Beyond Assist a nce

The Help Com mission Repo rt on Fo reign Assistan ce Refo r m

Helping to Enhance the Livelihood of People

around the Globe
Beyond Assistance 

The HELP Commission Report on Foreign Assistance Reform 

Helping to Enhance the Livelihood of People around the Globe 

December 2007 

 
 

 

Members of the HELP Commission, and How They Voted 

The Commission approved the following report by a vote of 19 to 1. 

Commissioners Voting in the Affirmative: 

The Honorable Mary K. Bush, Chairman 

The Honorable Dr. Carol C. Adelman, Vice Chairman 

Leo Hindery, Jr., Vice Chairman 

Steven K. Berry, Esq 

Jerome F. Climer 

Dr. Nicholas N. Eberstadt 

Glenn E. Estess, Sr. 

Lynn C. Fritz 

Benjamin K. Homan 

The Honorable Walter H. Kansteiner III 

Thomas C. Kleine, Esq. 

William C. Lane 

C. Payne Lucas 

Dr. Martin L. LaVor 

The Honorable Robert H. Michel 

Eric G. Postel 

Gayle E. Smith 

David A. Williams 

Alonzo L. Fulgham, Representative of the USAID Administrator 

Commissioners Opposing: 

Dr. Jeffrey D. Sachs 
Congresswoman Jennifer Dunn, who wanted America to be known not just for its strength, 

but for its compassion, was an invaluable member of the HELP Commission for twenty 

months. Jennifer’s grace distinguished and defined her life; she honored our Commission 

with her friendship and her service; and our report is dedicated to her memory.

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Table of Contents 

EXECUTIVE SUMMARY .............................................................................................. 1

FINDINGS..............................................................................................................................................3

The world has changed and U.S. assistance programs have not kept pace...........................3

Foreign assistance alone is not sufficient to help developing countries achieve 

 long-term, sustainable economic growth.................................................................................4

Long-term economic growth and job creation contribute the most to sustainable 

 development................................................................................................................................4

We need a clear and common vision for development across and throughout both 

 branches of the United States Government. ........................................................................5

An integrated approach to our government’s development assistance is needed................5

We must play to our strengths and work with others...............................................................5

RECOMMENDATIONS: THE NEED FOR CHANGE .........................................................................5

Rewrite the Foreign Assistance Act.............................................................................................6

Do more to help developing countries build vibrant private sectors.....................................6

Create a new business model and engage new non-governmental partners. ........................6

Align America’s trade and development policies.......................................................................6

Strengthen the management capacity of our nation’s assistance agencies.............................7

Reorganize all U.S. international affairs functions.....................................................................7

Determine funding from the bottom up, based on the needs and commitment of 

 developing countries and on the national and security interests of the United States....8

CHAPTER 1: INTRODUCTION .................................................................................10

CHAPTER 2: APPLY A NEW INTEGRATED APPROACH 

 TO DEVELOPMENT .........................................................................15

2.1 SUPPORT TRADE AND INFRASTRUCTURE...............................................................................16

2.1-1 Offer Duty-Free, Quota-Free Access to More Countries............................................16

2.1-2 Consider the Adverse Effects of Agricultural Subsidies ..............................................18

2.1-3 Remove Physical Trade Barriers with Infrastructure ....................................................19

2.2 ENSURE COORDINATION BETWEEN SECURITY AND DEVELOPMENT.............................20

2.2-1 Be Prepared to Respond to Failed and Failing States...................................................21

2.2-2 Respond to the Increasing Role of the Department of Defense ................................21

2.3 EXPAND PUBLIC DIPLOMACY ..................................................................................................23

2.4 EXTEND THE INTEGRATED APPROACH TO THE LEGISLATIVE BRANCH AND INCLUDE 

PRIVATE STAKEHOLDERS................................................................................................................26

CHAPTER 3: FORGE A NEW EXECUTIVE/LEGISLATIVE 

 RELATIONSHIP ............................................................................... 28

3.1 REWRITE THE FOREIGN ASSISTANCE ACT ............................................................................28

3.2 RE-ENGAGE THE AUTHORIZING BODIES..............................................................................29

3.3 ADOPT COMMON PROCEDURES ..............................................................................................30

3.4 CONSOLIDATE, ELIMINATE, AND REALIGN THE LARGE NUMBER OF FOREIGN 

 ASSISTANCE ACCOUNTS .........................................................................................................31

3.5 CREATE TWO RAPID-RESPONSE FUNDS: A HUMANITARIAN CRISIS FUND AND A 

 TRANSITIONAL SECURITY CRISIS FUND.............................................................................32

3.6 IMPROVE EXECUTIVE/ LEGISLATIVE BUDGET JUSTIFICATION SUBMISSIONS ..............33

3.6-1 Improve Budget Processes................................................................................................34

CHAPTER 4: IMPROVE HUMAN RESOURCES; FIX THE PROCUREMENT 

 PROCESS............................................................................................ 36
 

4.1 INCREASE THE NUMBER OF U.S. DIRECT-HIRE EMPLOYEES............................................36

4.2 LENGTHEN OVERSEAS POSTINGS AND IMPROVE TRAINING............................................38

4.2-1 Support Change Management Techniques.....................................................................39

4.3 ELIMINATE THE REQUIREMENT FOR A SEPARATE OPERATING EXPENSE (OE)

 ACCOUNT ......................................................................................................................................40

4.4 REFORM PROCUREMENT AND GRANT FUNCTIONS.............................................................41

CHAPTER 5: CREATE A NEW BUSINESS MODEL FOR GROWTH TO 

 CAPITALIZE ON WHAT THE U.S. DOES BEST......................... 46

5.1 CORE PRINCIPLES OF THE NEW BUSINESS MODEL.............................................................46

5.1-1 Principle 1: Understand that Development Must Be Locally Led and Owned.......46

5.1-2 Principle 2: Acknowledge the Importance of Private Partners..................................47

5.1-3 Principle 3: Embrace Risk and Innovation....................................................................48

5.1-4 Principle 4: Increase Flexibility........................................................................................49

5.1-5 Principle 5: Reward Graduation ......................................................................................49

5.1-6 Principle 6: Focus on Programs that Will Lead to Economic Growth ....................50

5.1-7 Principle 7: Concentrate on Results and Improve Monitoring and Evaluation ......51

5.1-8 Principle 8: Support the Promotion of Democratic Principles and Recognize that 

Good Governance and Accountable Leaders Advance Development................................51

5.2 APPLYING OUR PRINCIPLES IN RECOMMENDATIONS .........................................................52

5.2-1 Create an Initiative to Support Small and Medium Enterprises..................................53

5.2-2 Create an Institute to Support Technology Research ...................................................54

5.2-3 Increase Local Purchases of Food Aid............................................................................55

5.2-4 Engage the American People in Development Partnerships.......................................56

5.2-5 Shore up Agricultural Development Programs..............................................................57

5.2-6 Encourage Education to Build Human Capital .............................................................60

CHAPTER 6: CHANGE THE STRUCTURE............................................................ 62

6.1 RECOMMENDATIONS APPLICABLE TO ANY STRUCTURE....................................................63

6.1-1 Reduce the Number of Agencies Responsible for Development...............................63

6.1-2 Rewrite the Foreign Assistance Act to Reflect Today’s World ...................................65

6.1-3 Improve Interagency Coordination .................................................................................65

6.1-4 Link Authority and Accountability ..................................................................................65

6.1-5 Create a New Structure for Foreign Assistance Activities ...........................................66

6.2 THE COMMISSION’S OBJECTIVES FOR STRUCTURE..............................................................67

6.3 OPTIONS FOR STRUCTURE ........................................................................................................67

6.3-1 The Department for International Development (DID): A New, Independent 

 Development Agency ......................................................................................................68

6.3-2 State Integration (SI): Folding U.S. Government Development Organizations 

 into the Department of State..........................................................................................72

6.3-3 Option Favored by the Majority — 

 The International Affairs Department (IAD): Elevating, Integrating, and 

 Operationalizing International Affairs for a New Era ...............................................75

6.4 IT IS TIME TO CHANGE..............................................................................................................82

CHAPTER 7: BASE FUNDING ON LONG-TERM STRATEGY............................ 84

7.1 RECOGNIZE AMERICA’S CURRENT COMMITMENT TO FOREIGN ASSISTANCE ..............84

7.2 BASE FUNDING ON NEEDS.......................................................................................................84

7.3 PROVIDE FUNDS BASED ON STRATEGY.................................................................................85

7.4 MAKE PROMISES WE CAN KEEP .............................................................................................86

7.5 CONSIDER GOVERNMENT CONTRIBUTIONS BEYOND ODA AND THE 

 IMPORTANCE OF PRIVATE GIVING ....................................................................................86
 

7.6 CREATE A UNIFIED POLICY, BUDGETING, AND EVALUATION SYSTEM .........................87

7.6-1 Step 1: Produce Country Development Estimates.......................................................88

7.6-2 Step 2: Determine Specific Development Assistance Goals ......................................89

7.6-3 Step 3: Improve Budget Formulation.............................................................................90

7.6-4 Step 4: Enhance Feedback through Continual Monitoring and Evaluation .............92

7.6-5 Step 5: Work Closely with Congress to Improve the Funding Process....................93

7.7 SPEND ENOUGH TO ACHIEVE AMERICA’S GOALS ..............................................................94

CHAPTER 8: REFORM IS NEEDED NOW.............................................................. 96

ENDNOTES ................................................................................................................100

APPENDIX 1: MEMBERS OF THE HELP COMMISSION.................................... 101

APPENDIX 2: THE WRITERS GROUP....................................................................104

APPENDIX 3: HELP COMMISSION STAFF ...........................................................105

APPENDIX 4: STUDY TOURS BY THE HELP COMMISSION ............................106

APPENDIX 5: HELP COMMISSION MEETINGS ..................................................107

APPENDIX 6: EXPERTS CONSULTED DURING OFFICIAL COMMISSION 

 MEETINGS....................................................................................108

APPENDIX 7: SCENARIO PLANNING WORKSHOP............................................ 113

APPENDIX 8: LEGISLATIVE MANDATE AND THE HELP COMMISSION 

 REPORT......................................................................................... 116

APPENDIX 9: A HISTORY OF EXECUTIVE-LEGISLATIVE RELATIONS........ 119

APPENDIX 10: ISSUE PAPERS..................................................................................122

FOREIGN ASSISTANCE GRANT AND CONTRACT PROCUREMENT PROCESSES....................122

EXECUTIVE SUMMARY OF FOREIGN ASSISTANCE: WHAT WORKS AND WHAT 

 DOESN’T WITH RECOMMENDATIONS FOR MOVING AHEAD..............................................149

FOREIGN ASSISTANCE IS ABOUT CHANGE................................................................................155

APPENDIX 11: ADDITIONAL VIEWS BY COMMISSIONERS..............................163

REVAMPING U.S. FOREIGN ASSISTANCE BY HELP COMMISSION VICE CHAIRMAN LEO 

HINDERY, JR. AND HELP COMMISSIONERS JEFFREY D. SACHS AND GAYLE E. SMITH...163

SUPPORT FOR AN INDEPENDENT CABINET-LEVEL DEPARTMENT OF DEVELOPMENT 

BY HELP COMMISSIONER WILLIAM C. LANE ...........................................................................196

VARIOUS VIEWS ON FOREIGN AID: WHY COUNTRIES REALLY GROW;

MISPERCEPTIONS ABOUT US GOVERNMENT AID FOR POLITICAL PURPOSES; U.S.

PUBLIC OPINION ON FOREIGN AID; AND PRIVATE GIVING TO THE DEVELOPING 

WORLD BY HELP COMMISSION VICE CHAIRMAN CAROL ADELMAN AND 

COMMISSIONER NICHOLAS EBERSTADT ....................................................................................198

Executive Summary 

Foreign assistance is critical. It conveys America’s humanitarian values. It 

helps protect America's national security. And it helps countries address 

dire poverty and develop so that they can better provide for their own 

people. 

Our foreign assistance system is broken. We ignore this reality at our 

peril. 

The American people, and those in the developing world striving for a 

better life, deserve a better foreign assistance system. 

The American people have a right to expect that when the United States 

Government spends their hard-earned dollars for international assistance 

and development programs the money is spent wisely on attainable 

objectives tied to our national and moral interests. The American people 

have a right to know that when they call upon our government to help 

people overseas stop the suffering from disease, famine, and other 

catastrophes, their tremendous compassion and generosity will yield 

tangible results. The American people have a right to demand that the 

best possible tools are in place to permit any administration to conduct a 

robust foreign policy. 

For nearly 22 months, this bipartisan Commission interviewed, at home 

and abroad, many of the world’s foremost experts on U.S. foreign 

assistance. We spoke with current and former Secretaries of State. We 

met with leaders of U.S. Government agencies involved with foreign 

assistance. We met for more than two days straight with an international 

group of experts, testing and examining our preliminary findings under 

multiple alternative scenarios for the future. We consulted scholars, 

contractors, non-governmental organizations (NGOs), businesses and aid 

recipients, and studied previous reform efforts and reports. Opinions and 

recommendations varied. 

But not one person appeared before this Commission to defend the 

status quo. 

It is shocking that the need for foreign aid reform is so widely recognized 

yet so little has been done to implement lasting and vital changes. The 

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legislation mandating the U.S. system was written more than 45 years ago 

and is littered with competing goals, conflicting objectives, and vague 

directives. Our professional development corps has been eroded and 

replaced with people who must focus mainly on managing outside 

contractors. Some of our highest tariffs affect goods exported by some of 

the poorest countries. We have witnessed the steady proliferation of aid 

programs, accounts, instruments, and initiatives across multiple agencies 

and departments, but we still lack an effective mechanism to coordinate 

them within the U.S. Government. We also lack the means to ensure that 

our development assistance programs are definable, achievable, 

measurable and sustainable. Meanwhile, the vacuum created by our 

broken system is being filled in part, not by a reformed foreign aid system, 

but increasingly by the Department of Defense (DoD). 

 

The Commission understands that weak states can readily spawn conflict, 

undermine regional stability, and threaten our own security. They can 

offer vast ungoverned spaces to any and all who would exploit them. We 

know that failed states are unable to participate effectively in the world 

economy. We know that failed states foment human suffering. 

The Commission also understands that, just as modern technology brings 

many parts of America into the homes of people in the developing world, 

so too does it carry the problems of the developing world to our doorstep. 

When more than one-third of the people on the globe survive on less than 

two dollars a day, the contrast with developed countries is acute and 

unavoidable. Unless there is a way forward for the world’s poor, 

America’s own peace and prosperity can be put at risk as a result. 

The United States must respond quickly and effectively to work with our 

partner countries as they address these and other challenges, whether they 

are manifest in the dearth of effective primary schools, the presence of 

lawless territories, the absence of the health infrastructure needed to 

manage HIV/AIDS in Africa today, an avian flu pandemic tomorrow, or 

unsafe drinking water. 

The United States needs a strategy and the tools to address these 

challenges. We should start with a bipartisan agreement between the 

Executive and Legislative branches of government on the contours of a 

U.S. strategy for our development and humanitarian assistance programs. 

That strategy would require that we attain new capabilities and consistent 

policies across all of our foreign affairs agencies. We also must fix our 

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foreign aid system, restructure our agencies, strengthen our corps of 

development professionals, and involve new partners. Perhaps our 

greatest challenge will be adopting and sustaining a long-term approach to 

development assistance. 

War-torn societies are not healed in 12 months; weak and failing states 

cannot be rendered capable in two years. Transforming countries that 

have suffered decades of misrule, political dysfunction, economic 

distortion, and unchecked violence requires building consensus in the U.S. 

