said that these methods 

involved different security, flexibility, and cost considerations. For 

example, the estimated cost of delivering humanitarian or material 

assistance to the island ranged from about $4 to $20 per pound. 

Some grantees have taken steps to reduce the risk of loss—due to theft or

confiscation by the Cuban government—of assistance shipped to Cuba. 

Dissidents we interviewed in Havana said that the assistance they received

from USAID and State grantees (and other organizations) was sometimes 

interrupted. In addition, USAID officials said that the Cuban government 

closed some independent libraries and confiscated their books and 

equipment in 2005. 

We plan to issue a classified version of this report that would provide 

additional information about the methods used to deliver U.S. assistance 

to Cuba, steps taken to reduce losses of assistance shipped to the island, 

and some of the recipients of U.S. assistance in Cuba. 

USINT data shows that it delivers assistance and information to more than 

2,500 individuals and groups in Cuba. In 2005, for example, the office 

distributed over 269,000 books, magazines, articles, pamphlets, and other 

materials. According to U.S. officials, USINT’s role delivering democracy 

assistance has increased since 2000—as indicated by the substantial 

increase in the volume.30 These officials also said that further expanding

the volume of items distributed would require additional staff and 

resources. 

Several Methods Used to 

Deliver U.S. Assistance 

USINT Delivers Some 

Grantee and Other 

Assistance 

The assistance delivered by USINT was funded by State and USAID 

grantees as well as by USINT. According to U.S. officials, USINT 

purchased materials, equipment, and information, including U.S. national 

 30USINT records indicate that the annual volume of shipments increased between 2000 and 

2005 by about 200 percent—from about 51,000 to 155,000 pounds. U.S. officials estimate 

that equipment, books, and other assistance materials distributed by USINT made up about 

50–70 percent of the total volume for 2005. 

Page 24 GAO-07-147 Cuba Democracy Aid
news and professional magazines, such as the Spanish-language versions 

of Newsweek, The Economist, Art in America, The Atlantic, Popular 

Mechanics, and Downbeat. In 2004, the office also purchased equipment, 

materials, and an electronic subscription allowing it to publish onsite 300 

copies of El Nuevo Herald daily newspaper. USINT also purchased and 

distributed radios, laptop computers, and DVD players. Some of this 

material and information distributed by USINT is redistributed by 

individuals and groups to other locations in Cuba.

During our fieldwork at USINT, we observed employees unload, sort, and

distribute shipments sent by USAID grantees and one U.S.-based NGO, as 

well as items purchased by USINT. Shipments included materials for 

independent librarians and journalists, artists, musicians, academics and 

teachers, churches, and foreign diplomats. Some of these shipments were 

addressed to specific individuals. USINT officials said that they deliver 

information directly to some Cuban government officials. USINT officials 

also distribute literature and equipment to Cubans visiting the consular 

section for visas or other business. 

As part of its public diplomacy efforts, USINT provides videoconferencing 

capabilities and public Internet access to facilitate the work of State and 

USAID grantees. For example, grantees use Internet-based video 

conferencing for training sessions. We observed a training session 

organized by one USAID grantee for approximately 20 independent 

journalists. In addition to the training, the participants said that they had 

received other U.S. assistance, such as equipment, supplies, and help in 

publishing their stories outside Cuba. USINT also provides public access 

to about 20 computers with Internet access, printers, and copiers. During 

our fieldwork, we observed that a number of Cuban activists used these 

computers. The computers also appeared to be popular with the Cuban 

public—reservations for using them were booked for a month in advance, 

according to USINT employees managing this equipment. 

Additionally, as part of USINT’s public diplomacy program, the public 

affairs office also compiles and selects daily news clippings and quotes to

display on an electronic billboard news ticker located on USINT’s exterior. 

This billboard was installed in January 2006 to display information for 

people passing the building, which is located on a major Havana street and 

pedestrian walkway. 

Page 25 GAO-07-147 Cuba Democracy Aid
USAID’s internal controls over both the awarding of Cuba program grants 

and the oversight of grantees do not provide adequate assurance that the 

grant funds are being used properly or that grantees are in compliance 

with applicable laws and regulations.31 The Guide to Opportunities for 

Improving Grant Accountability states that organizations that award 

grants need good internal control systems to provide adequate assurance 

that funds are properly used and achieve intended results.32 However, we 

found some weaknesses in internal control in the preaward, award, 

implementation, and closeout phases of Cuba-program grants 

management.33 The agency’s preaward reviews of grantees often were not 

completed prior to grant awards, and USAID auditors did not adequately 

follow up to correct deficiencies after grant awards. In addition, the 

standardized terms and conditions of grants and cooperative agreements 

lacked the detail necessary to support adequate accountability; 

specifically, the grants and cooperative agreements did not include a 

requirement for an acceptable internal control framework, nor did they 

contain provisions for correcting deficiencies noted by preaward reviews. 

USAID’s Cuba program office also does not have adequate policies and 

procedures for assessing grantee risks in order to put in place proper 

procedures to reduce that risk. In addition, a lack of adequate oversight 

and monitoring by USAID’s program office allowed for questionable 

expenditures by grantees to go undetected; moreover, grantee compliance 

with cost-sharing provisions was not adequately addressed. The program 

office also did not provide adequate training to grantees and does not 

appear to routinely follow prescribed closeout processes. These 

Monitoring and 

Oversight of Cuba 

Program Grants Did 

Not Provide Adequate 

Assurance That Funds 

Were Used Properly

 31GAO’s Standards for Internal Control in the Federal Government provides an overall 

framework for establishing and maintaining internal control, identifying and addressing 

major performance and management challenges, and identifying and addressing areas at 

the greatest risk of fraud, waste, and mismanagement. GAO/AIMD-00-21.3.1 (Washington,

D.C.: Nov. 1999). 

32A guide compiled by members of the Grant Accountability Project—a collection of

federal, state, and local audit organizations tasked by the Comptroller General’s Domestic 

Working Group to offer suggestions for improving grant accountability. See Domestic 

Working Group, Guide to Opportunities for Improving Grant Accountability (Oct. 2005), 

available at http://www.ignet.gov/randp/rpts1.html. 

33In the preaward stage, potential grantees submit applications for agency review. In the 

award stage, the agency identifies successful applicants or legislatively defined grant 

recipients and awards funding. The implementation stage, also referred to as the postaward 

stage, includes payment processing, agency monitoring, and grantee reporting, which may 

include financial and performance information. The closeout phase includes the 

preparation of final reports, financial reconciliation, and any required accounting for 

property. 

Page 26 GAO-07-147 Cuba Democracy Aid
weaknesses in agency and program office internal control policies and 

procedures contributed to internal control deficiencies we found at 3 of

the 10 grantees we reviewed, leaving USAID’s Cuban democracy program

at increased risk of fraud, waste, and abuse. We referred the problems we 

identified at these 3 grantees to the USAID Office of Inspector General. 

USAID’s Preaward 

Processes Were 

Inadequate 

USAID guidance requires grant officers to determine whether the potential 

recipient possesses, or has the ability to obtain, the necessary 

management competence in planning and carrying out assistance 

programs, and whether it practices mutually agreed upon methods of 

accountability.34

As addressed in the Guide to Opportunities for Improving Grant 

Accountability, an effective review performed before the award—which 

includes a general review of the control environment and the control 

activities in place—helps to detect and correct control weaknesses that 

could contribute to potential fraud, waste, and abuse of grant funds. The 

potential grantee can then correct these weaknesses before USAID 

provides funding. During our site visits, we identified fundamental internal 

control weaknesses at three grantees that might have been mitigated if 

USAID had performed more timely preaward reviews and performed the 

necessary follow-up on findings. (Table 7 lists some examples of the 

internal control weaknesses we identified at these three grantees.) 

First, in four of the eight instances in which preaward reviews were 

conducted, the reviews were completed after the awards were made.35

According to USAID officials, these four reviews were issued from 3–33 

days after the award date primarily because of staffing shortages. 

However, in technical comments on our report, USAID officials said that 

the agreement officer received oral findings from USAID or Defense 

Contract Audit Agency auditors before the final report. 

 34USAID, ADS Chapter 303—Grants and Cooperative Agreements to Non-Governmental 

Organizations; Section 303.3.9.1(a), Pre-Award Survey Requirements. 

35Preaward reviews were conducted for 7 of the 10 grantees we reviewed. One grantee

received two preaward reviews. According to a USAID procurement official, in accordance 

with agency guidance, preaward reviews were not conducted for 3 of the 10 grantees 

because they were well-established and had done previous business with USAID. 

Page 27 GAO-07-147 Cuba Democracy Aid
We also identified one preaward review conducted for USAID by the 

Defense Contract Audit Agency that appears to have had limitations and 

weaknesses in its implementation. This review, dated November 20, 2002,

concluded that one of the three grantees for which we identified 

fundamental internal control weaknesses had an adequate accounting 

system. However, during our site visit in 2006, this grantee could provide 

only some paid invoices and bank statements for transactions before 

February 2005. These records were insufficient for tracking and reporting

accumulated grantee expenditures or reconciling bank accounts. 

Second, USAID’s follow-up on preaward reviews was insufficient to 

provide assurance that deficiencies and weaknesses found during the 

preaward reviews were adequately addressed. Five of the eight preaward 

reviews we assessed made recommendations for correcting deficiencies in

the grantees’ accounting systems that could adversely affect grantees’ 

ability to record, process, summarize, and report direct and indirect costs. 

However, the corresponding grants and cooperative agreements did not 

include specific provisions for correcting these deficiencies.36 Moreover, 

although all eight reviews we assessed recommended follow-up reviews, 

USAID did not conduct most of them in a timely fashion. In one case, 

USAID did not conduct a follow-up review until 3 years after such a review 

was recommended in an initial review. In technical comments on this 

report, USAID officials said that in the past there were some instances 

where resources for preaward and follow-up reviews were not available, 

but that obtaining funding for these reviews is generally a priority for 

USAID and the Office of Acquisition and Assistance. USAID officials stated

that the Office of Acquisition and Assistance will work with the Cuba 

program office to ensure information regarding grantee audits is 

communicated to all appropriate staff in a timely manner and that if any

subsequent audits are necessary, adequate funding will be made available. 

 36See Office of Management and Budget (OMB) Circular No. A-110, Uniform 

Administrative Requirements for Grants and Agreements with Institutions of Higher 

Education, Hospitals, and Other Non-Profit Organizations. OMB has codified A-110 at 2

CFR Pt. 215, and USAID had codified the requirements of A-110 at 22 CFR Pt. 226. 

Page 28 GAO-07-147 Cuba Democracy Aid
We performed a detailed review of four cooperative agreements and one 

grant agreement that USAID signed between 1997 and 2005 for democracy 

assistance for Cuba.37 These agreements had a variety of objectives, 

ranging from providing humanitarian assistance to dissidents and their 

families to providing information about conditions in Cuba to the Cuban 

public and the international community. In general, however, the 

standardized language of the agreements did not contain sufficient detail 

to address the unique objectives of each grant, the grantee’s internal 

controls, or the remediation of known grantee deficiencies. This increases 

the risk that grantees will use program funding, either unintentionally or 

intentionally, for purposes that are not intended by the program and that 

program assets will not be adequately safeguarded. 

Grant Agreements Did Not 

Support Program 

Accountability 

According to the Guide to Opportunities for Improving Grant 

Accountability, the terms, conditions, and provisions in the award 

agreement, if well designed, can render all parties more accountable for 

the award. The terms and conditions in the USAID grants and cooperative 

agreements we reviewed generally lacked the detail necessary to provide 

adequate guidance to grantees. For instance, although providing 

humanitarian assistance is a common objective, the agreements provided 

insufficient detail for grantees to differentiate between allowable and

unallowable types of such assistance. In addition, rather than providing 

guidance in the agreement document, the agreements pointed to 

additional sources of rules and regulations, including supporting 

legislation that the grantees might have difficultly locating or 

implementing without additional guidance. For example, the agreements 

do not contain details about acceptable cost-sharing contributions, but 

instead direct grantees to the Code of Federal Regulations. The grant 

agreements we reviewed also did not include provisions requiring grantees

to establish and maintain an acceptable internal control system or, as 

previously discussed, provisions for correcting deficiencies identified 

during preaward reviews. 

 37We judgmentally selected these 5 agreements from the 13 USAID agreements in our 

sample because they represent a broad range of the types of objectives outlined by Cuba

program grantees. A USAID official confirmed that all of the agreements use standard

language from document-generating software that is modified periodically under the 

direction of USAID’s Office of Acquisition and Assistance. 

Page 29 GAO-07-147 Cuba Democracy Aid
Internal controls should be designed to provide for ongoing monitoring in 

the course of normal operations. We identified several weaknesses in the 

USAID Cuba program office’s oversight and monitoring of grantees’ 

implementation of grants and cooperative agreements, including the lack 

of policies and procedures for identifying at-risk grantees, formal 

oversight of grant implementation, and a framework for monitoring cost 

sharing. In addition, the program office provided inadequate training to 

grantees. These weaknesses exist in a restrictive environment where the 

Cuban government precludes Cuba program officers from directly 

observing the use and outcomes of the assistance.

The USAID Cuba program office does not have adequate policies and 

procedures for assessing and managing the risks associated with specific 

grantees. USAID Cuba program officials have not performed a formal risk 

assessment of the grantees providing assistance to Cuba, although they

said that they consider recipients of larger awards to be higher risk. Larger 

recipients often are subject to the Single Audit Act

38 and annual financial 

statement audits, and are therefore subject to internal control and 

compliance testing. The program director and program office staff said 

that they visit grantees at least quarterly. However, one of the grantees we 

reviewed said that USAID officials do not conduct formal financial 

oversight visits to their office. Visits to large and small grantees were not 

formally documented and were not based on structured oversight 

procedures. In addition, the USAID program office also performed limited 

to no reviews of the financial records for recipients, increasing the risk 

that they would operate without effective controls. USAID Cuba program 

officials said that if the applicant had a prior history of managing USAID or 

U.S. government contracts or grants, USAID contacted the cognizant 

USAID or other federal agency technical officer for information about 

those awards. For applicants without a prior history of managing such 

federal awards, the program office verifies that the applicant had received 

Cuba Program Office 

Inadequately Monitored 

and Oversaw Grant 

Implementation 

Policies and Procedures for 

Mitigating Risks at At-Risk 

Grantees Are Inadequate 

 38The Single Audit Act (31 USC 7501-7507) is intended to promote sound financial 

management, including effective internal controls, for federal awards administered by state

and local governments and nonprofit organizations. OMB Circular No. A-133, Audits of 

States, Local Governments, and Non-Profit Organizations, sets standards related to the

Single Audit Act, including a requirement for organizations that expend $500,000 or more in 

federal awards during the fiscal year to have a single or program-specific audit conducted

for that year, including a review of internal controls.

Page 30 GAO-07-147 Cuba Democracy Aid
501(c)(3) status from the Internal Revenue Service (IRS).39 USAID also 

conducts local inquiries to verify the reputation and qualifications of the 

applicant. 