Government around strategies that extend beyond our one-year budget 

cycle and presidential elections that occur every four years. Unlike highly 

visible emergency relief efforts, development assistance rarely produces 

identifiable results in days, weeks, or even months. But development 

assistance, if executed well and in concert with committed developing 

country partners, can in many cases prevent the need for costly 

diplomatic, military, or humanitarian interventions. 

 

The HELP Commission’s report is not aimed at either political party or 

any particular administration. It reflects our strong belief that our nation 

must enact sweeping policy and institutional changes to equip our country 

to meet the challenges of the day with a foreign aid system that works at 

home and abroad. 

Findings 

The final recommendations of this Commission are based on a variety of 

findings, including the following: 

The world has changed and U.S. assistance programs have not kept 

pace. The development challenges of the 21st century differ from those 

of the 1960s, when the principal legislation governing America’s foreign 

assistance took effect. Changes in economic conditions, demographics, 

technology, and in our understanding of the potential consequences of 

local and global environmental risks, require new ways of promoting 

development. In addition, the growing role of private actors and capital in 

development — from foundations to corporations to faith-based 

organizations to individuals sending remittances — has significantly 

changed the development landscape. 

Yet, over the last several decades, our approach to development and the 

programs we fund have not kept pace with these changes. This means 

that the U.S. Government, NGOs, and the private sector must act 

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collectively and proactively. Programs should be nimble, so that they can 

change when conditions warrant it. They must be innovative — which 

requires that our nation accept and learn from failure. Development 

assistance programs should be designed to achieve objectives that are 

definable, achievable, measurable, and sustainable. And they should be 

designed with an eye to the long term, based on the recommendations and 

active participation of our local partners. 

Foreign assistance alone is not sufficient to help developing 

countries achieve long-term, sustainable economic growth. 

Development must be locally led and owned. Development occurs when 

countries make commitments to their own long-term, sustainable growth 

by implementing the right policies to achieve this. It follows that, for 

those recipient countries that are dedicated to development, the United 

States should make the necessary effort — both in terms of resources and 

commitment — to support them. We must invest in the capacity of these 

states to develop and sustain strong economies and serve their citizens. 

We must invest in the capacity of societies to live in peace, uphold the rule 

of law, and become attractive venues for private capital to generate the 

jobs, services, and goods needed to counter structural poverty. And we 

must invest in the capacity of individuals to lead more productive lives. 

Yet our assistance must include more than just foreign assistance dollars 

and the provision of consultants. Our contributions can and should be 

complemented by trade, investment, political diplomacy, and public 

diplomacy. 

Long-term economic growth and job creation contribute the most to 

sustainable development. Many foreign assistance activities can help 

address humanitarian imperatives. Yet, sustained economic growth is 

necessary to ensure that a country can, over the long term, feed, educate, 

protect, house, and provide for the health of its citizens. The United 

States should help developing countries build their productive capacities 

so they will be able to sustain themselves. Moreover, expectations should 

match reality: When America provides humanitarian assistance, our 

nation should not be surprised if those humanitarian contributions fail to 

create long-term, self-sustaining development.

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We need a clear and common vision for development across and 

throughout both branches of the United States Government. Our 

nation needs to create a coherent strategy for development assistance, 

shared by the Executive and Legislative branches and supported by the 

American people. This vision should translate into programs, designed 

together with each developing country, alone or in a regional context, 

which NGOs, philanthropists, multilateral organizations, and other 

donors can readily understand and support. 

An integrated approach to our government’s development 

assistance is needed. For decades, America has applied piecemeal fixes 

to complex development challenges, often through multiple U.S. 

Government agencies. For example, while we have devoted significant 

resources to health, education, and good governance, none of these 

initiatives, standing alone or even in combination, assures maximum 

impact in our efforts to promote development. Our assistance must be 

complemented by trade, investment, political engagement, and public 

diplomacy. Authority and accountability should not be scattered across 

the government. 

We must play to our strengths and work with others. A development 

assistance strategy that aims to address all aspects of poverty almost 

invariably will be stretched too thin. A better approach is to root U.S. 

development assistance in our nation’s comparative advantages: 

agriculture, technology, small business development, education, and other 

areas in which we excel. The United States should also leverage the 

activities and engagement of other donors, be they governments, 

multilateral agencies, businesses, charities, foundations, or faith-based 

organizations. Only then can we hope to achieve a practical and efficient 

division of labor that minimizes duplication of effort and reduces gaps in 

financing. 

Funding should be a function of realistic, long-term goals agreed to by the 

Executive and Legislative branches, and we should only make promises 

that we intend to keep. Further, our nation should fully fund international 

commitments to which it has agreed. 

Recommendations: The Need for Change 

Members of the Commission have different views regarding specific 

recommendations, but all think that substantive changes are needed in the way 

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 6

America’s development programs are led, coordinated, delivered, and financed. The 

HELP Commission recommends the following actions: 

Rewrite the Foreign Assistance Act. We must rewrite the Foreign 

Assistance Act (FAA) to reflect new development goals and programs in a 

vastly different world. The new act must also consolidate legislation 

enacted over the last 45 years, and it should address many of the 

recommendations contained in this report; a general outline of a new FAA 

draft is posted on the Commission website, www.helpcommission.gov. 

Do more to help developing countries build vibrant private sectors. 

Business can and should be the engine of growth in the developing world, 

as it is in the developed world. Thus, we recommend increasing technical 

assistance and funding for small and medium enterprises that do not have 

access to private capital. We also propose establishing a fund for research 

and development, to be modeled on the research arm of the Department 

of Defense. This organization would strive to create and commercialize 

technological products that could improve the lives of people in 

developing countries. Finally, we recommend that renewed attention be 

paid to increasing the productivity of agriculture and related industries in 

the developing world, especially in those countries that are small, resourcepoor, and land-locked. 

Create a new business model and engage new non-governmental 

partners. Foreign assistance has too often been delivered in a top-down 

fashion and driven by universal prescriptions that might or might not be 

relevant for every country. Where possible, U.S. foreign assistance 

programs should be carried out in concert with local private or public 

partners that are themselves committed to development. Programs should 

be demand-driven so that they respond to local needs and therefore have 

a better chance of creating lasting solutions. We must also actively engage 

new non-governmental actors and leverage the resources from the 

explosion of growth in philanthropy and private investment. We believe 

that new initiatives, increased funding and, most importantly, lasting 

results will occur if we more proactively collaborate with nongovernmental actors. 

Align America’s trade and development policies. U.S. trade and 

development policies often conflict. For example, the very countries that 

are eligible for funding from the Millennium Challenge Corporation 

(MCC) — the new U.S. Government agency that aims to help a select 
group of countries that have demonstrated a commitment to growth —

often pay more in tariffs than they receive in aid. To support 

development, we recommend allowing duty-free, quota-free provisions for 

MCC-eligible countries and, if possible, for the poorest countries with a 

per capita Gross Domestic Product (GDP) below $2,000. Countries 

receiving these trade preferences should be encouraged to liberalize their 

trade policies accordingly. 

Strengthen the management capacity of our nation’s assistance 

agencies. The U.S. Government should significantly improve the 

monitoring and evaluation, human resources, and procurement and 

contracting capabilities of its agencies. First, unless our government better 

evaluates projects based on the outcomes they achieve, it will not improve 

the effectiveness of taxpayer dollars. In addition, the workload imposed 

on our assistance agencies has significantly increased while the staff has 

been cut. These reductions hurt America’s assistance efforts. Human 

resources needs must be addressed. Our government must also halt the 

artificial and unhelpful budgeting that divides project and internal costs 

(the so-called Operating Expense account). At the same time, our nation 

must prepare and train its foreign assistance professionals, just as it does 

its armed forces: by providing, for example, increased language training 

and educational programs on local cultures and on effective methods for 

implementing change. Finally, the government must overhaul 

procurement and contracting functions. 

Reorganize all U.S. international affairs functions. The Commission 

strongly believes that development should be elevated to equal status with 

defense and diplomacy and that dramatic changes to the existing structure 

are required. Although the Commission has varying views on what form 

that structure should take, we agree on the objectives that it must meet. 

Some Commissioners prefer that a new stand-alone Department of 

Development be created, as has been done successfully in the United 

Kingdom. This department would oversee all primary development 

assistance and be comprised of the United States Agency for International 

Development (USAID) — the government body that now has primary 

responsibility for carrying out U.S. foreign assistance programs — and 

other U.S. development agencies. Other Commissioners prefer that our 

development agencies be merged into the existing Department of State so 

that the Secretary of State manages all aspects of U.S foreign policy and 

foreign assistance. 

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A majority of Commissioners, however, advocate developing a structure 

that achieves the advantages of both of those two options. While the 

Legislative and Executive branches would have to conduct an exhaustive 

review to affirm our conclusion, a majority of Commissioners believe that 

all civilian international affairs functions and funding might best be 

reorganized into a next-generation Department of State with four subCabinet agencies that report to the Secretary. They would focus on (1) 

trade and long-term development; (2) humanitarian crises and postconflict states; (3) political and security affairs; and (4) public diplomacy. 

This structure would not simply move USAID into the current 

Department of State. It would completely reorganize these and other 

agencies and departments by functions to ensure a coordinated, coherent 

approach. 

Regardless of whether a new development structure is created, there will 

always be some government entities engaged in foreign assistance that are 

not part of the primary assistance agency. The Commission also 

recommends that the White House — through the Executive Office of the 

President — establish a high-level mechanism (possibly within the 

National Security Council) to coordinate policy for all U.S. Government 

agencies involved in development and humanitarian programs. 

Determine funding from the bottom up, based on the needs and 

commitment of developing countries and on the national and 

security interests of the United States. Commissioners have different 

views of the timing and magnitude of potential increases in funding. All 

support greater funding for disaster relief and other humanitarian needs 

when called for. All Commissioners believe that all other types of funding 

should be increased, but under varying conditions. The majority 

recommends that more funding should come along with implementation 

of major reforms such as those set forth in this report; some believe that 

we should see measurable evidence of success prior to increasing funding; 

and some believe that such increases are warranted regardless. 

One additional reform that the majority of Commissioners recommends is 

to create a National Security Budget, combining Defense and International 

Affairs spending, with as much as ten percent devoted to international 

affairs activities. These funds would enhance the other tools of “smart 

power” and allow our nation to align public diplomacy, security assistance, 

and development and humanitarian aid in order to help prevent crises and 

promote peace and prosperity. If implemented at the ten percent level, 

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for example, this proposal would result in a doubling of current foreign 

aid levels. 

This report includes additional recommendations that support our key 

findings, such as: 

• Forge a new relationship between the Executive and Legislative 

branches that acknowledges the need for accountability and 

flexibility. 

• Bolster our nation’s humanitarian efforts and establish a $500 

million fund as a permanent Humanitarian Crisis Response Facility 

to use when natural disasters occur. 

• Create a permanent $500 million Foreign Crisis Fund to allow for 

maximum flexibility when confronted with security challenges in 

failed and failing states. 

• Simplify the funding account structure to allow for more clearly 

defined responsibility and authority. 

• Clarify DoD’s role in development assistance. 

• Use public diplomacy and branding more effectively. 

• Emphasize infrastructure and agriculture. 

The developing world matters more than ever to the United States. The 

Commission applauds the efforts of our foreign assistance professionals, 

as well as countless individual Americans and NGOs, who are making 

extensive efforts in these countries. We commend the many elected 

officials who care deeply about this subject. And we welcome President 

Bush’s efforts, supported by the U.S. Congress, to expand development 

aid funding for Africa, launch the Millennium Challenge Corporation, and 

introduce powerful initiatives to fight HIV/AIDS and malaria. The 

Administration’s call to put development on a par with diplomacy and 

defense matches our own convictions. Yet much remains to be done. We 

encourage the next administration and the Congress to take the necessary 

steps to overhaul America’s approach to development assistance, and we 

urge Americans to support our call for change.

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Chapter 1: Introduction 

Almost one billion people exist on less than one dollar per day. Another 

two and a half billion people live on less than two dollars per day. When 

the U.S. Congress established the HELP Commission, it specifically found 

that “. . . despite the long-standing efforts and resources of the United 

States dedicated to helping needy people around the world, despair 

remains and in many areas is growing.” Accordingly, this Commission 

examined why extreme poverty persists and what we can do about it. In 

conducting this inquiry, our Commission developed the following specific 

goals that should guide America’s foreign assistance efforts: 

1) Support and advance U.S. national security and foreign 

policy goals and objectives in measurable ways. 

2) Provide short- and medium-term emergency assistance to 

save lives in times of crisis and in environments of desperate 

need. 

3) Invest in recipients’ economic growth and development in 

order to provide assistance to people who cannot fully help 

themselves; help recipients become self-reliant and achieve 

sustained economic development; and promote trade within 

and among nations. 

4) Promote democratic principles for well- and justly-governed 

nations that are accountable to their citizens. 

Much of this report focuses on how and why the Commission believes 

foreign assistance programs can be improved. It contains many pointed 

critiques and recommendations for immediate change. But we also 

recognize the notable successes in development and humanitarian 

assistance programs, some of which are highlighted below. 

The Asian Green Revolution 

During the 1950s and 1960s, the Rockefeller Foundation, along 

with other donors, spurred the development of high-yield seed 

varieties and new techniques to modernize farming. USAID helped 

to finance the rapid uptake of these new technologies. Dramatic 

successes were achieved in the 1960s in India and Pakistan, and 

were later seen in China and Southeast Asia. 

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Smallpox Eradication 

In 1967, the World Health Organization (WHO), with funding 

from the United States, established the Smallpox Eradication Unit 

and launched a donor-supported worldwide campaign to eradicate 

the disease. In 1980, the WHO declared the world free of 

smallpox. 

Rural Electrification Program

The Rural Electrification Program in Bangladesh was started in 

1978 through a partnership with the National Rural Electrification 

Cooperative Association of the United States, and was funded by 

USAID. The program is based on the concept of member-owned 

systems and was designed and carried out as a peer-to-peer effort 

between the Association in the United States and its counterparts in 

Bangladesh. The average annual income of households with 

electricity is 64.5 percent higher than that of the households of nonelectrified villages, and 126 percent higher than that of households 

without electricity in electrified villages. 

River Blindness Control

In 1987, Merck Pharmaceuticals began the Mectizan Donation 

Program (MDP) to combat onchocerciasis (river blindness). Their 

donation served as the catalyst to bring together a public-private 

partnership including the World Bank, WHO, USAID, the Center 

for Disease Control, the Carter Center, and at least 20 private 

voluntary organizations, community-based distributors, and 

ministries of health, social welfare, and agriculture in the recipient 

countries. As a result, it is estimated that over 600,000 cases have 

been prevented in West Africa alone, and 25 million hectares of 

previously unusable land are now safe for agriculture and settlement 

there. 

Response to Hurricane Mitch

After Hurricane Mitch struck parts of Honduras, Nicaragua, and 

the Yucatan Peninsula in 1998, international relief efforts began 

almost immediately. USAID’s efforts in Honduras provided not 

only immediate relief to the communities affected, but also 

generated a sustainable long-term impact through financing the 

Food-for-Work program, clean-up efforts, and reconstruction of 

local infrastructure. 

 11
In addition to project-related successes such as those outlined above, 

some developing countries have realized substantial economic growth and 

improvements in living standards for their people. In parts of the 

developing world, economies are being opened, children are healthier, 

education is spreading, private investment is growing, civil society is alive 

and well, and the future promises a life better than the past. Strides made 

in places like Estonia, Costa Rica, and Tunisia would not have been 

possible without the political will of their people to implement enlightened 

policies conducive to growth, development, and free enterprise such as 

good governance, a sound trade and investment climate, rule of law, free 

press, free markets, and private property rights. 