USAID’s Cuba program office does not have a formal grantee monitoring 

and oversight process to help ensure accountability for grant funds. We 

found key weaknesses in the oversight USAID did provide. 

USAID Does Not Effectively 

Monitor Grant Project 

Implementation 

First, USAID lacked adequate documentation of the grantees’ 

implementation plans. Five agreements between USAID and grantees 

specified that grantees were to submit implementation plans for approval 

before initial disbursements. A USAID official said the plans had been

communicated orally or included in the grantees’ initial proposals. 

However, we found inadequate documentation in USAID’s files to support 

this. In addition, some grantees with whom we spoke lacked an 

understanding of USAID’s requirements for implementation plans. For 

example, two grantees could not confirm the existence of implementation 

plans for their respective grants. 

Second, USAID did not require grantees to submit detailed, well-supported 

quarterly reports and did not have a formal process for reviewing those 

reports. Along with a narrative report, USAID requires grantees to submit 

one-page quarterly financial reports (but not supporting documentation) 

to validate underlying expenditures. Although grantees provide summary

amounts for expenditures and obligations, the financial information 

required by USAID in the quarterly reporting process is not sufficiently 

detailed to help the program office identify potentially inappropriate 

expenditures. In addition, USAID does not have a formal process for 

reviewing this reporting. The lack of formal quarterly review procedures 

and documentation reduces USAID’s ability to identify and correct 

inappropriate expenditures by grantees. In technical comments on this 

report, USAID officials said that the Paperwork Reduction Act limits 

USAID’s ability to require, as a general rule, grantees to report information 

in addition to that required under OMB circular A-110 and 22 CFR Part 226 

 39501(c)(3) status, which is based on a provision in the Internal Revenue Code, means that

the IRS has reviewed an NGO’s application for such status entitling it to exemption from 

federal taxation, and has determined that the NGO meets specified criteria, such as being 

organized and operated exclusively for a public purpose (such as charity or education) and 

not engaging in prohibited activities (such as lobbying or profit-making). Because the IRS 

has already performed a review of an NGO’s organization and operation, USAID can

reasonably rely on IRS’s prior work and thus needs to conduct a less comprehensive 

review using USAID resources. 

Page 31 GAO-07-147 Cuba Democracy Aid
without approval from OMB. USAID officials said that they will consider 

pursuing OMB approval. 

Third, USAID does not have a protocol for monitoring visits to grantees 

and does not document the results of those visits. Our Standards for 

Internal Control in the Federal Government addresses the need for 

developing and implementing detailed procedures for grantee monitoring. 

During our fieldwork, we accompanied USAID Cuba office staff on site 

visits to several grantees. During this fieldwork, we observed that USAID 

officials did not use a structured review process or coordinate their 

reviews to prevent gaps or duplication of efforts. USAID officials did not

prepare trip reports or other written summaries of their observations 

during these site visits.40 Some grantees stated that program officials 

generally examined only a limited number of invoices during their visits. 

One program office staff member said that, during site visits, he typically

spent about an hour interviewing grantee representatives and reviewing 

records at each grantee.

USAID’s Cuba program office did not have a framework for overseeing 

grantee compliance with cost-sharing requirements in their grants and 

cooperative agreements and could not determine whether grantees were 

complying with these requirements. Cost sharing, an important element of 

the USAID–grant recipient relationship, is applied to certain grantees on a

case-by-case basis. If USAID includes a cost-sharing provision in an 

agreement, the respective grantee must finance a specified amount of 

activity costs using nonfederal funds. Some agreements allow grantee 

contributions to include nonmonetary contributions, such as services and

property, in addition to cash contributions.41

USAID Cuba Office Lacks 

Framework for Monitoring 

Cost Sharing 

 40The USAID program director said that the program office and grantees were concerned 

about creating records that might be released under the Freedom of Information Act, 

because the release of such information could damage program activities and/or result in 

the harassment or imprisonment of aid recipients in Cuba. However, in technical 

comments on this report, USAID officials said that concerns related to protecting sensitive 

information have been addressed through the application of Freedom of Information Act 

exemptions and, thus, in the future, will not present an obstacle to recordkeeping.

41OMB Circular No. A-110 provides guidance on cost sharing; USAID has adopted and 

codified this guidance with some limited modifications at 22 CFR 226.23. With a few limited 

exceptions, a grantee receiving federal dollars under more than one federal grant program

may not use the funds received under a different grant for cost sharing. On this last point,

see GAO, Principles of Federal Appropriations Law (commonly referred to as “the 

Redbook”), GAO-06-382SP, at 10.E.4 (3rd ed. Feb. 2006). 

Page 32 GAO-07-147 Cuba Democracy Aid
Twelve of the 13 USAID agreements we reviewed contained cost-sharing 

provisions, totaling about $7.6 million. In some cases, the grantee’s cost 

share was a significant portion of the total amount of assistance 

authorized under the agreement. For example, one grantee’s initial share 

represented 56 percent of the total estimated program amount. Moreover, 

as previously discussed, the cost-sharing provisions we reviewed offered 

little guidance about the allowable sources of cost-sharing funds or the 

methods for valuing non-monetary contributions applied toward the cost 

share, instead directing grantees to the Code of Federal Regulations.42

Grantees are required to periodically report to USAID the amounts they 

have spent as their portion of the cost sharing. However, based on a 

review of grantee documentation and interviews with agency staff, we 

determined that USAID does not systematically monitor grantee 

compliance with cost-sharing requirements. For example, staff does not 

use a work program or structured methodology to determine whether 

grantees comply with cost-sharing provisions in their respective 

agreements. 

Two of the USAID grantees we reviewed reported that they complied with 

USAID grant regulations by applying funds received under grants from 

NED toward their required share of program costs. USAID grant 

regulations at 22 CFR 226.23 require grantees to meet their cost-sharing 

requirement with nonfederal resources. For the purpose of complying with 

USAID grant regulations on cost-sharing requirements, it is unclear 

whether funds received under grants from NED constitute federal or 

nonfederal resources.43 USAID officials, after consulting with State and 

NED officials, have determined that NED funds provided from U.S. 

government sources cannot be used by NED grantees to meet required 

cost-share contributions under USAID regulations. USAID officials said 

 4222 CFR 226.23 states that cost sharing must meet specific guidelines. For example, 

contributions must be verifiable through recipient records, necessary and reasonable for 

proper and efficient accomplishment of project or program objectives, not paid by the

government under another award (except where authorized by federal statute), and

provided for in the approved budget. 

43This issue arises because NED is a private, nonprofit corporation established by statute 

that receives federal funds to carry out its activities. Under the NED statute, State is 

required to make an annual grant to NED out of specific appropriations to carry out the 

purposes of the NED statute. NED is prohibited from carrying out activities directly and is

instead required to fund private-sector initiatives furthering this purpose. Therefore, NED 

makes grants to private NGOs, which may at the same time be USAID grantees. 

Page 33 GAO-07-147 Cuba Democracy Aid
that they will address the proper use of NED grant funds provided from 

U.S. government sources in relation to existing and future USAID grants. 

One important role for a grantor program office is the training and guiding 

of program grantees, as discussed in the 2005 Guide to Opportunities for 

Improving Grant Accountability. However, USAID does not provide 

formal grant management training to help grantees understand the 

regulations, policies, and procedures governing grant funds.44 According to 

USAID officials, limited English proficiency has created additional 

challenges for some of the smaller grantees. The Cuba program director 

stated that he had wanted to provide formal training to certain grantees, 

but was concerned about the grantee reaction to creating training 

requirements for some, but not all, grantees. In technical comments on this 

report, USAID officials said that although grantees are responsible for 

understanding and complying with grant provisions and federal laws and 

regulations, USAID will consider providing Spanish language technical 

assistance to grantees to build NGO capacity for financial management. 