In spite of these successes, many continue to suffer. Conditions that are 

incomprehensible in our nation constitute daily reality for many in the 

world. Consider the following: 

• Of the one billion people who live on one dollar per day or less, 

many suffer from poor health. 

• Malaria kills an estimated one million people a year. 

• Approximately 68 percent of the 33.2 million people infected with 

HIV/AIDS worldwide live in sub-Saharan Africa. 

• 10.5 million children die before their fifth birthday each year, 

mainly from preventable causes. 

• In some countries, electrical generating capacity is remarkably 

scarce: Liberia has only enough public electricity to power the 

equivalent of 1,600 American homes. 

• 815 million people in developing countries are undernourished. 

• 771 million adults in the world are illiterate. Of that number, 64 

percent are women. 

The problems are vast in scope and their solutions are long-term. 

When more than one-third of the people on the globe must survive on 

less than two dollars a day, the contrast with developed nations is acute 

and unavoidable. People who believe they have no chance for a better life 

or who believe that they have no control over their fates can be persuaded 

to vent their frustration and anger in violence. States that do not have 

control over their own territory, as was the case with Afghanistan, can 

become havens for terrorist groups. The inability of poor countries to 

manage and control public health problems appropriately can lead to 

 12
pandemics spreading more quickly. America’s peace and prosperity are 

put at risk if we fail to address these challenges. 

Providing humanitarian assistance is part of the solution. Time and again, 

the American people have responded to international emergencies with 

compassion and generosity. Similarly, Americans expect the U.S. 

Government to respond effectively to humanitarian crises, and our 

humanitarian efforts represent one of the best aspects of the American 

character. 

Today, however, the United States is attempting to address these 

challenges with an outdated Foreign Assistance Act written more than 45 

years ago. Our delivery of foreign aid is outmoded and does not reflect 

economic and demographic changes in the developing world. After 

decades of attempting piecemeal fixes, our government’s foreign assistance 

structure includes a hodge-podge of approximately 20 departments and 

agencies,1

 many of which carry out overlapping, inefficient programs. The 

U.S. Government’s development efforts must be materially reformed to ensure that 

taxpayers’ money is spent effectively. 

Further, some policies of the United States and other developed 

countries can unintentionally harm the efforts of some developing 

countries to grow. For example, tariffs on certain goods make it difficult 

for developing countries to export their products. Also, subsidies for 

domestic farmers can depress the world prices of some developing 

country agricultural exports. Reforming our nation’s foreign assistance 

agencies without addressing these kinds of problems is not enough. 

An honest assessment of development and humanitarian efforts must 

begin with realistic expectations: 

• It typically takes decades for an economy to grow out of poverty. 

• Government assistance alone cannot achieve success. 

• Growth in developing countries is primarily affected by the policies 

and leadership of those countries. 

• Government funding has been modest compared to the need: the 

U.S. Government’s economic assistance to sub-Saharan Africa 

amounted to about $3.36 per person per year from 1962-2005. 

• Government assistance has often been provided for political 

reasons, as it was during the Cold War, and not necessarily to those 

countries most committed to reform and development. 

 13
When struggling to understand how our development efforts could better 

serve America’s national interests, the Commission tried to think beyond 

conventional and bureaucratic solutions. Instead, we looked at how best 

to get the job done. 

The Commission decided that the United States must implement a more 

comprehensive approach. U.S. foreign assistance efforts are essential to 

our own national interests and should be better integrated with our 

foreign policy objectives. Further, U.S. assistance should be delivered 

through a new model, and the HELP Commission believes that it must be 

one that includes the shared vision of the Executive and Legislative 

branches. In addition, Americans are more and more energized about 

helping people around the world. The HELP Commission welcomes this 

surge in involvement and the emergence of a constituency of “Americans 

for Development” and believes that the new model must encompass the 

active engagement of the American people and private institutions. 

Just as Americans came to understand that waging the Cold War against 

an implacable enemy would require years of sustained concentration and 

effort, Americans are now beginning to understand that resolving the 

challenges faced by the developing world will also require a long-term 

commitment. Congress and the current Administration have taken 

important new steps to work with recipient countries to address global 

poverty. Since 2000, the United States has increased Official 

Development Assistance (ODA) from $10 to $23.5 billion in 2006; it has 

created the Millennium Challenge Account; and it has introduced major 

initiatives on HIV/AIDS and malaria in Africa. These projects are 

important. However, the problems described above still exist. 

As the challenges created by the most vulnerable states become clearer, and as America 

continues to understand better what is truly at stake, our nation must commit to a new, 

comprehensive strategic approach to development. We can do more and we can do it 

better. 

 14
Chapter 2: Apply a New Integrated Approach to 

Development 

U.S. Government efforts to promote development are focused primarily 

on providing assistance. There is a growing understanding, however, that 

aid alone, while important, cannot spark the changes necessary for 

economic growth and shared prosperity. We believe that U.S. 

Government assistance must be part of a more comprehensive approach 

of engagement with the developing world that also includes diplomacy, 

trade, public diplomacy, security cooperation, and the full range of private 

sector resources. 

Our deliberations underscored the importance of distinguishing between 

the tool of assistance and the goal of development, which are separate and 

distinct: 

• Foreign assistance is a tool that can be used effectively by the U.S. 

Government for a number of legitimate purposes, among them 

humanitarian relief, security, political persuasion, and development. 

• Development, on the other hand, is a goal which other states aspire 

to achieve, and that America can support through foreign assistance 

and foreign policy. 

Any attempt to reform our development and humanitarian programs must take a 

coherent approach as they cannot succeed in isolation. This was made evident in 

the Marshall Plan. The Marshall Plan provided assistance as part of a 

much larger government-wide effort that also focused on trade, diplomatic 

initiatives, and the involvement of our military, security assistance, and 

public diplomacy. While supporting the development of the world’s 

poorest countries is a different task from rebuilding developed countries, 

the lesson drawn from the Marshall Plan — that aid alone is not the 

answer — remains as relevant today as it was 60 years ago. 

The remainder of this Chapter considers how reforms in three areas other 

than foreign aid can, along with foreign aid reform, enhance our nation’s 

ability to promote development in a comprehensive manner. These areas 

are trade, security, and public diplomacy. Other vital areas, such as 

investment, agriculture, education, and greater engagement of the private 

sector, are discussed in Chapter Five. Our recommendation is that these 

three areas be evaluated in conjunction with foreign aid reform to ensure 

 15
that the United States pursues an integrated, comprehensive approach to 

development.

2.1 Support Trade and Infrastructure 

Volumes have been written on the importance of trade and investment to 

development. Since 1973, the value of global trade (exports plus imports) 

has increased nearly 18-fold. Trade — in particular, exports — is of 

particular importance to low-income countries: between 1995 and 2005, 

the value of exports of these economies nearly tripled. The increase in 

foreign direct investment in developing countries and emerging markets 

has also been significant, rising 170 percent between 1995 and 2005. As 

these trends make clear, the importance of trade to economic growth and 

development is increasing. 

While critical to low-income countries, trade has been hampered by both 

government trade policies and by natural, physical barriers. Removing the 

physical barriers by improving infrastructure takes a hard hat, while 

eliminating the policy barriers takes an open mind. The Commission 

recommends the following policy reforms regarding both types of 

impediments to trade. 

2.1-1 Offer Duty-Free, Quota-Free Access to More Countries 

Because exports are so crucial to developing countries, attention must be 

paid to policies that affect both sides of the trade equation: developedcountry imports as well as their exports. Yet today, the United States and 

Europe apply their highest trade barriers to imports from the poorest 

countries. In fact, many poor countries, even the most reform-minded of 

them, pay far more in U.S. import taxes than they receive in development 

aid. 

Table 2.1 Selected effective 2006 tariff rates for poor countries 

2006 Trade-weighted Tariff 

Rate 

Per Capita 

Income 

Bangladesh 14.91% $451

Cambodia 16.75% $503

Laos 14.84% $567

Mongolia 17.21% $1,081

Sri Lanka 12.92% $1,355

High Income Countries 1% (Average) $10,726 or more

Source: The Trade Partnership (Washington, DC) from U.S. Census data. 

 16
 17

For example, the United States assessed more duties on imports from 

countries eligible for the Millennium Challenge Corporation (MCC) — the 

new initiative that rewards poor countries that have good governance, 

follow sound economic policies, and invest in their people — than it 

provided through the MCC appropriation. In 2006, the United States 

received $1.77 billion in U.S. duties from MCC countries. This is $20 

million more than the $1.75 billion in aid appropriated for the MCC for 

fiscal year 2007. Chart 2.2 illustrates how regressive U.S. trade policy has 

become, with the highest tariffs imposed on the lowest income countries. 

Table 2.2 U.S. Duties Assessed in 2006, by Income Level 

Countries by Income per Capita 

Imports 

in $U.S. 

millions 

Duties 

in $U.S. 

millions 

Average 

Duty 

High Income ($10,726 or more) $983,620 $9,433 1.0% 

Upper Middle Income ($3,466-

$10,725) 

$366,142 $1,689 0.5% 

Lower Middle Income ($876-$3,465) $405,858 $11,176 2.8% 

Low Income ($875 or less) $72,527 $2,637 3.6%

Total $1,828,147 $24,935 1.4% 

Source: The Trade Partnership (Washington, DC) from U.S. Census data. 

These high tariffs result in discrimination against the products developing 

countries are trying to export at competitive prices: textiles, apparel, 

footwear, and agricultural products. 

Table 2.3 Selected countries that paid the U.S. more in duties than they received 

from the U.S. in aid in 2006 

2006 Tariffs 

000 $ 

Aid 

000 $ 

Aid Minus Duties

000 $ Per Capita Income

Bangladesh $487,240 $80,978 -$406,262 $451

Cambodia $366,496 $60,055 -$306,441 $503

Nicaragua $105,366 $52,415 -$52,951 $908

Mongolia $19,602 $13,615 -$5,987 $1,081

Philippines $403,510 $127,066 -$276,444 $1,345

Sri Lanka $276,644 $22,647 -$253,997 $1,355

Indonesia $799,259 $150,907 -$648,352 $1,640

Source: The Trade Partnership (Washington, DC) from U.S. Census data. 
In addition to changing U.S. policies, it is important to help developing 

countries enhance the knowledge, skills, and policy mechanisms conducive 

to increased trade. 

The HELP Commission recommends that the U.S. Government adopt 

the following policies to expand trade opportunities for the developing 

world: 

. 

• Recommendation: Grant duty-free, quota-free access to U.S. 

markets to those countries that are eligible for an MCC Compact or 

Threshold Program. 

 

• Recommendation: Provide the same duty-free, quota-free status to 

those countries with a per capita Gross Domestic Product (GDP) 

under $2,000. Those countries that are otherwise ineligible for U.S. 

foreign assistance would be denied such access. 

• Recommendation: Encourage duty-free quota-free eligible countries 

to embrace trade liberalization by committing to: (1) reduce their trade 

barriers gradually toward Most Favored Nation (MFN) status; (2) 

provide greater respect for worker rights; and (3) enhance 

environmental protections. 

• Recommendation: (1) Provide through legislation, improved and 

expanded Trade Adjustment Assistance (TAA) to help displaced 

American workers and communities retrain and retool for the future; 

and (2) promote labor rights and environmental protections as part of 

bilateral trade negotiations with developing countries. 

• Recommendation: Promote trade capacity building in the 

governments, regulatory agencies, and trade and business associations 

of developing countries. 

2.1-2 Consider the Adverse Effects of Agricultural Subsidies 

Because such a high percentage of the world’s poorest people rely on 

agriculture, American agricultural subsidies are especially pernicious to 

growth in developing countries. Former Secretary of State Colin Powell 

has suggested that removing agricultural barriers that distort trade could 

produce an extra $72 billion of income and investment in poor parts of 

 18
the world, where 70 percent of the population engages in agriculture. The 

Copenhagen Consensus, an organization of top economists that strives to 

quantify the most cost-effective solutions to the world’s greatest 

challenges, concurs. In a recent report, it concluded that offering “firstworld access to third-world agriculture” was one of the most economic 

and effective endeavors our nation could undertake to reduce global 

poverty. 

The Commission strongly recommends that the U.S. Government: 

• Recommendation: Exert leadership within the Group of Eight 

(G8) in encouraging its members, individually and collectively, to 

take practical and immediate actions to minimize the adverse effects 

of their respective domestic agricultural subsidies and practices on 

the economies of developing countries and their own agricultural 

industries. 

2.1-3 Remove Physical Trade Barriers with Infrastructure 

Where physical barriers impede trade and commerce, as they do in many 

landlocked countries and those with difficult terrain, the U.S. Government 

should invest in infrastructure to help reduce these barriers. Building 

bridges, roads and ports is costly and the need for infrastructure is often 

immense. The United States should consider investing in concert with 

other donors, both bilateral and multilateral, when possible. It is 

indisputable that developing countries want more infrastructure; many 

MCC-eligible countries, for example, identify infrastructure investments as 

a top priority. 

These sentiments were echoed in a recent statement to the Congressional 

Black Caucus by Akinwumi Adesina, Vice President of the Alliance for a 

Green Revolution in Africa: 

But lack of infrastructure (roads, rails, ports, 

electricity and irrigation) continues to hamper the 

development of African agriculture. High transport 

costs make it difficult for traders to supply areas 

beyond good market roads, which inevitably are in 

the poorer areas....Poorly developed infrastructure 

also limits opportunities for intra-regional trade and 

lowers competitiveness in international 

markets....There is an urgent need to drastically 

 19
increase investment in rural infrastructure in Africa 

in order to achieve a green revolution. 

The Commission therefore recommends that the U.S. Government: 

• Recommendation: Increase the profile of infrastructure in our 

development programs and be receptive when countries make requests 

for infrastructure support. Give priority to landlocked countries and 

regions. This is recommended with a specific interest in removing 

barriers to trade and does not propose a specific earmark. 

• Recommendation: Lead the G8 countries in supporting an increase 

in infrastructure investment in developing states. 

• Recommendation: Urge the World Bank to continue to support 

infrastructure lending and investment. We understand that the Bank 

reversed its long-standing decline in infrastructure lending in 2002; we 

commend that reversal. 

2.2 Ensure Coordination between Security and 

Development

Once thought to be distinct and removed from one another, security and 

development now intersect regularly in two essential ways. First, making 

sustained economic progress in countries plagued by insecurity, where 

peoples’ lives are regularly threatened by violence and anarchy is difficult, 

if not impossible. During our field research, Commissioners saw a 

number of instances where danger and instability inhibited development. 

In Haiti, for example, it was clear that unless the security situation is 

resolved, there can be no meaningful progress toward sustained 

development. 

Oxford University Economist Paul Collier quantifies the problem in his 

book, The Bottom Billion: “73 percent of people in the societies of the 

bottom billion have recently been through a civil war or are still in one. 

...the risk that a country in the bottom billion falls into civil war in any 

five-year period is nearly one in six....Growth directly helps to reduce risk; 

cumulatively it raises the level of income, which also reduces risk.” Collier 

summarizes starkly: “Civil war is development in reverse.” Where 

security and stability are lacking, assistance will likely have a limited 

impact. Security and development reinforce one another. Because 

 20
insecurity undermines development, the Commission believes that as the 

United States reforms its foreign assistance apparatus, it must develop new 

capabilities for preventing, mitigating, and responding to the crises that 

fuel insecurity. 

2.2-1 Be Prepared to Respond to Failed and Failing States 

Moving states from failed and failing to capable requires going beyond 

assistance, linking trade, democratic principles of governance, and security 

with traditional assistance. Our nation needs to build the context in which 

traditional development can be implemented. A multinational approach is 

often required to address the problems faced by failed and failing states; 

America should work together with other donors such as the European 

Union and multilateral organizations such as the United Nations to build 

the context for recovery through application of our collective tools. 