USAID also is pursuing providing grant and regulation information to 

grantees in Spanish. 

USAID Does Not Provide 

Adequate Training to Grantees 

USAID Does Not Appear to 

Routinely Follow 

Prescribed Closeout 

Processes 

Closeout processes can be used for identifying problems with grantee 

financial management and program operations, accounting for any real 

and personal property acquired with federal funds, making upward or 

downward adjustments to the federal share of costs, and receiving refunds

for unobligated funds that the grantee is not authorized to retain. USAID 

did not provide us with evidence that they routinely performed closeout 

 44The guide states that agency staff and grantees need sufficient training so that they can 

understand the regulations, polices, and procedures governing grant funds. The guide

further states that it is essential that grantees receive such training, particularly small 

entities unfamiliar with all of the regulations and policies. See Grant Accountability 

Project, Domestic Working Group, Guide to Opportunities for Improving Grant 

Accountability (Oct. 2005). 

Page 34 GAO-07-147 Cuba Democracy Aid
processes for some agreements.45 Currently, USAID guidance states that if 

a U.S. grantee requires a closeout audit, the Office of Acquisitions and 

Assistance must include a closeout audit request in the next regularly 

scheduled audit of the organization. In technical comments, USAID 

officials said that such audit requests are no longer made because the 

agency uses a database system to track whether grantees required to have

closeout audits receive one in accordance with agency policies and 

procedures. The Office of Acquisitions and Assistance recognizes that the 

current written policy regarding closeout procedures is outdated and is 

working to update it. 

USAID’s Weaknesses 

Contributed to 

Deficiencies Observed at 

Three Grantees 

During our limited reviews, we identified fundamental internal control 

weaknesses at 3 of the 10 grantees that most likely would have been 

identified had USAID followed up on weaknesses identified by preaward 

reviews. In addition, the lack of adequate oversight and monitoring by 

USAID’s program office allowed for questionable expenditures by three 

grantees to go undetected. Table 7 summarizes the internal control 

weaknesses we observed at these grantees. 

 45According to USAID officials, agency policy for closeout reviews of U.S.-based grantees

depends on whether the grantees are subject to the Single Audit Act. For grantees subject 

to this act, USAID verifies that they file an A-133 report before closing out that grant. For 

grantees not subject to this act, the Office of Acquisition and Assistance reviews the project 

file and consults with the agreement officer and cognizant technical officer to determine 

whether a particular grantee should receive an audit. Factors considered in making this

determination include whether there have been performance concerns and the benefits and 

costs of an audit. USAID guidance instructs agreement officers to “leave open” all grants 

with open (unresolved) audit recommendations. 

Page 35 GAO-07-147 Cuba Democracy Aid
Table 7: Internal Control Standard Deficiencies Observed at Three Grantees, March–April 2006

Grantee A Grantee B Grantee C 

Control environment 

• A poor “tone at the top” and attitude by 

grantee management toward

maintaining adequate financial and 

program records. 

• Grantee management lacks knowledge 

that commingling funds was not 

authorized under the program. 

• Grantee management lacks 

understanding of the requirements in the 

grant agreement. 

• Grantee management lacks 

understanding of the requirements in 

the grant agreement. 

• Management indicated that they were

selling some inventory items, primarily 

books meant for distribution in the 

program, to raise additional revenue. 

Control activities 

• Significant commingling of funds 

between the Executive Director’s 

personal bank account, the USAID grant 

account, and the private donations 

account. 

• Lack of bank reconciliations and 

adequate records to support 

expenditures. 

• Lack of documentation to determine 

compliance with cost-sharing 

requirements detailed in grant

agreement. 

• Recording of time charges that do not 

appear to be logical or correct. 

• Lack of accounting records to support 

expenditures. For example, grantee 

could not produce expense reports or 

detailed listings of expenses for periods 

prior to February 2005. 

• Questionable travel expenses lack 

adequate documentation. 

• Lack of documentation to determine 

compliance with cost-sharing 

requirements detailed in grant

agreement. 

• Lack of accounting records to support 

expenditures. For example, grantee 

couldn’t provide time reports to justify 

salary expenses for some employees. 

• Questionable expenses paid to family 

member of grantee manager.

• Hundreds of dollars in petty cash was 

observed at the grantee’s office that 

was not controlled or properly secured. 

Source: GAO analysis of USAID and grantee records. 

The 3 grantees discussed in table 7 accounted for about 9 percent ($4.7 

million) of the awards received by the 10 grantees we reviewed.46 Two of 

the 3 grantees detailed above did not maintain adequate records of the 

amount and type of assistance or materials sent to Cuba, the methods and 

dates assistance was sent or transmitted, or efforts to verify that 

assistance was received. Additionally, these two grantees had not 

established systematic procedures for gathering, documenting, and 

reporting this information.47

 46The 10 grantees we reviewed had 13 USAID Cuba awards totaling almost $50 million, and 

one State DRL Cuba award of about $2.3 million. We calculated percentages using the total 

amount for 14 awards. 

47Nevertheless, some dissidents in Havana said that they had received some assistance 

from one of these grantees. Additionally, the USAID Cuba program director was able to 

confirm indirectly that some of this grantee’s shipments had reached Cuba. 

Page 36 GAO-07-147 Cuba Democracy Aid
For these three grantees, we identified numerous questionable 

transactions and expenditures that USAID officials likely would have

identified had they performed adequate oversight reviews. For example, 

two grantees had inadequate support for checks written to key officials of 

that organization. In addition, one of these two grantees could not justify 

some purchases made with USAID funds, including a gas chainsaw, 

computer gaming equipment and software (including Nintendo Gameboys 

and Sony Playstations), a mountain bike, leather coats, cashmere 

sweaters, crab meat, and Godiva chocolates. According to this grantee’s

proposal, USAID funds were to be used to provide humanitarian 

assistance and information to dissidents and their families. Subsequent to 

our questions regarding these purchases, the grantee’s executive director 

wrote us that he intended to submit corrections to USAID for some of 

these charges. 

In conjunction with the USAID Assistant Administrator for Latin America 

and the Caribbean and the Cuba program director, we referred the 

problems we identified at the three grantees discussed in table 7 to the 

USAID Office of Inspector General. An investigator said that the Office of

Inspector General was investigating these three grantees. 

Based on our limited review, 7 of the 10 grantees appear to have 

established systematic procedures for documenting, tracking, and 

reporting on the use of grant funds. These 7 grantees accounted for about

91 percent ($47.2 million) of the awards received by the 10 organizations 

that we reviewed (see footnote 44). The operating procedures at some of 

these 7 grantees are likely the result of pre-existing internal control 

operating characteristics (and do not reflect USAID monitoring and 

oversight). These grantees also had detailed records of their respective

activities. For example, one grantee maintained an inventory and signed 

receipts for humanitarian shipments to Cuba, and dated, handwritten 

notes of telephone calls or other communications to verify receipt of 

shipments. Another grantee maintained detailed records of the methods 

used, quantities of printed material transmitted, and copies of

communications as evidence of receipt. 

Agencies and grantees face an operating environment in Cuba that 

presents monitoring and evaluation challenges. USAID has conducted 

some program evaluation, but has not routinely collected program 

outcome information from its grantees. Instead, USAID and its grantees 

have largely focused on measuring and reporting program activities. In 

2005–2006, however, USAID began to focus on collecting better 

information about the results of U.S. democracy assistance. 