Additional measures to address the failed and failing state problem include 

a rapid-response crisis fund, discussed in Chapter Three; our 

recommendation later in this chapter to strengthen the Office of the 

Coordinator for Reconstruction and Stabilization (S/CRS) at State; and 

the Civilian Reserve Corps recommended by this Administration, which 

would be applicable in any of the proposals to reorganize USAID and the 

State Department outlined in Chapter Six. 

2.2-2 Respond to the Increasing Role of the Department of Defense 

Given the growing evidence of the linkages between security and 

development, it comes as no surprise that the U.S. Government’s primary 

security institution, the Department of Defense (DoD), is increasing its 

engagement in the development realm. DoD has grasped and is 

increasingly acting upon the recognized need to promote development in 

order to achieve security. In fact, Secretary of Defense Robert Gates 

referred to the shrinking of USAID as a mistake. Driven in part by its 

practice of engaging in long-term planning, and informed by the increasing 

evidence that weak states are unable to manage effectively a host of 

transnational threats that transcend borders, DoD has developed new 

programs and capacities that address these development challenges. 

This new role surpasses the discreet position that DoD traditionally has 

taken in America’s assistance programs, such as supporting humanitarian 

operations and bolstering drug interdiction campaigns. While troops have 

been engaged in small civil affairs activities for many years, the scope of 

these programs has expanded significantly. DoD’s share of U.S. Official 

Development Assistance grew from 12.7 percent in calendar year 2004 to 

 21
18 percent just two years later, largely, but not only, because of Iraq and 

Afghanistan. A recent Associated Press story on the Pentagon’s 

humanitarian efforts, published at the home port of the largest Navy base 

in the world, stated, “The strategy reflects a broader Defense Department 

effort to use aid, training and other cooperative efforts to encourage 

stability in fledgling democracies and create relationships around the globe 

that can be leveraged if a crisis does break out in a region.” 

As the Commission witnessed during its visits to the Republic of Djibouti 

and other locations, military forces now build schools and health clinics, 

protect aid workers, support aid operations, and carry out other traditional 

development activities. In Djibouti, the Commission witnessed troops 

deployed as part of the Combined Joint Task Force — Horn of Africa 

engaged in traditional development activities which USAID cannot 

undertake for lack of funding. 

While DoD’s engagement in development and humanitarian assistance 

programs can be beneficial, it also poses some difficult new questions. 

There is no better illustration of this than the controversy surrounding the 

creation of DoD’s new, unified Africa Command (AFRICOM). A recent 

article in The Botswana Gazette typifies this discussion: “By emphasizing 

AFRICOM's role in development and humanitarian tasks, U.S. officials 

might have actually amplified African concerns. The fear is that 

henceforth the main lens through which development efforts in Africa will 

be perceived will be the Pentagon’s.” 

Even if its genesis is understandable, DoD’s “mission creep” comes with 

significant implications. The Senate Foreign Relations Committee found 

in 2006 that DoD’s expanded role was complicating the already complex 

inter-agency coordination in embassies overseas and would likely foment 

department turf wars in Washington. In addition, some host countries are 

quietly beginning to ask why the most prominent face of America is 

increasingly a military one. Even more problematic, the American military 

is being asked to carry out missions that deviate from its primary warfighting and defense roles. Meanwhile, the civilian organizations that were 

created to address these concerns with sustainability in mind are denied 

adequate resources. 

Our government must position the military with roles, responsibilities, and 

resources that make it an important asset in the delivery of American 

foreign assistance, but coordinate its actions with overall government 

 22
strategies and activities. Rather than transfer to DoD the development 

responsibilities that should fall more properly to trained civilians, our 

government needs to focus DoD’s responsibilities on its core 

competencies. The American military is superb at building infrastructure, 

supporting relief operations, and providing security, and it should 

continue to carry out these functions. On the other hand, America’s 

civilian organizations should be fully equipped to support the long-term 

development needs of states. To that end, the HELP Commission 

strongly believes that our government should adopt the following 

recommendations: 

• Recommendation: Adequately fund the State Department and 

USAID in areas where DoD has taken on their traditional 

development responsibilities in recent years so that DoD can remain 

focused on its core functions. 

• Recommendation: Bolster the legislative requirements to require 

concurrence between the Secretary of State and DoD on all foreign aid 

activities consistent with scale and scope of projects carried out by 

DoD. (This is currently true for Section 1206 and 1207 Defense 

Department programs for military and police training.) 

• Recommendation: Strengthen and fund the capacities of the State 

Department Office S/CRS and assign it responsibility for coordinating 

State and Defense Department programs for security-related aspects of 

addressing crises and weak and failing states. 

• Recommendation: Encourage Congressional Armed Services and 

Foreign Relations/Foreign Affairs Committees to hold joint hearings 

on the coordination of aid activities between DoD on the one hand 

and the State Department and USAID on the other. Congress should 

also consider sequential referral of legislation that affects foreign aid 

matters of both DoD and State/USAID. 

2.3 Expand Public Diplomacy

Many believe that the relationship between public diplomacy and foreign 

assistance suffered after our nation’s primary organization for public 

diplomacy, the United States Information Agency (USIA), was merged 

into the State Department in 1999. We welcome the recent renewed 

 23
emphasis on public diplomacy and we believe that additional resources 

should be allocated for enhanced public diplomacy efforts. 

The Commission believes that our renewed investment (including 

technology and personnel) in public diplomacy must continue and that 

informing the public in developing countries about U.S. assistance to their 

country is a vital element of our foreign policy. Yet during overseas site 

visits, Commissioners saw few places where the American people were 

acknowledged adequately for the assistance they provide. This connection 

seems to be especially weak in the Muslim world. The FY 2008 budget 

request for Economic Support Fund assistance to Egypt is $415 million. 

HELP Commissioners were told when they visited Egypt that, despite this 

sizable investment, 64 percent of respondents in a recent survey had not 

heard of any USAID projects. As Secretary of Defense Robert Gates said 

recently in a lecture given at Kansas State University, “Public relations was 

invented in the United States, yet we are miserable at communicating to 

the rest of the world what we are about as a society and a culture, about 

freedom and democracy, about our policies and our goals.” 

 Rather than credit going to the American people, the lion’s share of it 

tends to go to the NGO that oversees the activity or to the foreign 

government or multilateral organization (such as UNHCR, the United 

Nations refugee agency, or the World Food Program) that physically 

receives and delivers the aid. This tends to be the rule rather than the 

exception. However, the Commission understands that it is sometimes 

necessary for security reasons to not show that the origin of the aid is 

from the U.S. Government. 

Contrast this with the recognition the United States receives when the 

U.S. military is involved in the delivery of assistance. Reconstruction 

assistance to Pakistan after the 2005 earthquake, much of it carried out by 

the American military, is illustrative. Pew Research studies reveal that 

attitudes in Pakistan toward America improved following these 

reconstruction efforts. 

One promising approach that has been successfully tested by USAID is 

the use of an integrated media campaign (including TV and radio 

advertising, billboards, and newspaper bulletins) to promote the work that 

USAID is already doing in a given country. Trial programs launched in 

Jordan, the West Bank and Gaza, and Indonesia have produced good 

results. Despite its limited budget, the effort in the West Bank and Gaza 

 24
was able to reach 46 percent of Palestinians; of these, 49 percent said that 

it gave them a greater appreciation of American contributions. Sixty-two 

percent said that their perceptions of the American people and the United 

States had changed because of the campaign. 

Both at home and abroad, the United States should stop being shy about 

the substantial contributions it makes to development. Development 

programs and policies should be highlighted in the press, and far more 

recognition should be given to our nation’s Foreign Service Officers and 

Foreign Service Nationals. When our nation provides aid through third 

parties, it needs to take additional steps to ensure that the American 

people share the credit for the successes. And almost all of the 

Commissioners strongly believe that the best brand for U.S. development 

assistance is the American flag. 

 

Specific recommendations to improve public diplomacy include the 

following: 

• Recommendation: Enhance the public diplomacy capabilities of U.S. 

field personnel by strengthening the training and coordination of 

country spokesmen, and by expanding collaborative efforts between 

the United States and foreign governments or NGOs. 

• Recommendation: Encourage each USAID mission to undertake 

surveys — conducted by local professionals — that can help U.S. 

development officials: better understand how their programs are 

perceived; assess how people get their information (as done by USAID 

in Egypt); expand relationships with in-country media outlets; and 

determine how outreach and communication efforts can be improved. 

This should help inform an overall communications strategy that is 

coordinated, long-term, and evaluated through appropriate metrics. 

• Recommendation: Use integrated media campaigns in host countries 

to increase awareness of U.S. assistance programs. 

• Recommendation: Harmonize public diplomacy efforts by all U.S. 

Government agencies engaged in overseas development. Focus 

branding messages on a single core message, such as “From the 

American People.” Select and apply only one or two prominent 

 25
identifiers for all civilian assistance (e.g., the American flag or “clasped 

hands”) as opposed to using the logos of many agencies. 

• Recommendation: Brand with sensitivity. Ambassadors should be 

able to waive branding regulations when it might be dangerous for 

employees or for other reasons appropriate to local circumstances. In 

addition, there should be clear and open avenues for grantees and 

contractors to discuss branding concerns with Ambassadors. 

• Recommendation: Affirm and expand to all foreign assistance 

USAID’s existing policy regarding identifiers for “acquisition awards” 

(e.g., contracts). That policy requires that the USAID logo be placed 

on these goods or services delivered and paid for by the U.S. 

Government. 

• Recommendation: Affirm and expand to all foreign assistance 

USAID’s existing branding policy on “assistance awards” (e.g., grants), 

with one exception: whenever USAID’s cost-sharing burden is 90 

percent or more of the total project cost, the Commission 

recommends that the acquisition branding policy should apply. 

• Recommendation: Consider how to improve awareness of U.S. 

Government funding for multilateral relief and development 

organizations, including the World Food Program and others. 

2.4 Extend the Integrated Approach to the Legislative 

Branch and Include Private Stakeholders

The comprehensive approach outlined above does not apply only to the 

Executive branch. A shared strategic vision for a coherent approach must 

include the Legislative branch as well. Both branches must ensure that 

development is viewed as vital to America’s national security and 

economic and moral interests, and then put mechanisms in place to 

translate that vision into action. A discussion of what the Legislative 

branch can do follows in Chapter Three. 

Additionally, it is critical that the U.S. Government be proactive in its 

outreach to and coordination with the full range of actors outside the 

public sector, including the private sector, NGOs, foundations, and 

philanthropies. With proactive coordination, our nation can capitalize on 

the respective strengths of private entities and the U.S. Government. This 

 26
is discussed in greater detail in Chapter Five. One finding that emerged 

from the Commission’s strategic planning exercise built on Project 

Horizon2

, in which members of the Commission and a broad range of 

invited participants tested our recommendations against five future 

scenarios, was that official foreign aid, regardless of the nature or structure 

of future reforms, is no longer the only major provider of development 

resources. As such, and in order to ensure both efficiency and coverage, 

our nation’s foreign aid system must allow for deliberate coordination 

with the other prominent providers of development assistance and 

support. 

 27
 28

 Chapter 3: Forge a New Executive/Legislative 

Relationship 

Getting foreign assistance right requires the full engagement of both the 

Executive and Legislative branches of government. The decisions made 

within and between these branches directly affect the policies that drive 

foreign assistance programs, decisions as far-reaching as U.S. 

commitments to allies and friends, country qualification criteria, funding 

levels, and the designation of implementing partners. (For a history of 

this relationship, see Appendix Nine.) 

These realities lead to the following recommendations: 

3.1 Rewrite the Foreign Assistance Act

The Foreign Assistance Act (FAA) includes provisions that clearly 

delineate the role of each branch. But just as the current FAA proves 

cumbersome with respect to the goals and objectives of foreign aid, its 

convoluted content — layered on by efforts to reform and revise the Act 

since it was enacted in 1961 — makes it a clumsy tool for defining foreign 

aid policy. A new Act setting out basic foreign aid authorities without 

voluminous specific restrictions, prohibitions, programs, and issue-specific 

earmarks would be a good start. The process of producing a 

comprehensive and coherently rewritten FAA would give both branches 

an opportunity to forge a more trusting relationship. 

The HELP Commission therefore recommends that for the first time since John 

Kennedy was President, the Congress and the White House come together to rewrite the 

Foreign Assistance Act. A new FAA should have the following attributes: 

• Establish broad practices and parameters for pursuing our national 

interests through effective and efficient foreign development 

policies and program authorities; 

• Allow for adequate Executive branch flexibility; 

• Be leaner and more effective; and 

• Provide a strong and streamlined Legislative branch role in 

oversight and information gathering. 

A general outline of a new FAA draft is posted on the Commission 

website, www.helpcommission.gov. 
3.2 Re-engage the Authorizing Bodies 

For the past 20 years, the Congressional authorizing committees that 

oversee foreign assistance have taken a smaller role compared to the 

appropriating committees. Although both must be engaged, greater 

activism on the part of the authorizers is necessary to ensure that 

Congressional oversight is not restricted to the management of funds, but 

also includes the consideration of the effectiveness of aid and aid policies. 

A rewritten FAA should re-engage Congressional authorizers in the 

process. 

The Commission therefore recommends that the authorizing committees 

re-engage and enact bi-annual reauthorization measures. The authorizing 

committees should focus on becoming policy and program experts. 

Specifically, this means that the Executive branch must notify and fully 

inform authorizers on an equal basis with the appropriators before 

implementing new initiatives. On occasion, this has been done 

successfully. Congress considered and enacted authorizing legislation to 

implement the Millennium Challenge Corporation and the President’s 

Emergency Plan for AIDS Relief (PEPFAR). But this process should 

become the rule rather than the exception. 

On the authorizers’ part, they must spend time reviewing policy initiatives 

and other Executive branch recommendations. The Senate Foreign 

Relations Committee recently re-established a global subcommittee 

dedicated to oversight of foreign assistance programs. The Commission 

applauds this action and recommends that authorizing committees permanently 

maintain a dedicated foreign assistance subcommittee. 

Some think that another way to enhance the role of the authorizing 

committees would be the consolidation of defense and foreign policy 

authorization bills into a unified National Security authorization that 

would mirror the creation of a National Security budget, recommended in 

Chapter Seven. 

Increasing the number of foreign aid site visits on the part of the 

authorizing committees and their members would be a further asset. 

Indeed, seeing our assistance programs firsthand is essential for officials in 

both branches. Site visits would enable them to examine the context of 

aid programs, to understand the opportunities and challenges that must be 

considered to ensure effective implementation and delivery, and, more 

 29
importantly, to determine how well policies and procedures developed in 

Washington achieve success on the ground. 

 

• Recommendation: Encourage members of authorizing 

committees to take part in site visits to countries receiving foreign 

assistance. Encourage the President to invite members of Congress 

regularly as participants in official American delegations to 

important international conferences and forums on global 

development. While this occurs on occasion, the systematic 

inclusion of lawmakers would elevate the stature of U.S. 

representation and foster greater partnership between the 

Legislative and Executive branches. 

3.3 Adopt Common Procedures 

While procedures governing initial and subsequent allocations of foreign 

assistance might strike some as obscure bureaucratic details, they allow the 

two branches to make mid-course adjustments and manage reallocation of 

our nation’s foreign aid resources. Reprogrammings, Congressional 

Notifications (CNs), legislative holds on proposals to shift funds, transfers 

of money, and other procedures enable Congress and the White House to 

determine what countries and programs receive aid and how to address 

changing circumstances that demand alterations in resource priorities. 

At present, the interpretation, management, and operation of these 

procedures is at best unwieldy and at times unworkable. Furthermore, 

different procedures govern the two branches. Within the Legislative 

branch itself, the authorizers and appropriators follow different 

procedures, and the House and Senate obey their own distinct processes. 

Moreover, some of these procedures are informal, while others are 

modified by changes made by Executive branch agencies or Congressional 

committees of jurisdiction. 

To address this problem, the Commission recommends that an agreement 

be struck between the two branches, the two houses of Congress, and 

between authorizers and appropriators on uniform procedures for 

reprogramming, Congressional Notifications and holds, and other 

procedures governing the movement and allocation of funds. While 

rendering the process of allocating, shifting, or withholding funding more 

efficient, the adoption of common procedures would also permit 

increased transparency between the two branches and allow a clearer and 

 30
more comprehensible budget process and accounting. For example, at 

present the Chairmen and ranking members of the committees of 

jurisdiction can hold up a minor reprogramming submission for months 

with no formal mechanism in place to close the matter. Congress has 

taken steps recently to instill more transparency in the Congressional 

earmark process and should consider doing the same for the foreign aid 

reprogramming and “hold” procedures. 

• Recommendation: Strike an agreement on uniform procedures 

for reprogramming, Congressional Notifications and holds, and 

other procedures governing the movement and allocation of funds. 

One improvement would be for the Executive branch to include more 

substantive information and justification in its submission of 

reprogramming notifications, something that would help avoid delays 

caused by legitimate Congressional requests for additional information. 

From the Legislative branch, “holds” that exceed the normal 15-day 

notification requirement should be submitted in writing by the Chairman 

or Ranking Minority Member of committees of jurisdiction so that the 

issue is elevated in subsequent consultations between the two branches. 

3.4 Consolidate, Eliminate, and Realign the Large Number 

of Foreign Assistance Accounts

One of the constraints on the agility of our foreign aid system derives 

from the existence of multiple budget accounts within the International 

Affairs Budget. The Commission believes that a necessary step in reform 

is to align budget accounts with the organizational structure(s) that 

manage our foreign aid, as addressed in depth in Chapter Six. Regardless 

of the institutional arrangement, the Commission recommends that 

Congress and the Executive branch merge the plethora of foreign 

assistance accounts within the International Affairs Budget. The Office of 

Management and Budget (OMB) should start by consolidating the existing 

accounts into four or five major accounts that support development, 

humanitarian, post-conflict and failing states, and security aid activities. 

The Commission also believes that consolidated or realigned accounts, 

while providing flexibility, should also be governed by clear limits on the 

use of funds in each account. Many remain concerned that development 

policy and programs could be compromised if the long-term nature of 

America’s development goals is subsumed by the short-term imperatives 

 31
of foreign policy and national security. The Commission shares this 

concern and believes that transfers of development funds should be 

monitored closely. However, the Commission also recognizes that our 

nation’s foreign policy requires that a portion of our foreign assistance 

resources be available to support U.S. strategic and security interests. 

Although the Economic Support Fund (ESF), or security assistance 

account, was designed to ensure that these short-term imperatives are met, 

real-time imperatives continue to prompt policymakers to seek additional 

sources that often result in shifts from Development Assistance accounts. 

• Recommendation: Fund the ESF account appropriately and 

ensure that management of the foreign assistance budget includes 

provisions making clear that ESF is for short-term economic needs. 

Further, the Development Assistance Account must be ring-fenced 

so as to ensure that funding for long-term goals is protected. 

3.5 Create Two Rapid-Response Funds: a Humanitarian 

Crisis Fund and a Transitional Security Crisis Fund 

The Commission strongly supports the creation of two rapid-response 

crisis funds to help relieve the constant pressure to respond to crises by 

using existing resources already dedicated to important priorities. An 

appropriate size for each fund might be on the order of $500 million 

dollars. 

When an unforeseen crisis occurs that demands a quick response, 

administrations typically pay for the emergency by moving money from 

traditional aid programs, including those focused on long-term 

development. As a result, often when the Executive intervenes, our 

nation’s well-planned, long-term assistance programs suffer, sometimes 

very seriously. 

To relieve such pressures, a rapid-response mechanism needs to be 

established, modeled after the existing Emergency Refugee and Migration 

Assistance Fund (ERMA). The process and procedure to access these 

funds must be very precise. It should begin with a Presidential finding, a 

justification and program implementation plan presented to Congress, a 

clear understanding of the process to submit to oversight information 

requests from Congress, and a requirement that each utilization will 

require the administration to submit a request for replenishment of the 

 32
funds at the first supplemental budget request or the annual budget 

request, whichever comes first. If the conditions are not met, the 

Executive must also run a risk, such as suspending authority to use the 

funds until the administration requests replenishment. 

Recommendation: The HELP Commission recommends that 

Congress authorize two rapid-response crisis funds: 

(1) A permanent Humanitarian Crisis Response Fund that can be 

drawn upon to respond to natural disasters; and 

(2) A Foreign Crisis Fund to allow for maximum flexibility when 

confronted with security challenges.

3.6 Improve Executive/ Legislative Budget Justification 

Submissions

Most Executive/Legislative branch differences manifest themselves in the 

Congressional exercise of the “power of the purse.” Congress has the 

upper hand, but it begins with the President’s budget submission. 

Executive and Legislative branch leaders could initiate productive steps to 

reduce the friction over budget and expenditures in the foreign assistance 

accounts. 

• Recommendation: Adopt the following procedures to improve 

relations: 

1. The Executive should offer a “fenced” or consolidated National 

Security and Foreign Assistance budget that establishes 

appropriation levels for defense and foreign aid, including 

development assistance. In turn, the Legislative branch should 

consider the consolidated budget as a whole, maintaining the 

combined National Security and Foreign Assistance resources. 

2. The Executive should consider joint guidance from the National 

Security Council (NSC) and Office of Management and Budget 

(OMB) that sets program goals, benchmarks and timing. Such 

guidance should be detailed enough to guide individual agencies. 

3. Eliminate the Operating Expense (OE) account as a separate 

line item in the budget in the 150 account, as discussed in 

Chapter Four. 

 33
4. Align priorities of both branches under the actual budget 

processes, timetables, and accounts. Under one possible option, 

the Executive would submit to Congress an optional, revised 

Congressional Budget Justification (CBJ) closer to the time of 

Congressional legislative action on the pending foreign aid 

budget. This modified CBJ would reflect changes in 

administration priorities, money transfers, and significant 

Executive branch policy adjustments that occurred after the 

President’s budget was set late in the previous calendar year. 

This revised CBJ would allow both sides to identify where the 

most problematic differences remained prior to passage of the 

final appropriations and authorization bills. Some of these 

differences might be worked out in advance of enactment and 

reduce the often extensive and time-consuming consultation 

process that can dramatically delay program implementation 

after passage. A revised CBJ could also inform Congress of 

how the current-year program is operating, including the effects 

of reprogramming. Care must be taken, however, not to overtax the Executive branch with an overwhelming reporting 

burden. The Executive should view this as a last opportunity to 

justify resource realignment, not for launching new initiatives. 

Such new activities should require the submission of a budget 

amendment that would include a request for additional funds. 

3.6-1 Improve Budget Processes 

• Recommendation: Invest in a new unified accounting system for 

long-term planning, near-term budget formulation, current budget 

execution, and real-time and historical reporting for our 

development activities, regardless of organizational location. As 

elaborated on in Chapter Seven, coverage of the system would 

extend to all foreign assistance activities of all U.S. Government 

departments and agencies. 

• Recommendation: Create a single point of contact within the 

U.S. Government for reporting to the public and the Congress on 

financial, program, and budget information. 

Budgetary processes, Congressional Notifications, consolidated accounts, 

and the OE budget are not among the most exciting aspects of U.S. 

 34
development assistance; indeed, they evoke unpalatable notions of 

government bureaucracy. But, these seemingly mundane and often 

complex procedures, rules and systems ultimately determine whether our 

nation’s foreign assistance is conceived wisely, programmed transparently, 

or managed effectively. The Commission believes that government rules 

should be designed to provide policymakers with efficiencies and 

taxpayers with accountability; our proposals to modernize these rules and 

regulations aim to do no less. 

 35
Chapter 4: Improve Human Resources; Fix the 

Procurement Process 

For the United States to execute development and humanitarian assistance 

programs effectively, it must have both sufficient capacity and accountable 

means of managing U.S. resources. Regardless of whether foreign 

assistance and humanitarian programs remain under USAID, as 

designated by the “F Process” recently undertaken by the State 

Department, or are moved to a successor agency, the Commission 

strongly believes that America’s development and humanitarian 

aspirations require more skilled people with adequate training to undertake 

the challenging work expected of them. In addition, the Commission 

proposes that the procurement and contracting system at USAID be 

reformed.

4.1 Increase the Number of U.S. Direct-Hire Employees 

Over time, USAID has evolved from an agency that administered 

government-to-government programs into one that conducts aid projects 

through contracts and grants. This changed role has increased employee 

workloads and brought the Agency new and varied responsibilities. In 

addition, many current program activities are more staff-time intensive 

than the aid activities of the past. Most of these responsibilities require 

trained and skilled U.S. direct-hire employees, but the number of Civil 

Service and Foreign Service employees within USAID has shrunk from 

3,163 in 1992 to 2,040 in 2006. Although the Agency has recently 

increased the number of direct hires, current levels are insufficient to keep 

pace with increased program activities. 

In 1992, the Government Accountability Office (GAO) issued a report 

stating that USAID had too many mandates as successive administrations 

and Congresses added new priorities and programs that left the Agency 

with no clear priorities or meaningful direction. The GAO concluded, 

“AID’s program has grown too large and unfocused for its operating 

expense budget and staff levels.” Despite this warning, over the next 

decade, the Agency cut the number of U.S. direct-hire employees and 

increased program funding. 

Program funding has increased significantly in recent years: it grew from 

$7.68 billion in 1996 to $10.66 billion in 2006 (in constant 2006 dollars), 

funding the President’s Emergency Plan for AIDS Relief (PEPFAR), 

 36
rebuilding and reconstruction programs in Iraq and Afghanistan, and 

other Legislative and Executive branch priorities. The Commission 

believes that this proliferation of initiatives, with the administrative and 

human resources requirements they impose, along with the increase in 

program appropriations, impedes the Agency’s ability to execute its duties 

properly. This is particularly problematic given the smaller direct-hire 

workforce. 

In 2003, GAO repeated its warning in its “Report on Workforce 

Planning” and explained the effect of these cuts on USAID effectiveness: 

“Having fewer U.S. direct hires managing more programs in more 

countries has resulted in a workforce that is overstretched, raising 

concerns about USAID’s ability to provide effective accountability for 

program results and financial management.” 

To compensate for its human resource shortfalls, USAID has tried a 

variety of strategies, each with varying degrees of success. The Agency 

relies mainly on U.S. and Foreign Service National Personal Services 

Contractors (PSCs), as well as detailees from other agencies (which are 

reimbursable), Intergovernmental Personnel, Presidential Management 

Fellows, and interns to provide staffing services. The Director of Human 

Resources does not control all, or even the majority of, these different 

hiring mechanisms. In all, the Agency can use from 14 to 24 different 

hiring mechanisms to acquire staff. 

The lack of central control of Agency hiring is problematic and impedes 

human resources long-term planning. Non-direct hiring mechanisms tend 

to fall outside of the Agency’s human resources management structures, 

and deprive the government of the important added value that can be 

achieved through a well-managed workforce, planning, recruitment, 

employee training, and career development program. 

The HELP Commission believes that staffing must be aligned with 

program mandates and funding to ensure proper oversight and 

accountability. We therefore propose the following specific remedies: 

• Recommendation: Substantially increase and better train the U.S. 

foreign assistance agency’s direct-hire workforce. Merely to fulfill 

current mandates, USAID or its successor agency needs a 

substantially larger, better-trained workforce to reduce its 

 37
dependence on PSCs. Restoring staff to a level twice that of 

current direct-hire employees would not be unreasonable. 

This report recommends reforms to our programs and foreign assistance 

structure that will require additional staff as well. For example, an 

important aspect of the funding proposal discussed in Chapter Seven calls 

for ensuring appropriate staffing once country goals and plans are 

determined. A new strategy for human capacity will be needed that 

incorporates these changes and anticipates staffing needs for the future. 

Much of USAID's current human resource management practice is based 

on the expectation that individuals will remain with one entity in a closed, 

bottom-entry Foreign Service system until they retire. Such a system is illsuited to today's mobile employees, who might change jobs several times 

over the course of their careers. 

• Recommendation: Adopt the best practices of modern human 

resources management within our nation’s foreign assistance 

agency. In keeping with employee wishes for greater mobility, 

USAID should accept mid-career hires, unpaid sabbaticals, and 

other flexible employment practices, including granting employees 

the option to leave the Agency and then return. 

4.2 Lengthen Overseas Postings and Improve Training

Development requires social, political, and economic change. These 

changes range widely and include complex intervention in fields that 

include, for example, combating government corruption, changing land 

tenure patterns, modernizing entrenched traditional farming techniques, 

and reforming the domestic laws and customs regarding marriage and 

family. To be effective, employees operating in such arenas need to 

develop in-depth knowledge of local cultural practices, values, and 

languages. Yet the depth of understanding and experience that this work 

requires cannot be created under the current personnel practices. The 

average length of an overseas assignment is three years. 

• Recommendation: Lengthen overseas assignments of foreign 

assistance agency staff when feasible. Moving personnel from 

country to country or region to region on short rotations prevents 

foreign assistance staff from developing the level of expertise they 

need. 

 38
Another challenge for USAID is the limited training it can offer 

employees. Because training and salaries for U.S. direct hire staff must 

come from the Operating Expenses (OE) budget, USAID lacks the 

resources to develop its own training programs. (OE will be discussed in 

greater detail below.) It also has insufficient staff to provide a “training 

float” for appropriate instruction. The result is that foreign aid personnel 

cannot get the training they need to do their best work. Given that more 

than half of all Foreign Service Officers joined the Agency in the last eight 

years, USAID needs to provide Agency-specific training to enable them to 

perform as fully qualified managers for the ever more complex missions 

they will undertake. To help repair these shortfalls, the HELP 

Commission proposes these actions: 

• Recommendation: Recruit and train the development agency 

workforce to the same standard of language and cross-cultural 

sensitivities as its counterpart in the Foreign Service at the U.S. 

Department of State. Provide sufficient funding for training in 

critical competencies. 

4.2-1 Support Change Management Techniques 

Because the vast majority of U.S. foreign assistance dollars and programs 

are designed to stimulate change in recipient countries, foreign assistance 

should promote change. Our nation does not invest in health care, 

education, justice and anti-corruption, infrastructure, agriculture, and jobs 

to maintain the status quo. Our nation spends money because we think it 

will enhance both our national interests and the interests of the recipients. 

We do so to encourage change. 

Whether acting as direct employees of the government or through NGOs, 

religious institutions, educational groups, or contractors, those 

representing the United States should be knowledgeable about the nature 

and process of change. If change is America’s objective, a fundamental 

shift in this critical field of knowledge by U.S. employees and our agents is 

necessary to improve results. 

Leading change is much more than just making the right policy decision or 

selecting the best leaders. Proven methodologies for managing change 

make clear that advocates, sponsors, agents, and targets of change all have 

specific roles they must play for change to be effective and enduring. If 

those relationships are understood, the challenge for the U.S. 

 39
Government’s representative becomes much clearer and the probability of 

success much greater. 

In some cases, leaders and mentors need to recognize that change 

produces resistance, which should be made visible so that it can be 

addressed, and that a certain level of resiliency should exist before the 

beneficiaries of the change can adopt a new way of doing things. Those 

same leaders and mentors should also understand their essential roles in 

the process and how their commitment and communications are key to 

effective implementation of change.3

• Recommendation: Train U.S. foreign assistance personnel in 

change management techniques. 