Some Data Available 

about the Impact of 

U.S. Assistance 

Page 37 GAO-07-147 Cuba Democracy Aid
The operating environment in Cuba poses a range of challenges to 

monitoring and evaluating U.S.-funded democracy assistance. Challenges

include: 

Operating Environment 

Presents Monitoring and 

Evaluation Challenges 

• The lack of USAID presence in Cuba and the inability of the USAID staff to 

travel there, because the Cuban government actively opposes U.S. 

democracy assistance. 

• The lack of operational coordination and routine communication links 

between State and USAID (as previously discussed). 

• Grantee reluctance to share information with other grantees because of 

concerns about potential Cuban government infiltration of grantee 

operations. 

• USAID and grantee concerns that sensitive agency records could be 

disclosed in response to Freedom of Information Act requests (as 

previously discussed). 

• U.S. officials and grantees cited potential danger to dissidents and activists 

in Cuba if sensitive information was released or disclosed. 

The USAID Cuba program director said that in this environment, strict 

cause and effect relationships between the USAID program and changes in

Cuban civil society are difficult to establish and document.48 Compared 

with activities in Cuba, off-island activities, such as those at U.S. 

universities, are generally easier to carry out, monitor, and evaluate, 

according to USAID officials. However, off-island activities have a lessevident and slower impact on Cuban society and politics. 

 48Democracy assistance in authoritarian or totalitarian states such as Cuba is often 

designed to lay the groundwork for future transitions and, as such, the impact of that 

assistance can be difficult to measure, particularly at an early stage. One democracy expert 

has written that “many of the most important results of democracy programs are 

psychological, moral, subjective, indirect and time-delayed.” Thomas Carothers, Aiding 

Democracy Abroad (Carnegie Endowment for International Peace: Washington, D.C.: 1999, 

p. 340). 

Page 38 GAO-07-147 Cuba Democracy Aid
USAID’s Cuba program office and its grantees have conducted some 

evaluations of U.S. assistance, but these studies have been limited in 

number and scope. USAID officials also have informally interviewed 

Cuban dissidents and émigrés about the receipt and effectiveness of U.S. 

assistance, but they did not systematically document, compile, or analyze 

the results of these interviews. Although USINT has assessed some 

independent libraries in Cuba, USAID has not received its reports. 

USAID and its grantees have conducted some evaluations of U.S. 

democracy assistance for Cuba (see table 8). Generally, however, these

efforts have not reflected a systematic approach to program evaluation, 

although some benefits resulted. 

USAID and Grantees Have 

Conducted Some 

Evaluations of Cuba 

Assistance 

USAID and Grantee 

Evaluations of Cuba Assistance 

Table 8: Evaluations of USAID’s Cuba Democracy Assistance, 1996–2005 

Evaluation/study Evaluation author, purpose, and findings Our comments and observations

Grantee evaluation of 

independent NGOs

(2004–2005) 

One year after increased repression in Cuba, a grantee 

conducted an evaluation of some independent NGOs in 

Cuba at USAID’s request. 

The study methodology included fieldwork in Cuba by 

subject matter experts and telephone interviews and 

analysis. 

The study: 

• identified challenges—such as an out-dated leadership 

structure and “brain drain” caused by emigration; 

• identified best practices and lessons learned; and 

• included several recommendations to improve program 

implementation.

USAID and grantee officials stated that they 

benefited from this evaluation and that it 

provided otherwise unavailable information. 

External evaluation of 

USAID’s Cuba program 

(2000) 

USAID contracted with PricewaterhouseCoopers to assess 

the effectiveness of its program, assess grantee 

compliance with the agreement terms and conditions, and 

recommend program improvements. 

The study methodology included reviewing grantee records 

and interviews with grantee representatives, U.S. officials, 

academics, and other experts. The study did not include 

fieldwork in Cuba. 

The study found USAID’s administration of the Cuba 

program to be generally satisfactory. For monitoring and 

evaluation, the study noted, however, that baseline data 

and targets to measure program performance were drawn 

from limited data sources and had limited utility for 

monitoring and evaluating the activities of some grantees. 

The study recommended increasing program staff, 

adopting a research agenda to guide planning and inform 

program activities, expanding grantee information sharing 

and cooperation, and improving measurement of program 

performance. 

USAID implemented some of the study’s 

recommendations but did not implement 

others, such as the recommendation to 

improve program performance (results) 

measures.a

Page 39 GAO-07-147 Cuba Democracy Aid
Evaluation/study Evaluation author, purpose, and findings Our comments and observations

Survey of recent Cuban 

emigrants 

(1999) 

Survey of recent Cuban emigrants to establish a baseline 

on knowledge, attitudes, and access to accurate 

information about democracy, human rights, and free 

enterprise. 

The Cuba program plans to fund a follow-up 

survey to measure changes in knowledge, 

attitudes, and access to information since the 

1999 survey. 

Focus groups with 

Cuban émigrés

(2003–2006) 

Two grantees conducted focus groups with recent Cuban 

émigrés to estimate the audience for, and improve the 

content and effectiveness of, a pro-democracy newsletter 

published and distributed in Cuba by one of the grantees. 

The grantees documented, compiled, and analyzed the 

results of these groups. 

The USAID Cuba program director has 

participated in some of these groups and has

reviewed some of the resulting analyses. 

Grantee end-of-project 

reports 

(various years)

USAID grants and cooperative agreements require 

grantees to submit final reports containing an evaluation of 

the program’s accomplishments and failings, including 

comments and recommendations for potential future work.

In our review of USAID files maintained for 

each grantee, we found few end-of-project 

reports. 

Because agreements did not require 

intermediate program evaluations, USAID’s 

frequent use of agreement extensions has 

allowed many projects to continue for several 

years without evaluation.b

Source: GAO analysis of USAID and grantee records. 

a

In technical comments on this report, USAID officials said that, following the evaluation, the Cuba 

program relied on an annual census of the Cuban opposition’s on-island actions as a proxy indicator 

for assessing the performance of USAID programs to help develop civil society in Cuba (see our 

discussion of this measure below).

b

In technical comments on this report, USAID officials said that grantee proposals requesting 

additional funding include lessons learned and other information normally found in an end-of-project 

report. The interagency committee reviewing the proposals uses this and other information to 

evaluate grantee performance. 

The USAID program director also has conducted a number of informal 

interviews with Cuban dissidents and members of independent Cuban 

NGOs able to travel outside Cuba. Although limited by Cuban government

controls on travel, these opportunities provided USAID with some ability 

to verify the receipt and impact of grantee assistance directly, according to

USAID officials. For example, the program director was able to verify that

some dissidents had received, and continued to use, computers shipped to 

the island. In other cases, USAID has relied on USINT reporting to verify 

receipt of such assistance. However, these interviews and discussions 

were conducted on a sporadic basis, and USAID officials did not 

systematically document, compile, or analyze the results. 

USAID’s Informal Interviews 

with Cuban Dissidents 

USINT officials have done some monitoring of assistance (books, 

equipment, and supplies) distributed to about 100 independent NGOs in 

Havana. (USINT employees distributed this assistance, which it and 

USAID grantees had purchased.) As we observed during our fieldwork, 

USINT employees kept records of unannounced inspection visits to these 

USINT Assessments of

Independent NGOs in Cuba 

Page 40 GAO-07-147 Cuba Democracy Aid
organizations and submitted summary reports to USINT officials. Based on 

these reports, USINT officials have recommended increases or decreases

in the level and type of assistance provided to these NGOs. Although there 

have been documented losses at some of these organizations, USINT 

officials said such losses were unavoidable in Cuba and that their policy is 

to continue providing some limited assistance to these NGOs. As 

discussed previously, however, USAID has not received these reports. 