4.3 Eliminate the Requirement for a Separate Operating 

Expense (OE) Account 

A common view of administrative expenses is that they are useless or 

wasteful overhead costs. Worried that USAID was spending too much on 

overhead costs as a percentage of program costs, in 1976 the Senate 

Appropriations Committee added a line item account, the so-called 

Operating Expense account, to the appropriations to separate the cost of 

doing business from the cost of development and humanitarian programs. 

The intention was to prevent the day-to-day costs of running the Agency 

from diverting funds from program implementation. 

Over time, the effectiveness of a separate OE budget has eroded. During 

the past 30 years, Congress and the Executive branch have allowed 

program funds to be used to pay for the costs of activities once funded 

from the OE account while cutting the OE budget. In a 2003 GAO 

report, USAID officials reported: “Congress has increasingly encouraged 

the Agency to use program funds to support certain administrative costs.” 

The average amount of program funds that the Agency managed between 

2002 and 2006 was $11.8 billion, which represented a 46.8 percent 

increase over the average program funds obligated from 1997 to 2001. 

During the same period, OE obligations only increased by 7.8 percent. 

In 2006, Operating Expense obligations were $740 million, which is just 

6.9 percent of total program fund obligations. That same year, USAID 

spent an additional $660 million from program funds on administrative 

costs. When the Commission interviewed USAID employees overseas, 

they reported that budgetary constraints imposed by the OE account 

 40
resulted in the missions not having sufficient funds to visit projects in 

remote areas and that they were thus unable to provide proper oversight. 

The existence of an Operating Expense account side-by-side with an 

ability to use program and project funding to perform the same tasks has 

undermined the original intent of the OE account. 

• Recommendation: Abolish the OE account and replace it with a 

more accurate accounting process. 

The Commission believes that the USAID OE account no longer serves a 

useful purpose. While it might have been constructive in bringing clarity 

to the cost of doing business in the 1970s, another system should be 

developed that calculates true administrative and management expenses, 

including those now funded with program or project funds. This new system 

needs to allow administrative expenses to be properly managed and monitored and needs 

to ensure that Congress receives clear, timely and transparent information regarding 

these expenditures. 

4.4 Reform Procurement and Grant Functions4

The grant and contract award procedures applied to foreign assistance 

programs that were developed in response to the severe shortage of direct 

hire personnel do not meet the highest standards of public confidence and 

transparency. These processes and their outcomes have provoked 

widespread complaints both inside and outside of government. 

Agencies in modern governments of all kinds rely more and more upon 

outside nonprofit and commercial entities to carry out functions that their 

own employees once performed. Over the last 20 years, the contract and 

grant award processes used by U.S. Federal agencies have transformed 

from an occasional administrative support function into what is now often 

the agencies’ main responsibility. Agencies currently accomplish their 

missions principally by awarding grants and contracts to non-federal 

entities. The consequences of this shift across the government are 

underappreciated. 

At USAID, the contract and grant award processes have not received the 

management attention and support commensurate with the central role 

they play in the Agency’s mission. An inadequate number of people are 

assigned to these duties, and the Agency’s central Office of Acquisition 

 41
and Assistance is currently short by about 16 percent of its authorized 

staffing level. 

Partly in response to chronic management problems in the grant and 

procurement award systems, USAID during the past 12 to 15 years has 

altered its operations. It has turned to umbrella grants and contracts and 

other mechanisms that do not provide as full, open, and transparent 

competition as previous procedures provided. As a result, opportunities 

for smaller contractors and non-governmental organizations to compete 

for USAID funding have been restricted or even eliminated. Many believe 

that the adoption of umbrella mechanisms will eventually drive out all but 

a handful of firms and large NGOs from the U.S. foreign aid program. 

Indeed, the share of Agency contracts awarded to the top five contractors 

rose from 33 percent ($57.3 million) in Fiscal Year 1996 to 52 percent 

($1.4 billion) in Fiscal Year 2005. 

Federal laws and regulations permit these mechanisms. But when used as 

extensively as they are now with many USAID grants and contracts, these 

mechanisms become questionable. 

The established principle of government contracting is that full and open 

competition for well-defined goods or services produces the best value for 

the taxpayers. The Commission believes that more such full and open 

contracting will produce positive benefits for the American taxpayer and 

for the aid recipient countries. 

America requires the foreign governments we assist to adopt procurement 

procedures that meet high standards of accountability and transparency. 

The United States would improve its credibility if all of our nation’s 

foreign assistance programs, regardless of the agency in charge of them, 

could serve as models for full and open competitive procedures. 

The key recommendations that the U.S. Government should adopt are: 

• Recommendation: Recognize contract personnel as key 

contributors to program success. Devote sustained high-level 

attention to the substance of program design, the selection of 

implementers, the post-award surveillance of performance, and the 

processes by which these are accomplished. 

 42
• Recommendation: Provide U.S. foreign assistance agencies with 

sufficient staff and related funding so that grant and contract 

operations can proceed appropriately. Use transparent and 

competitive processes to the maximum extent possible, which will 

require a substantial increase in U.S. procurement personnel at 

USAID — perhaps as many as 125 additional people. 

• Recommendation: Limit the size, range of activity, and number 

of umbrella contracts and grants that are awarded. Ensure that 

large, multi-year, multi-million dollar projects are subject to full and 

open competition. 

• Recommendation: Harmonize procurement practices, guidelines, 

and policies across all major foreign assistance programs when 

possible, and incorporate state-of-the-art procurement practices. 

Adopt and enforce policies and procedures within the foreign 

assistance agency that: (1) are uniformly followed both in 

Washington and in the field missions; (2) resolve common contract 

and grant issues consistently; and (3) handle post-award 

interventions similarly. Such policies and procedures can be crafted 

to achieve the sought-after uniformity of process without 

compromising the ability of overseas missions to tailor 

development assistance to local conditions. 

• Recommendation: Minimize “tied aid” procurement 

requirements. According to the Center for Global Development’s 

publication “U.S. Assistance for Global Development,” U.S. laws 

on development assistance require that “...70% of these funds 

must be spent on U.S. contractors and goods. This ‘tied aid’ may 

be good for the U.S. economy, but it substantially reduces the value 

of U.S. assistance by up to 25%, because poor countries are not 

permitted to purchase less expensive goods and services of equal 

quality elsewhere.” 

• Recommendation: Permit only direct-hire employees of the U.S. 

Government to write Requests for Proposals (RFPs) and Requests 

for Applications (RFAs), barring extraordinary circumstances. 

• Recommendation: Design new procurement processes and 

vehicles to help implement other recommendations of this 

 43
Commission. Take into account through these processes the 

increased participation of recipient countries in their own assistance 

plans, as well as new efforts to monitor and evaluate the 

effectiveness of development assistance. 

• Recommendation: Enact legislation to include host country 

recipients, civil society, and government officials as substantive 

participants in the grant and contract scoring and award processes 

in order to ensure country ownership of the projects. 

In order to achieve a best-practices standard of procurement and 

contracting, these additional steps should be taken: 

1. Foreign assistance agencies must be given the funding necessary to 

develop and implement a professional training program for all 

employees participating in the grant and contract award processes. 

Program office personnel who have a key role in defining 

government requirements, drafting solicitation documents, 

evaluating proposals, and conducting post-award surveillance of 

grant and contract performance must be included. The Defense 

Acquisition University's rigorous and extensive training for DoD 

acquisition personnel could serve as a model. Done correctly, the 

program would go beyond a one-time course. 

2. The Administrator of USAID should immediately strengthen the 

independent evaluation unit to monitor contract officers' 

performance and help ensure checks and balances. USAID needs a 

stronger central operations unit within its contract and grant 

functions to develop these higher standards and put them in place. 

3. The Inspector General (IG) at USAID should elevate to a higher 

priority the program audits of the Agency’s contract and grant 

functions performance. An independent voice can help the 

Administrator address what are believed to be entrenched 

management and administrative failings. While the IG’s current 

focus on fraud and abuse should continue, paying more attention to 

inefficiencies and other waste in grant and contracting processes 

might yield even greater savings. We recommend that additional 

funding be provided to the IG’s office if needed to carry out this 

work. 

 44
4. The USAID Administrator should take steps to ensure that 

leadership at the Agency’s Office of Acquisition and Assistance will 

commit to at least five years of service. Re-invigorating the 

Agency’s grant and contract award systems and inculcating the 

values of the new systems will require at least that great an 

investment of time. 

5. The USAID Administrator should establish an ambitious internal 

goal to develop partnerships that encourage greater use of minority, 

disadvantaged, women-owned, and other small businesses, as well 

as minority and smaller NGOs, as prime contractors and grantees. 

The Administrator should also launch more initiatives to reach new 

types of development partners and funding sources, such as is the 

case with PEPFAR’s New Partners Initiative,5

 provided they are 

not done via formal set-asides. 

6. USAID policies that serve no significant public purpose should be 

abolished. This would include, for example, restricting an 

individual’s salary while ignoring the total costs charged for his or 

her services. 

7. The distinction set forth in the Federal Grant and Cooperative 

Agreement Act of 1977 among grants, cooperative agreements, and 

contracts should be respected. Program and contract officers 

should be trained to apply consistent criteria in choosing among the 

different mechanisms, and their decisions should be subject to 

stringent review. 

 45
Chapter 5: Create a New Business Model for Growth 

to Capitalize on What the U.S. Does Best 

Assistance can alleviate suffering, provide some of the know-how to 

compete in the global marketplace, help remove obstacles to economic 

growth, and encourage reform-minded leaders to challenge the status quo. 

But sustainable development is primarily a function of leadership within 

the recipient country. Leaders who recognize the importance of good 

governance and the rule of law are often best suited to drive development. 

While one goal of U.S. foreign policy is to promote good governance and 

human rights in the developing world, an equally challenging objective is 

to assist countries in their efforts to create sustainable economic growth. 

A new, flexible business model should include a broader “basket of tools” 

than solely foreign aid, and should allow for flexibility on some policies 

that can affect development. The new business model also needs to focus 

on building local management capacity and leadership skills in order to 

help countries promote growth. Our nation’s foreign assistance programs 

do not have to address every problem in every sector; we should capitalize 

on what we do best. 

• Recommendation: Create a new business model for foreign 

assistance programs based on the following eight core principles. 

5.1 Core Principles of the New Business Model

5.1-1 Principle 1: Understand that Development Must Be Locally 

Led and Owned 

Development assistance is by its nature cooperative and is most effective 

when undertaken as a partnership between the donor and the recipient. 

The United States cannot force a country to develop; at best, our nation 

can help identify and remove external obstacles to growth and encourage 

national and local leaders to take the necessary steps for change. 

The ultimate responsibility for development falls squarely on the public 

and private leadership of developing countries. When leaders and the 

people dedicate their energies to development and institute policies that 

drive toward self-reliance, the United States should do everything it can to 

 46
assist them in accomplishing their goals. The U.S. Government must work 

alongside public and private partners to create plans tailored to each 

country’s cultural, social, and economic conditions, and reject “cookiecutter” plans and programmatic earmarks. Recipient states must detail 

how and when the United States can be most helpful, and our leaders 

must listen and help them achieve their priorities. When listening to 

recipients, we need to listen to both women and men because experience 

teaches us that sometimes the answers are quite different. 

A country-driven approach to development not only ensures that 

programs are adapted to fit the country’s unique circumstances, but also 

increases the chance that development gains will be sustained long after 

U.S. funding ends. By adopting policies and programs based on 

collaboration and joint commitment, America will enhance the ability of 

people in the developing world to sustain pro-growth policies able to 

propel their countries toward political, civil, and economic stability. 

Partnership requires a long-term commitment from both parties. When 

all agree on common priorities and make investments that are 

commensurate, everyone is accountable for the results, and sustainability is 

achieved through mutual accountability. 

5.1-2 Principle 2: Acknowledge the Importance of Private Partners 

Although many think only of Official Development Assistance (ODA) 

when considering foreign assistance or development, the role of private 

philanthropy should not be overlooked. Private philanthropists and 

foundations, multinational corporations, non-governmental organizations, 

co-operatives, faith-based organizations, and universities are increasingly 

engaged in the developing world through charitable giving and through 

development activities which were formerly the exclusive purview of 

governments. 

Philanthropy is important not only because of its size, but also because of 

its nature. It can be flexible and adapt easily to circumstances on the 

ground. Philanthropic organizations often have a higher tolerance for risk 

than does the government. Some organizations approach philanthropy as 

a form of venture capital. They bring innovation to the developing world 

and expect to see tangible results from their investments of material and 

intellectual capital. 

Our elected leaders should capitalize on the unique skills and assets that 

other segments of our society can bring to bear. They should look to 

 47
outside sources of investment in developing countries as opportunities to 

leverage our own foreign assistance expenditures. And if the private 

sector and/or the philanthropic community can achieve a desired 

outcome more efficiently, the U.S. Government should consider stepping 

aside. 

The Global Partnership Center (GPC), an outgrowth of the Secretary of 

State’s Advisory Committee on Transformational Diplomacy, is important 

to building a partnering capacity that will engage the private sector in a 

unified manner. Expanding on the lessons learned from USAID’s wellreceived Global Development Alliance (GDA), the GPC could be one 

vehicle for integrating the partnering efforts of the Department of State 

with other agencies overseas. This could align our nation’s collective 

efforts, reduce duplication, and enhance the ability of the U.S. 

Government to partner with the private sector. The result would likely be 

more robust, outcome-oriented, multi-sector international partnerships 

that fulfill our nation’s strategic objectives. 

5.1-3 Principle 3: Embrace Risk and Innovation 

Some of the greatest contributions to economic growth and development 

have come through technological advances. New technologies help 

societies grow, and America has historically been a leader in promoting 

technological innovation. For example, the U.S.-led Green Revolution of 

the 1960s delivered hundreds of millions of people from starvation by 

providing a broad range of inputs including genetically improved seeds. 

Success has not always come from a major breakthrough; often it comes 

from consistent application of a known solution. Bed nets for malaria, 

vaccines for smallpox and polio, oral rehydration salts for diarrhea, and 

“smart cards” for business loans to organizations without bank accounts 

in poor areas are solutions that have improved human lives and boosted 

local economies. 

Yet, our naturally risk-averse government prefers to see immediate results 

and tends to reuse traditional methods when designing development 

assistance programs. While America remains committed to research and 

development (R&D) in defense matters, particularly through the Defense 

Advanced Research Projects Agency (DARPA), the United States in 

recent years has failed to apply our nation’s R&D expertise to the 

challenges of the developing world. The HELP Commission believes that 

our nation’s leaders must get past their fear of failure and should be 

 48
willing to accept the risk that comes with more innovative approaches to 

these critical problems. 

5.1-4 Principle 4: Increase Flexibility 

The world is complex, with no two countries in the developing world 

facing identical challenges. Political, economic, and social characteristics 

of each country are unique and so generate different problems and 

capacities for change. In addition, events ranging from changes in 

weather patterns to natural disasters to commodity price fluctuations can 

send the economy of a promising and growing country into chaos. 

Accordingly, the Commission believes that development programs should 

be designed in ways that allow them to adapt to changing conditions on 

the ground over the long term. What makes sense when a particular 

program is first designed might no longer work two years later. 

Monitoring and evaluation mechanisms should be used to obtain 

information about the effectiveness of a program while it is in progress, 

and our foreign assistance system should allow for change when necessary. 

Such flexibility will ensure that development assistance is effective and 

efficient over the long term. 

5.1-5 Principle 5: Reward Graduation 

A significant portion of our development assistance does and should 

support countries as they put in place the necessary policies and 

procedures for change. It is not an indefinite commitment: political 

reform, poverty reduction, and economic growth should reach levels that 

allow a developing country to be designated “beyond assistance,” to 

graduate, and to stand on its own. 