USAID and Grantees Have 

Focused on Measuring and 

Reporting Program 

Activities

USAID and its grantees have not routinely collected and reported data and 

other information about the results or impact of the democracy assistance 

they have provided. USAID’s reports have focused primarily on measures 

of program activities. The Cuba program office’s accomplishment reports, 

updated on a monthly basis, consolidate quantitative data about activities 

and related information submitted quarterly by grantees, such as the 

number of books, newsletters, and other informational materials sent to 

the island; the number of reports published by Cuban independent 

journalists; and instances where the international community denounced 

Cuban government human rights violations. The Cuba program’s annual 

operational plan takes a similar approach. USAID officials said that data

about shipments of books, newsletters, and other informational materials 

provide a measure of the flow of information to Cuba. The officials also 

said that data about the number of independent journalists published 

outside Cuba on the Internet (or in hard copy) provide a measure of the 

flow of information from Cuba. However, these reports and data do not 

provide an assessment of the impact or contribution of these activities in 

the context of helping to build civil society in Cuba (part of the USAID 

Cuba program’s strategic objective) or the effectiveness of U.S. assistance 

in achieving broader U.S. democracy goals and objectives for Cuba.49

In addition to measures of program activities, USAID officials point to the 

total number of nonviolent acts of civil resistance in Cuba, as reported in 

annual Steps to Freedom reports,50 as a proxy indicator for measuring the 

 49One difficulty in assessing program impact is that USAID has not identified intermediate 

outcomes for these objectives. Our prior work suggests that identifying short- , 

intermediate-, and long-term outcomes can help agencies evaluate program results, as 

required by OMB. For example, see GAO, Program Evaluation: Strategies for Assessing 

How Information Dissemination Contributes to Agency Goals, GAO-02-923 (Washington,

D.C.: Sept. 30, 2002). 

50See, for example, Cuban Democratic Directorate and Center for the Study of a National 

Option, Steps to Freedom 2004: A Comparative Analysis of Civil Resistance in Cuba 

from February 2004 through January 2005 (Hialeah, Florida: 2005). 

Page 41 GAO-07-147 Cuba Democracy Aid
positive impact of U.S. democracy assistance. Rich in detail about Cuba’s 

dissidents, the reports show that total nonviolent acts of civil resistance 

increased from about 600 acts in 2001 to about 1,800 in 2004. However, the 

reports show that, between 2002 and 2004, the number of less intense 

nonviolent acts of civil resistance increased while the number of more 

intense acts declined.51 In commenting on a draft of our report, State 

officials said that this decline coincided with the Cuban government’s 2003 

crackdown on dissidents. Annual reports on human rights conditions in 

Cuba prepared by Amnesty International, Human Rights Watch, and State 

covering the same period (2001–2004) portray a more complex and 

ambiguous human rights situation than the generally positive trend shown 

by the indicator in the Steps to Freedom reports. 

Grantees’ quarterly reports to USAID are the main vehicle for reporting 

performance information. The quarterly reports submitted by 10 grantees 

in 2005 consistently provided data about program activities. However, 

these reports generally did not provide a focused analysis of program 

accomplishments. Only two organizations consistently identified program 

results as part of their quarterly reporting. For example, one grantee’s 

reports discussed the results of assistance activities in the context of the 

broader Cuban pro-democracy movement and short- and long-term civil 

society goals. USAID officials said that they had repeatedly emphasized to 

grantees the importance of including information about project results in 

their reporting. The USAID Assistant Administrator for Latin America and 

the Caribbean and the Cuba program director said that the director had

discussed this topic at grantee meetings held several times each year. 

 51The Steps to Freedom reports discuss three levels of nonviolent acts of civil resistance 

that range from less to more intense: (1) protest and persuasion, including organized or

spontaneous public demonstrations of discontent or against specific injustices; (2) 

intervention, including creating alternative venues of expression and association, such as 

forming independent libraries or labor unions; and (3) non-cooperation, which implies a 

general withdrawal of public support for a government, including refusal to participate in

political activities. The 2004 report states that the number of acts of intervention declined

from 389 in 2002 to 100 in 2004. Comparing the number of acts of non-cooperation reported

in the 2003 and 2004 reports shows a decline in this category from 37 acts in 2002 to 4 acts 

in 2004. 

Page 42 GAO-07-147 Cuba Democracy Aid
Since 2005, USAID’s Cuba program has taken several steps to improve 

data collection and its communication with grantees. These include: 

• Increasing staff expertise and meeting more regularly with grantees. In 

2005, a staff member with experience in grant management and 

performance evaluation joined USAID’s Cuba office; this staff member 

developed, and began using, a set of structured questions to gather and 

record grantee performance information. This new staff member also 

began to meet and regularly communicate with grantees. However, the 

staff member said that the office’s small number of staff makes effective 

program monitoring and evaluation challenging.52

USAID Program Office Has 

Started to Focus on 

Collecting Better 

Information 

• Improving information in grantees’ quarterly reports. The Cuba program 

acknowledged that quarterly reports submitted by grantees have not 

included important information about program activities and results. 

Several grantees said that they were unsure of what evaluation-related 

information to include in reports and had received relatively little 

guidance from USAID until recently. According to USAID, smaller grantees

have experienced greater challenges in this regard because of their lack of

experience working with USAID and because of their limited English 

proficiency. USAID officials acknowledged grantees had not been 

provided formal training in program evaluation. 

In July 2006, USAID’s Cuba program office e-mailed grantees a more 

detailed description of the types of data and other information to include 

in their quarterly reports, as part of a series of e-mails to remind grantees

of USAID laws, regulations, and policies. USAID staff said that they are 

working with grantees to improve the quality of their quarterly reports and 

that they intend to issue additional written guidance. 

• Requiring intermediate program evaluations. In 2006, recognizing that 

the frequent use of agreement modifications and extensions had 

postponed end-of-project evaluations for many grantees, the Cuba 

program office decided to include terms in future grants and cooperative 

agreements requiring grantees to submit interim evaluations when 

requesting significant project modifications or extensions. 

 52The 2000 PricewaterhouseCoopers evaluation report concluded that the unusual nature of 

the Cuba program created a heavy workload for USAID’s Cuba program office and that the 

office was understaffed. 

Page 43 GAO-07-147 Cuba Democracy Aid
In the context of recent recommendations to increase funding for 

democracy assistance in Cuba, we conclude that the U.S. government’s 

efforts to support democratic political change face several significant 

challenges. Some of these challenges stem from the difficult operating 

environment in Cuba, while others are the result of weaknesses in the 

managerial oversight the program has received to date. Recently, however, 

USAID has taken some steps to establish improved policies and reporting 

procedures. 

Effectively delivering democracy-related assistance to Cuba will require a 

number of improvements, including better communication between State 

and USAID regarding day-to-day activities, particularly in Cuba. In 

addition, a number of the basic elements required for effective grant 

management and oversight need to be strengthened. These include 

ensuring that effective preaward reviews are performed, strengthening 

internal controls at the grantee level, and identifying and monitoring atrisk grantees. Further, agency officials need to inform and, as needed, 

train grantees about their shared responsibilities in collecting information 

that will permit better monitoring and evaluation of program outcomes. 

Ultimately, better program oversight can help to assure that resources are 

responsibly and effectively utilized and grantees are in compliance with 

applicable laws and regulations. 

We recommend that the Secretary of State and the USAID Administrator 

work jointly to improve communication among State bureaus in 

Washington, D.C.; USINT in Cuba; and USAID offices responsible for 

implementing U.S. democracy assistance, recognizing that USINT has 

limited resources but a crucial role in providing and monitoring 

democracy assistance. 

We also recommend that the USAID Administrator direct the appropriate 

bureaus and offices to improve management of grants related to Cuba by

taking the following actions: 

Conclusions 

Recommendations for 

Executive Action 

• Improving the timeliness of preaward reviews to ensure they are 

completed prior to the awarding of funds. 