In the past, successful development assistance efforts often culminated in 

graduation when foreign aid recipients had grown their way out of 

absolute poverty and could sustain their own development without further 

international economic assistance. Taiwan and South Korea are two of 

the most celebrated and familiar examples. For some time, both countries 

received significant amounts of aid, but developed past the point of 

needing it. Botswana had a similar experience. According to the Center 

for Global Development, for Botswana and South Korea both, “U.S. 

assistance...[in] the early stages of their development amounted to 5% to 

10 % of their national incomes and helped them become the two fastestgrowing low-income countries over the past 40 years. As their incomes 

grew, U.S. assistance tapered off, and both countries now rely on private 

 49
capital markets to finance their development.” As outcomes like these are 

obviously the goal of most of our foreign assistance, the U.S. Government 

must develop a clear understanding of what graduation involves and 

measure progress toward its achievement when evaluating program 

performance. 

As we gain a clearer understanding of how all the “tools in the toolbox” 

can be used to help countries that are implementing the necessary policies 

and procedures to raise living standards, we need to celebrate those 

countries that are graduating from receiving foreign assistance. We should 

not reward a country’s successes by prematurely cutting off all aid. And 

moving beyond development assistance does not mean that a former aid 

recipient no longer needs our support. Moving beyond development 

assistance means that the U.S. Government will have new types of 

relationships with the graduated counties’ institutions, both government 

and private, when they are successfully managing their own affairs. The 

new relationships will in part revolve around opening new avenues for 

trade and investment, as well as sharing best practices and ideas. 

5.1-6 Principle 6: Focus on Programs that Will Lead to Economic 

Growth 

Only with steady jobs and long-term economic growth can those countries 

with the proper policies emerge from poverty. In its 2007 report to the 

Canadian Senate, Overcoming 40 Years of Failure: A New Road Map for SubSaharan Africa, the Standing Committee on Foreign Affairs and 

International Trade concurred: “African people do not want us to provide 

their social programs; they want viable economies, skills and technology, 

and jobs.” 

To be successful, U.S. assistance programs must help countries create the 

economic foundation for growth. They also must enhance the capacities 

of people in developing countries to address the cultural, political, and 

social obstacles to growth. 

The HELP Commission finds merit in the Canadian Senate’s conclusion: 

The international community of donors must also shift 

its focus on Africa towards the things that African 

citizens and leaders actually want — assistance in 

generating investing [sic], creating jobs, and facilitating 

trade. The Committee has concluded that forty years of 

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foreign aid has done little to propel Africa from 

economic stagnation or to improve the quality of life on 

the continent.... Developed countries must redirect 

international assistance towards building stronger 

economies on the continent.

5.1-7 Principle 7: Concentrate on Results and Improve Monitoring 

and Evaluation 

As discussed in Chapter Seven, all assistance programs must have robust 

monitoring and evaluation, as well as an improved feedback mechanism to 

ensure effectiveness. Noted economists from MIT’s Poverty Action Lab, 

Esther Duflo, Rachel Glennerster, and Michael Kremer, emphasize the 

point. In an article on randomized evaluations, they assert that: 

Having strong evidence about what works is important 

for many reasons. Non-governmental organizations 

(NGOs) and governments can use this evidence to 

focus their limited budgets on those programs that are 

most effective. With widespread cynicism about the 

effectiveness of aid, providing clear evidence on the 

impact of different programs can also help galvanize 

support for more development assistance. 

The HELP Commission believes that programs should have objectives 

that are measurable and achievable. We also support sustained monitoring 

to ensure effectiveness and to allow for mid-course corrections. Finally, 

we believe that independent evaluations must be focused on outcomes. 

Interventions in states must be quantifiable, with numerical goals and 

timetables, and programs must have specific objectives, which could be 

measured, evaluated, and re-assessed. (See also Section 7.6-4.) 

5.1-8 Principle 8: Support the Promotion of Democratic Principles 

and Recognize that Good Governance and Accountable Leaders 

Advance Development 

The U.S Government’s Democracy and Governance (D&G) assistance 

activities, which include efforts associated with rule of law, human rights, 

good governance, political competition, consensus-building, civil society, 

and election assistance, have grown from $509 million in 1999 to $1.2 

billion in 2006. They have risen to be of such magnitude and moment 

because a fundamental problem confronting much of the developing 

world today is a lack of good governance. 

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The HELP Commission unanimously believes that one of the prominent stated goals of 

U.S. foreign assistance should be to promote democratic principles so that nations are 

well and justly governed and accountable to their citizens. 

Democracy embodies political liberty and is therefore the best opportunity 

to realize free elections, independent judiciaries, and a representative 

legislature. In turn, political systems that incorporate the principles of just 

governance and accountability to citizens also usually produce greater 

economic opportunity for more of their citizens. However, because 

free elections alone do not necessarily guarantee either economic liberty or 

equality of opportunity, D&G activities should also support and reward 

developing countries which fundamentally seek to protect human rights, 

reduce corruption, increase the quality of governance, and undertake other 

reforms to promote democratic principles. 

The Commission recognizes and agrees that the U.S. Government 

sometimes appropriately uses foreign assistance to help meet the needs of 

citizens of countries whose governments have not embraced democratic 

practices. And the Commission also understands that, in all cases, local 

leadership and country ownership are critical to long-term economic and 

political development. Former Secretary of State Colin Powell recognized 

this latter condition as well when he commented in November 2003: 

“Economic and political reform cannot be imposed. It must come from 

within, from the people themselves freely using tools of their own 

prosperity. Liberty must be earned. But the friends of liberty can make a 

loan, so to speak. A loan of experience. A loan of encouragement.” 

5.2 Applying our Principles in Recommendations

This Chapter has outlined core principles and best practices that the U.S. 

Government should incorporate into its program design and 

implementation to increase the effectiveness of its development assistance 

and promote growth. Below are several examples that illustrate how 

following these recommendations would improve the effectiveness and 

outcomes of our programs and policies. Included also are several 

examples of how specific development priorities — including, for 

example, small business, technology, agriculture, and education — might 

incorporate this innovative business model. 

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5.2-1 Create an Initiative to Support Small and Medium Enterprises 

In the developed world, small- and medium-sized enterprises (SMEs) are 

the backbone of the national economy and the foundation of the middle 

class. In the United States, SMEs have created over 60 percent of net new 

jobs each year for the past decade, and more than half of “non-farm 

private gross domestic product” comes from SMEs. In the economies of 

most developing countries, however, small and medium businesses in 

sectors beyond basic retail are rare and struggling. While an average of 

51.5 percent of GDP comes from SMEs in high income countries, SMEs 

account for only 15.6 percent of GDP in low income countries. As a 

result, they often employ only a few workers and cannot grow or trade 

across borders. 

To be sure, small and medium businesses in developed countries have 

countless advantages over start-ups in the developing world. But to 

maximize the opportunities for enterprises there, the U.S. Government 

should, perhaps in partnership with private entities, expand upon the 

efforts of other development agencies to provide technical assistance to 

aspiring small business owners. We should also consider providing 

modest-sized loans, loan guarantees, and equity investments to support 

the growth of financial, commercial, and industrial enterprises which do 

not have access to private capital. 

This initiative would have to be rigorous and systematic in many ways. A 

government’s eligibility for assistance would be determined by objective 

criteria. If the government meets these eligibility criteria, assistance would 

then flow to those non-micro enterprise entrepreneurs — generally, those 

who employ between ten and 250 people — who would be most apt to 

benefit from assistance and who do not have adequate access to private 

capital markets for equity and debt financing. 

• Recommendation: Provide technical assistance from the U.S. 

Government to aspiring small business owners in developing countries. 

 

• Recommendation: Consider offering modest-sized U.S. 

Government loans, loan guarantees, and equity investments to support 

the growth of financial, commercial, and industrial enterprises. 

Require within the authorizing legislation that all investment capital be 

repaid to the U.S. Treasury. This is designed to spur increased job 

creation, and to lead to sustainable economic growth. 

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5.2-2 Create an Institute to Support Technology Research 

One way to ensure that risk-taking and innovation are fully integrated into 

our nation’s foreign assistance programs is to establish a research and 

development organization to create the technology that will change 

people’s lives in the developing world. Technology is increasingly 

becoming a part of daily life even in poor countries. More importantly, 

the scientific and technological capacity of developing states is also 

growing. The African Laser Centre, for example, is a virtual organization 

of scientists from across Africa working on, among other things, laserguided means for assessing the condition of crops. Biotechnology, climate 

research, other physical sciences, science-based approaches to mitigating 

local environmental stresses, biofuels, information technology (IT), 

communications, and other technologies all provide opportunities for 

partnerships with American organizations.

 

• Recommendation: Create a new U.S. Government organization that 

can develop and apply innovative technologies to development 

problems in order to jumpstart research and development aimed at 

reducing global poverty. 

This organization, which we suggest be called the “Development 

Applications Research Institute” (DARI), could be modeled on DARPA 

and focus on building technology in all relevant development areas, 

including agriculture, health and education. DARI would also incorporate 

change management techniques into its operations in order to spur 

adoption of new breakthroughs. Like DARPA, it would take on longterm projects and welcome risk-taking, with the understanding that risktaking implies potential losses as well as gains. In addition, much of the 

organization’s work would be carried out in partnership with the 

developing countries themselves, as a way to spur the development of 

local R&D capabilities and to ensure that local expertise informs solutions 

destined for local use. 

DARI would have to be carefully structured to ensure accountability and 

performance in the service of developmental goals. To create a flow for 

communicating real-world problems, the head of DARI could serve as 

science advisor to the lead U.S. Government official in charge of 

development policy. At the same time, staff could proactively seek new 

ideas for funding from private enterprise and research universities to 

ensure the broadest range of inputs. All research would be subject to peer 

 54
review to ensure quality. DARI would have to be able to contract with 

non-U.S. public and private institutions as well as with U.S. private, 

educational and philanthropic entities to provide the broadest possible 

access to ideas. In addition, DARI would only fund projects that would 

lead to practical application of technology by poor people in the 

developing world. 

America needs to build a successful new R&D organization that is 

devoted to development. The cost would be relatively small, on the order 

of $50 to $100 million a year, but DARI could transform countless lives. 

Its cost is easily justified by solving a “market failure.” In other words, 

private markets probably have not responded to these needs because of 

the anticipated small market and low expected private return. However, 

these are outweighed by the high expected social return. DARI also could 

help alleviate suffering around the world and restore our country’s 

reputation for leadership in innovation. 

5.2-3 Increase Local Purchases of Food Aid 

A key example of the need for flexibility can be found in the U.S. food aid 

program. America donates more food than any other country in the 

world; our nation provides more than half of all global food aid. Since 

2003, the United States has provided nearly two billion dollars per year in 

annual and supplemental funding for U.S. international food aid programs, 

and in 2006, our nation’s largest food aid program, Title II of P.L.480, 

aided more than 70 million people. By any measure, food provided by 

American farmers has ameliorated hunger and saved the lives of millions. 

Yet CARE — one of the world’s largest charities and a major participant 

in American food aid programs — intends to phase out the approximately 

$45 million of funding it receives through U.S. food aid programs because 

of the potentially harmful effects of America’s food policies on developing 

countries. Other organizations that carry out food programs, including 

Adventist Development and Relief Agency, Food for the Hungry, and 

World Vision have suggested that American-sourced food aid makes the 

most sense when a low-income country already relies on commercial 

imports for sufficient supplies of a given commodity. 

With modest changes in policy, American food aid could be made much 

more efficient and effective. As of now, P.L. 480 requires 75 percent of 

the food aid delivered from America to be carried on ships carrying the 

U.S. flag. That means nearly two-thirds of total funds for U.S. emergency 

 55
food aid now goes to pay for transportation and associated costs rather 

than for actual food. If America allowed food purchases to take place 

closer to the points of delivery, while holding alternative suppliers 

accountable for quality and food safety, ocean transportation costs and 

delivery times would be cut. In addition, U.S. assistance could help to 

stimulate local markets and thus have a positive impact on local producers. 

The Bush Administration has indicated the need to amend U.S. laws to 

increase the amount of food our nation’s aid dollars provide by increasing 

the amount of food that is purchased from markets in close proximity to 

areas of need. The HELP Commission strongly endorses these changes in 

P.L. 480 to permit more local food buying. Senator Tom Harkin has 

proposed a pilot program to improve the efficiency of food aid, saying, 

“The goal is to help us respond more quickly to dire humanitarian 

emergencies.” Although we recognize the substantial political 

impediments to changing the P.L. 480 purchasing regulations, the HELP 

Commission believes these changes are appropriate and will go far toward 

helping developing countries. 

5.2-4 Engage the American People in Development Partnerships 

For us to succeed, the American people need to be engaged in support of 

development and humanitarian assistance programs. When the United 

Kingdom revamped its foreign aid program, the reform was carried out in 

concert with an extensive domestic public diplomacy campaign to educate 

the British people about the importance of foreign aid to their lives. We 

believe that American citizens, companies, philanthropies, NGOs, 

cooperatives, universities, and faith-based organizations can be very 

effective at promoting understanding, in the United States, of positive 

change in developing countries. These combined efforts can be as modest 

as an individual farmer from Iowa collaborating with a farmer in Kenya, 

or as extensive as the Bill & Melinda Gates Foundation’s work on 

HIV/AIDS. The HELP Commission refers to this phenomenon as 

“Americans for Development” and believes that Americans’ involvement 

in our nation’s foreign assistance programs will lead to a better future for 

the millions of people trapped in poverty around the globe. To the extent 

that Americans are aware of opportunities to be involved in development 

activities, we can magnify the potential for partnership. 

• Recommendation: Overhaul, rejuvenate, and adequately fund 

Biden-Pell Development Education Programs, an initiative begun 27 

years ago in order to promote better engagement of Americans and 

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foreign nationals living in the United States regarding development 

issues. 

The late HELP Commissioner, former Congresswoman Jennifer Dunn, 

was passionate about increasing the engagement of the American people 

in promoting poverty reduction. Therefore, we recommend that a revised 

and expanded Biden-Pell Development Education Program be enacted 

and that the legislation be named the Biden-Pell-Dunn Act. 

The Commission regards USAID’s “Lessons Without Borders” initiative 

as a possible means of encouraging engagement. This program was 

started in the mid-1990s to bring lessons learned in developing countries 

to the United States for application to similar problems. 

• Recommendation: Clarify the intent of the statutory provisions 

(Sec. 539 of the Foreign Operations, Export Financing, and Related 

Programs Appropriations FY2006, as continued in FY2007 and 

FY2008) that have, at times, been interpreted by Executive agencies 

to limit their ability fully to explain U.S. development activities to 

the American people. The Commission believes that this 

clarification would facilitate the government’s communication with 

the American people aimed at raising their level of understanding 

about and support for foreign assistance. 

5.2-5 Shore up Agricultural Development Programs 

The United States has long been recognized as a worldwide leader in 

agricultural research, training, and innovation. One needs to look no 

farther than the history of the Green Revolution and the involvement of 

USAID and the Rockefeller and Ford Foundations for evidence of our 

country’s past commitment to agricultural development. According to 

former USAID Administrator Andrew Natsios, the Agency is “restoring a 

focus on agricultural development that was diminished in the 1980s 

because of budget cuts.” This change in policy could not come at a better 

time. 

The World Bank reports that 75 percent of the world’s poor still live in 

rural areas. Many of these people live in land-locked countries that lack a 

competitive advantage in manufacturing and so depend on what they can 

produce locally. One of the most immediately useful types of assistance 

for the rural poor is that which supports agricultural development. 

According to one study of 62 countries, agriculture’s direct contribution to 

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GDP growth per worker averages 54 percent, while the non-agricultural 

sector accounts for only 17 percent. 