• Improving the timeliness and scope of follow-up procedures to assist in 

tracking and resolving issues identified during the preaward reviews. 

Page 44 GAO-07-147 Cuba Democracy Aid
• Requiring that grantees establish and maintain adequate internal control 

frameworks, including developing approved implementation plans for the

grants. 

• Providing grantees specific guidance on permitted types of humanitarian 

assistance and cost-sharing, and ensuring that USAID staff monitors 

grantee expenditures for these items. 

• Developing and implementing a formal and structured approach to 

conducting site visits and other grant monitoring activities, and utilizing 

these activities to provide grantees with guidance and monitoring. 

We received comments from State and USAID, which are reprinted in 

appendixes II and III, respectively. State and USAID appreciated the 

professionalism with which we conducted our review and were gratified 

that we were able to report that dissidents in Cuba appreciated U.S. 

democracy assistance, and found this assistance to be useful in their work. 

In response to our recommendation, State said that, consistent with the 

Secretary of State’s recent foreign assistance reforms, it was taking steps 

to improve interagency communication and coordination for Cuba 

democracy assistance. These steps included providing USAID officials 

regular access to classified communications with USINT in Havana and 

State, and implementing regular meetings between DRL, the Bureau of 

Western Hemisphere Affairs’ Office of Cuban Affairs, the Office of the 

Cuba Transition Coordinator, and USAID. State also commented that—

within the constraints imposed by implementing a democracy-building

program in Cuba—DRL and the Office of Cuban Affairs would work 

closely with all grantees to identify creative ways to document the impact 

of Cuba programs. These new methods of documentation would attempt 

to measure impact beyond direct outputs (e.g., items delivered or persons 

trained). 

USAID said it was taking actions to improve its performance in managing,

monitoring, and evaluating democracy assistance for Cuba. These actions 

would include better documentation of USAID grantee monitoring, 

improved interagency communications, and a review of all aspects of the

USAID procurement system as it relates to the Cuba program. Subsequent 

to submitting its written comments, USAID offered additional comments 

regarding our recommendations. USAID concurred with our first, second, 

third, and fifth recommendations, as well as with the part of our fourth 

recommendation that USAID should ensure that its staff monitors grantee 

expenditures. USAID concurred, in part, with our recommendation to 

Agency Comments 

and Our Evaluation 

Page 45 GAO-07-147 Cuba Democracy Aid
provide grantees specific guidance on permitted types of humanitarian 

assistance and cost-sharing. To avoid potentially making grant documents 

unwieldy and difficult to use, USAID plans to continue to reference 

additional regulatory material regarding allowable costs and other matters 

in its grants. However, USAID will review its standard grant provisions to 

ensure that grantees are provided clear guidance regarding how to access 

referenced regulatory materials. USAID also is considering providing 

technical assistance for grants management and grant and regulatory 

documents to Cuba program grantees in Spanish. 

State and USAID provided technical comments on a draft of this report, 

which we have incorporated where appropriate. In its technical 

comments, USAID raised some issues regarding some of our findings. 

However, we have worked with agency officials to resolve or clarify these

matters. 

We will send copies of this report to the Secretary of State, the USAID 

Administrator, appropriate congressional committees, and other interested 

parties. Copies will be made available to others upon request. In addition, 

this report will be made available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 46 GAO-07-147 Cuba Democracy Aid
If you or your staff have any questions about this report, please contact 

David Gootnick at (202) 512-4128 or gootnickd@gao.gov. Contact points 

for our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix IV.

David Gootnick, Director

International Affairs and Trade 

Jeanette M. Franzel, Director 

Financial Management and Assurance 

Page 47 GAO-07-147 Cuba Democracy Aid
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

This report examines (1) the roles and objectives of the agencies 

implementing U.S. democracy assistance targeted at Cuba and the 

characteristics and selection of the grantees1

 receiving Department of 

State (State) and U.S. Agency for International Development (USAID) 

awards; (2) the types, amounts, beneficiaries, and methods used to deliver 

assistance for selected grantees in 2005;2

 (3) USAID’s monitoring and 

oversight of these grantees; and (4) the availability of data to evaluate

whether U.S. assistance has achieved its goals. 

During our review, we conducted fieldwork at USAID, State, and the 

Departments of Treasury (Treasury) and Commerce (Commerce) in 

Washington, D.C.; we also conducted work at the offices of selected 

grantees in Washington, D.C., and Miami, Florida. At these locations, we 

analyzed key records and interviewed agency officials and grantees to 

obtain an understanding of the processes used to select grantees, monitor 

their performance, assess the disbursement of funds, and evaluate project

results. We also discussed Cuba democracy assistance with officials at the 

National Endowment for Democracy and the Council on Foreign Relations 

in Washington, D.C. 

We conducted fieldwork at the U.S. Interests Section (USINT) in Havana,

Cuba, from late June–early July 2006, where we interviewed relevant U.S. 

government officials and observed their activities, such as sorting, 

delivering, and monitoring assistance. We interviewed several leading

dissidents and human rights activists—including independent librarians 

and journalists—and family members of political prisoners. We also 

interviewed foreign-embassy officials. 

We conducted our work from August 2005 through September 2006 in 

accordance with generally accepted government auditing standards. 

To identify the roles and objectives of the implementing agencies, we 

analyzed (1) U.S. laws authorizing democracy assistance to Cuba and 

related records, such as agency officials’ statements and committee 

reports; (2) State and USAID policy and strategy records, such as agency

strategic and performance plans, budget requests, and bureau and mission 

performance plans; and (3) the two reports of the Commission for 

 1

This report refers to nongovernmental organizations receiving either grant or cooperative 

agreements as grantees. 

2

Unless otherwise noted, all annual references are to the U.S. fiscal year (Oct. 1–Sept. 30).

Page 48 GAO-07-147 Cuba Democracy Aid
Appendix I: Objectives, Scope, and 

Methodology 

Assistance to a Free Cuba and related records. We also interviewed 

USAID, Treasury, Commerce, and State officials (including State’s Cuba 

Transition Coordinator) about the objectives and roles of their agencies in

providing assistance to Cuba. 

To examine the characteristics and selection of the grantees that received 

State or USAID awards in 1996–2005, we reviewed key grantee and agency 

records including annual reports, proposals, and Web sites for the 34 

organizations that received State or USAID awards during that period; and 

the grants and cooperative agreements, agreement modifications, and 

related agency records for the 44 awards State and USAID made during 

that period. We analyzed this information to determine (1) the types and 

location of organizations that received awards; (2) whether these 

organizations had previously worked on democracy promotion activities; 

(3) the methods State and USAID used to identify and evaluate assistance 

proposals; and (4) selected characteristics of the awards, such as their 

initial amount and length, cost-sharing requirements, and any postaward 

modifications. 

To identify the types and amounts of assistance provided by grantees, 

beneficiaries of this assistance, and grantees’ delivery methods, we 

selected a judgmental sample of 10 grantees with active awards in 2005

(see table 9). These 10 grantees were implementing 14 grants or

cooperative agreements in 20053

 with a total estimated budget of nearly 

$52 million. In selecting the grantees, we considered a range of factors to 

ensure our sample included a mix of large, medium, and small awards; 

included a mix of types of nongovernmental organizations (NGO); and 

covered the range of U.S. democracy assistance targeted at Cuba. We 

focused our detailed analysis on USAID’s grantees and agreements 

because State’s grants were not awarded until mid-2005. We also 

considered the length of time grantees had been providing U.S. democracy

assistance for Cuba to ensure grantees had several years experience 

working with USAID.4

 The resulting sample accounts for over 76 percent 

of the State and USAID awards active in 2005 for U.S. democracy 

assistance targeted at Cuba. 

 3

The 14 awards consist of 1 State grant of $2.3 million; and 1 USAID grant and 12 USAID 

cooperative agreements totaling $49.6 million. 

4

At the time we conducted our site visits, the 10 grantees had received USAID funding for 

Cuba democracy assistance for between 2.6 and 8.3 years, with an average of 5.7 years. 

Page 49 GAO-07-147 Cuba Democracy Aid
Appendix I: Objectives, Scope, and 

Methodology 

Table 9: State and USAID Grantees and Awards that GAO Reviewed

Grants and cooperative agreements 

Grantee Location Number of awards Dollars (in millions)

a

Grantee 1 Washington, DC 2 $12.28

Grantee 2 Miami, FL 1 10.95

Grantee 3 Washington, DC 2b10.09

Grantee 4 Miami, FL 1 4.94

Grantee 5 Washington, DC 2 4.67

Grantee 6 Miami, FL 1 3.05

Grantee 7 Miami, FL 1 2.32

Grantee 8 Miami, FL 1 2.02

Grantee 9 Miami, FL 2 1.21

Grantee 10 Miami, FL 1 0.36

Total 14 $51.89

Source: GAO analysis of State and USAID records. These grants and cooperative agreements were active in fiscal year 2005. 

a

Reflects agreement modifications as of 2005. 

b

Grantee had one State and one USAID grant. 

To identify these organizations’ program objectives, we analyzed grantee 

proposals, grants or cooperative agreements, internal authorization 

memorandums, and modification of assistance forms. We obtained 

grantees’ quarterly narrative and financial reports to USAID to identify 

grantees’ reported activities and to quantify the types and amounts of 

assistance these grantees reported sending to Cuba. To corroborate these

data and to develop an understanding of grantees’ delivery methods, we 

interviewed representatives of these organizations in Washington, D.C., 

and Miami and, when possible, observed their activities. We also reviewed 

internal documents provided by these grantees, including procedures 

manuals, tracking databases and reports, and other records. 

We developed an electronic database to track and analyze selected terms 

of the agreements in our sample, including objectives, award amounts and 

dates, cost-sharing amounts, modifications, sub-grant agreements, and 

reported activities. To test the general reliability of quantities of assistance 

recorded for our sample, we compared these data with other documents 

provided by grantees (e.g., shipment logs, tracking databases, and internal 

reports), documents submitted by USAID, and data provided by USINT. 

We also used interviews with grantee representatives to corroborate these 

data. Based on these general comparisons, we determined grantees’ 

records were sufficiently reliable for the purposes of this report. 

Page 50 GAO-07-147 Cuba Democracy Aid
Appendix I: Objectives, Scope, and 

Methodology 

To identify the types and amounts of assistance provided by grantees in 

our sample, we used our electronic database to track and summarize 

grantees’ individual activities, which we then used to categorize assistance 

types and amounts. In addition, we interviewed representatives of the 

grantees in our sample and select beneficiaries in Havana about their 

experiences. 

To assess USAID’s management and internal control for monitoring 

grantees, we reviewed grants and cooperative agreements, interviewed 

agency officials and select grantees, reviewed USAID and grantee policies 

and procedure manuals, performed walk-throughs of grantee 

disbursement processes, and reviewed grantee invoices and supporting 

documentation. For 10 grantees, we reviewed the internal controls and 

related residual fiscal accountability risk. Based on our initial reviews, we 

performed additional expenditure testing for 3 grantees that appeared to 

have poor control environments. To assess grantees’ potential fiscal 

accountability residual risk, we reviewed the adequacy of their internal 

controls according to the criteria contained in our Standards for Internal 

Control in the Federal Government.

5

 Our procedures did not specifically 

address whether grantees were complying with federal laws and 

regulations. However, grantees expending more than $500,000 in federal 

funds annually are subject to the Single Audit Act. Under this act, these 

grantees must receive an annual audit, which includes determining 

whether the grantee has complied with laws, regulations, and the 

provisions of contracts or grant agreements that may have a direct and 

material effect on each of its major programs. We focused our detailed

analysis on USAID’s grant oversight and did not perform similar detailed

analysis of State’s grant oversight because State’s grants were not awarded 

until mid-2005. 

We performed a detailed review of 5 of 14 grant agreements in our sample. 

We selected these agreements because they represented the range of Cuba 

program objectives outlined and were signed over an 8-year period 

between 1997 and 2005. A USAID official confirmed that all grant and 

cooperative agreements use standard language from document-generating 

software. The standard language is modified periodically under the 

direction of the USAID’s Office of Acquisition and Assistance. 

 5

GAO/AIMD-0021.3.1 (Washington, D.C.: Nov. 1999). 

Page 51 GAO-07-147 Cuba Democracy Aid
Appendix I: Objectives, Scope, and 

Methodology 

To assess the monitoring and reporting of program performance 

information evaluation, we examined USAID, Office of Management and 

Budget, and other federal government policies and guidance. We also 

reviewed our previous reports and expert panel reports on grant 

accountability to identify lessons learned. To better understand the 

challenges of evaluating democracy assistance, we reviewed relevant 

literature. We also analyzed USAID Cuba program documents, grantee 

agreements, and modifications to identify guidance provided on reporting 

performance data. We also analyzed grantee quarterly reports to identify 

how they reported program achievements. We also assessed evaluations of 

U.S. assistance to Cuba, such as one grantee’s evaluation of some 

independent NGOs, the PricewaterhouseCoopers evaluation of the USAID 

Cuba program, and associated program documents. 

We interviewed USAID Cuba program officials concerning their current 

and past program evaluation practices; program grantees in Miami and 

Washington, D.C., to identify the instructions and feedback they have 

received concerning program reporting and evaluation; USINT officials 

concerning their role in monitoring and reporting program performance 

information; and beneficiaries in Cuba about their views of the 

effectiveness of the U.S. democracy assistance they had received. We

focused our detailed analysis on USAID’s program effectiveness because 

State’s grants were not awarded until mid-2005. 

Both State and USAID officials provided sensitivity reviews of a draft of 

this report, and we followed their direction in removing potentially 

sensitive or classified information. 

Page 52 GAO-07-147 Cuba Democracy Aid
Appendix II: Comments from the Department Appendix II: Comments from the Department of State 

of State 

Page 53 GAO-07-147 Cuba Democracy Aid
Appendix II: Comments from the Department 

of State 

Page 54 GAO-07-147 Cuba Democracy Aid
Appendix II: Comments from the Department 

of State 

Page 55 GAO-07-147 Cuba Democracy Aid
Appendix III: Comments from the U.S. Agency for International Development 

Page 56 GAO-07-147

Appendix III: Comments from the U.S. 

Agency for International Development 

Cuba Democracy Aid
Appendix III: Comments from the U.S. Agency for International Development 

Page 57 GAO-07-147 Cuba Democracy Aid
Appendix IV: 

A

GAO Contacts and Staff 

cknowledgments 

Page 58 GAO-07-147 

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

David Gootnick, (202) 512-3149 or gootnickd@gao.gov

Jeanette M. Franzel, (202) 512-9471 or franzelj@gao.gov

In addition to the contacts named above, Phillip Herr, Michael Rohrback, 

Bonnie Derby, Elizabeth Guran, Keith H. Kronin, Todd M. Anderson, Cara 

Bauer, Lynn Cothern, and Reid Lowe made key contributions to this 

report. Ernie Jackson, Lauren S. Fassler, and Arthur L. James, Jr., provided 

technical assistance. 

 Cuba Democracy Aid

GAO Contacts 

Staff 

Acknowledgments 

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