Indeed, during the HELP Commission’s visit to Malawi, we saw that a 

family’s income increased 12-fold when it was provided with one cow. It 

should not come as a surprise that the MCC has budgeted about threequarters of compact funding in Africa for transportation and other 

infrastructure projects (37 percent) and agriculture and rural development 

projects (39 percent). 

Shortly after becoming President of the World Bank, Robert Zoellick 

declared that a Green Revolution for Africa would be among his top 

priorities, and he devoted his first World Development Report to 

agriculture. The Report asserts that a yield for cereal crops in sub-Saharan 

Africa is less than half of South Asia’s and about one-third of Latin 

America’s. 

Innovation in agricultural development programs will make alreadyavailable technology accessible to developing countries and adapt 

strategies for dry-land farming, irrigation, insect control and soil erosion 

management to the situations on the ground. In fact, a lot of progress and 

technological advances have already been made in African agriculture, 

such as the development of high-yield maize, biological control for 

cassava, and genetically engineered rice. America should support these 

initiatives and others like them, encourage risk-taking, and look for 

ground-breaking new ideas. 

Partnership is also important when designing agricultural assistance 

programs. As in the original Green Revolution, major actors in the private 

sector are already ably working toward a Green Revolution for Africa. 

Among these are the Bill & Melinda Gates and the Rockefeller 

Foundations, which joined together to create the Alliance for a Green 

Revolution in Africa (AGRA) in 2006. According to the group’s website 

AGRA began with $150 million in funding and aims to improve 

agricultural development in Africa over the long term “by addressing both 

farming and relevant economic issues, including soil fertility and irrigation, 

farmer management practices, and farmer access to markets and 

financing.” Our government should support the efforts of AGRA and 

organizations like it and work with them whenever possible to promote 

agricultural development. 

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In addition to partnering with private actors, American agricultural 

assistance programs must be designed and implemented with the full 

participation of national and local leaders. In his remarks to the 

Congressional Black Caucus, AGRA’s Vice President, Akinwumi Adesina, 

praised the technological innovations that have brought success to some 

areas of agriculture in Africa, but he also cautioned against an overly 

optimistic outlook: 

While these are all significant achievements, technically, the 

challenge has been lack of bold policy, pricing and 

institutional support systems to accelerate adoption by 

hundreds of millions of farmers as was the case during the 

Asian green revolution. The missing role of the state in 

providing the needed incentives and market support 

systems to allow for large-scale adoption of these 

technologies is the major reason why Africa has not 

achieved a green revolution of similar scale in Asia. 

Other elements of successful agricultural programs are flexible design and 

a fully integrated approach. However marvelous a technological 

breakthrough might be, unless it is accompanied by incentives and 

channels to spread it through the population, it will be nothing more than 

a laboratory curiosity. These incentives and channels include: 

• Policy reform supported by technical assistance to the central 

government that will permit markets to function; 

• Technical assistance to farmers to support adaptation of the new 

technology; 

• Development assistance to build roads to transport agricultural 

produce economically from farm to market, and to build irrigation 

systems; 

• Support for reforming the financial sector so that credit will flow to 

seed, fertilizer, and equipment suppliers and will allow consolidators 

to purchase many small crops and move them more efficiently to 

large urban markets; 

• Reformed land tenure policies, because the lack of secure rights to 

use or own the land has discouraged farmers from making the longterm investments that the land requires to achieve food security; 

and 

• Open trade policies that permit exports, so that Africa’s share of 

global trade can grow from its current level of about two percent. 

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Any one of these activities is alone insufficient to transform the lives of 

the poor, and sustainable real impact requires attention to all the necessary 

elements for change. 

• Recommendation: Increase U.S. Government support for 

agricultural development programs that capitalize on our 

technological expertise, designed and implemented with 

partnerships between American and developing country 

organizations and based on the principles listed above. This is not 

a recommendation for specific earmarks for agriculture programs. 

5.2-6 Encourage Education to Build Human Capital 

A well-educated populace has greater capacity to advance the welfare of a 

country. Yet one billion adults around the world are illiterate and 

approximately 25 percent of the children in impoverished countries do not 

finish primary school. Achieving the Millennium Development Goal of 

universal primary school enrollment by 2015 will require tremendous 

effort. In its report; “The United States and the MDGs, InterAction, the 

nation’s largest coalition of development NGOs, states: “When a country 

educates girls, its mortality rates usually fall, fertility rates decline, and the 

health and education prospects for the next generation improve." MCC 

changed its indicator from “Primary Completion Rates” to “Girls’ Primary 

Completion Rates” as a way to reflect “not only the importance of 

primary education generally but also the high economic return from the 

education of women in particular.” 

 

The U.S. Government has long supported basic education, training, 

workforce development and higher education programs. While full 

national development might take generations, educational programs that 

address a broad array of recipients (teachers, farmers, small business 

entrepreneurs, governmental workers and public-sector leaders, etc.) can 

expedite development. This kind of education goes beyond the traditional 

classroom education. 

• Recommendation: Support education as an important 

component of development assistance. 

• Recommendation: Encourage U.S. citizens, be they farmers, 

business leaders, or local government officials, to help train their 

 60
counterparts in developing countries, through exchange programs 

and other initiatives. 

• Recommendation: Apply technological tools and other 

innovative new approaches to increase education and literacy in 

partnership with recipient countries. 

 61
Chapter 6: Change the Structure 

Over the last half century, our development and humanitarian programs 

have been modified approximately once every decade. They are perhaps 

the most reformed programs in the U.S. Government. Yet the 

Commission could not find a single current or former government official 

or development expert who believes that the current organizational 

structure works. 

Not a single person defends the status quo. 

In 1961, the U.S. Agency for International Development was created to 

end the scattering of responsibilities for development and humanitarian 

assistance around the departments and agencies. As President John F. 

Kennedy said in a special message to Congress: 

[N]o objective supporter of foreign aid can be satisfied with 

the existing program — actually a multiplicity of programs. 

Bureaucratically fragmented, awkward and slow, its 

administration is diffused over a haphazard and irrational 

structure covering at least four departments and several other 

agencies. The program is based on a series of legislative 

measures and administrative procedures conceived at different 

times and for different purposes, many of them now obsolete, 

inconsistent and unduly rigid and thus unsuited for our 

present needs and purposes. Its weaknesses have begun to 

undermine confidence in our effort both here and abroad. 

Under Kennedy's reorganization, the Administrator of USAID was to be 

the official responsible for bilateral development and humanitarian 

assistance programs. The Administrator was charged with creating an 

overarching strategy and executing coherent, integrated, and effective aid 

projects in foreign countries. Although it worked for a while, program 

coherence gradually unraveled. Today, the system is widely viewed as 

ineffective. 

The remainder of this chapter is organized as follows: 

• First, five major recommendations that all Commissioners believe 

are applicable to any structure; 

 62
• Second, our agreed objectives for any structure; and 

• Third, a description of three structural options, ending with the 

option supported by a significant majority. 

The three structural options considered were the creation of an 

independent, Cabinet-level Department of Development; folding existing 

U.S. Government development organizations into the current Department 

of State structure (called “State Integration” in this report); and 

reorganizing both the development agencies and the existing Department 

of State into a new organization, which is called the “International Affairs 

Department” (IAD) in this document, but which would still be called the 

“Department of State.” The latter was the structure supported by the 

majority. 

The descriptions of each of the three options do not reflect the views of all 

Commissioners. 

6.1 Recommendations Applicable to Any Structure

All Commissioners support the following five major recommendations, 

regardless of the structural option they endorse. 

6.1-1 Reduce the Number of Agencies Responsible for Development 

Among the key challenges is that there is a plethora of U.S. Government 

agencies operating separate development and humanitarian assistance 

programs: 20 largely uncoordinated departments, agencies, initiatives, and 

programs manage U.S. assistance. And while the head of the U.S. Agency 

for International Development is ostensibly the lead official responsible 

for development and humanitarian programs, a significant share of 

development assistance — including the Millennium Challenge Account 

(MCA) and Department of Defense funding — falls outside the 

jurisdiction of the USAID Administrator. Almost half of non-military 

official foreign assistance is now designed and/or executed by other 

agencies. 

Many of the disparate elements of the foreign aid program are small-scale 

programs but some, including the MCC and PEPFAR, are multi-million 

dollar programs that, in some countries, dwarf the traditional USAID 

program. Also, in some countries, the United States does not speak with 

one voice; separate policy and program decision-making processes lead to 

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multiple conclusions and conflicting recommendations on program 

priorities. 

For example, our nation may not have reconciled advocacy for fiscal 

restraint made by the IMF (which receives input from the U.S. 

Government through the Department of the Treasury) with advocacy for 

spending on priority sectors made by other U.S. agencies. When our 

government does not reconcile these positions, our country sends 

confusing signals. During the Commission’s visit to one African state, we 

found that conflicting economic advice was given to the country’s 

government by USAID, MCC, and the African Development Foundation. 

This is a predictable result of today’s fractured structure. 

Another predictable result of multiple agencies with overlapping interests 

is a large amount of bureaucratic friction. Without policy coherence, 

various actors in the Executive and Legislative branches frequently pursue 

narrow or parochial agency agendas and measure their successes and 

failures by different standards. 

In the field of democracy and governance (D&G), the separation of our 

efforts into a State Department program and a USAID program has led to 

such a lack of agreement on core issues that the Senate Committee on 

Appropriations noted: “The Committee remains concerned that the State 

Department and USAID do not share a common definition of a 

‘democracy program.’” 

Meanwhile, although the Department of State pursues long-term 

solutions, it often needs to use foreign assistance as a tool to promote 

critical short-term diplomatic and political objectives. This can lead to a 

diminution of foreign aid's longer term economic and social development 

objectives and compounds the lack of clarity that characterizes the U.S. 

approach to development. 

The current structure produces confused lines of authority, responsibility, 

accountability, and in some instances, creates a disconnect between 

authority, responsibility, and accountability. Moreover, in recent years, a 

growing number of coordinators have been appointed for issues of special 

concern. The Commission believes that the fact that so many of these 

coordinators were deemed necessary reflects the inefficiencies in our 

foreign assistance system.

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• Recommendation: Reduce the number of agencies responsible 

for development. 

6.1-2 Rewrite the Foreign Assistance Act to Reflect Today’s World 

As described in Chapter Three of this report, our foreign aid policies and 

programs are guided by a Foreign Assistance Act that was written in 1961 

and has since grown to include 247 directives and 33 goals. Due to the 

proliferation of aid accounts within the Act, and the increasing number of 

aid actors across U.S. Government agencies, our development and 

humanitarian assistance programs are more diffuse than focused. Longterm planning is impeded by the different and uncoordinated goals and 

objectives of multiple agencies. We therefore believe that a new foreign 

assistance act is needed. 

• Recommendation: Rewrite the Foreign Assistance Act to reflect 

today’s world. 

6.1-3 Improve Interagency Coordination 

Regardless of which structural option might be pursued, some resources 

and instruments will fall outside the mandate of that structure. For 

example, the Department of Defense has capabilities that are and will 

remain of use in development and humanitarian work, and it is unlikely 

that the Department of the Treasury will ever relinquish its jurisdiction 

over the international financial institutions. 

• Recommendation: Establish a high-level policy coordinating 

mechanism in the Executive Office of the President (EOP). 

This high-level coordinating mechanism could be run out of the National 

Security Council (NSC) and/or be jointly managed by the NSC and the 

National Economic Council (NEC). It should bear responsibility for 

coordinating all U.S. Government agencies involved in development and 

humanitarian policies and programs and for ensuring policy coherence. 

6.1-4 Link Authority and Accountability 

For decades, those who set policy for the U.S. Government’s foreign 

assistance programs have not been responsible for program design, 

implementation, or operations. This lack of parity between authority and 

accountability violates one of the most basic principles of good 

management. 

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Policy decisions about foreign assistance made without the participation of 

those with practical experience in the field are inevitably less effective at 

achieving U.S. objectives than those made with the input of experienced 

professionals. At the same time, project execution by those who fear they 

will be blamed for the outcomes of poor policy decisions in which they 

had no input is likely to be bureaucratic, self-protective, and oppositional. 

• Recommendation: Vest both authority and accountability in the 

same decision-making structures. Ensure that those with the authority 

to set development policy are also accountable for its execution. 

6.1-5 Create a New Structure for Foreign Assistance Activities 

Many believe that our nation’s current foreign aid structure reinforces the 

tendency to focus assistance on short- rather than long-term priorities. 

Unlike the State and Defense Departments, USAID is not a Cabinet-level 

agency. It has a lesser stature and has always had an ambivalent 

relationship with the State Department. Hence, foreign aid is perceived by 

many as a tool to support other foreign policy objectives, rather than 

being focused on the goal of promoting long-term development. 

The Commission spent considerable time deliberating on structural 

options and took into account the experience of the reorganization of the 

intelligence community and the creation of the Department of Homeland 

Security. Our discussions were driven by the consensus view that the 

current structure provides neither focus nor agility and does not ensure 

that foreign aid serves national interests. 

Throughout the Commission’s deliberations, considerable attention was 

also given to the roles of the Department of State and the Department of 

Defense in managing America’s role in an increasingly complex global 

environment. In addition, Congress, recognized experts, and sitting and 

former foreign policy officials are all engaged in an important debate, 

which also informed the Commission’s views, about how the United 

States should best address a host of new foreign policy challenges. The 

Commission has consulted widely with leading participants in the debate 

about the future of foreign assistance and the roles of the Departments of 

State and Defense. 

Recommendation: Create a new structure for foreign assistance 

activities based on the seven objectives below.

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6.2 The Commission’s Objectives for Structure 

All Commissioners agreed that any development and humanitarian 

assistance structure should accomplish the following objectives: 

1. Elevate development to a more equal footing with defense and 

diplomacy. 

2. Enable the U.S. Government to define and promote an integrated 

foreign assistance strategy by having one organization responsible for 

coordination across the government, and then speaking with one voice. 

3. Provide access to all the tools necessary to implement the long-range 

strategic vision for U.S. foreign assistance in a cohesive manner. 

4. Ensure that policy formulation, program design, implementation and 

operations reside within the same organization with clear lines of 

authority, accountability and responsibility for the management of 

foreign assistance. 

5. Provide Congress with means for ensuring accountability through the 

clear alignment of goals, accounts, and performance metrics. (This 

issue is discussed more fully in Chapter Three.) 

6. Enable strong partnerships with the many American private sector and 

non-governmental organizations that increasingly are engaged in 

addressing development challenges. 

7. Ensure that policies and programs are rooted in the realities of what 

foreign assistance can and cannot do. 

6.3 Options for Structure

Commissioners considered three alternatives for restructuring our foreign assistance 

agencies. The two minority views are presented immediately below and elaborated on in 

Additional Views in Appendix 11. The alternative ultimately favored by the majority 

is presented last. 

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6.3-1 The Department for International Development (DID): A 

New, Independent Development Agency 

Some Commissioners believe that the United States should create a new, 

independent development agency led by a Cabinet-level Secretary, as 

described hereafter and in Additional Views (“Revamping U.S. Foreign 

Assistance” and “Advocating for an Independent Cabinet-Level 

Department of Development”) in Appendix 11. According to this view, 

an independent development agency is the structure best suited to elevate 

our nation’s development priorities and ensure a strategic and sustained 

focus on development, as distinct from diplomacy. It is also necessary, 

they believe, to ensure optimum impact of the development component 

of America’s long term development strategy — a strategy grounded in 

leading a world where a majority of capable and well-governed states join 

us in pursuit of common goals. These Commissioners believe that the 

development challenges we face are so vast and so distinct that a 

specialized independent agency is necessary for success, just as is the case 

for defense and diplomacy. 

This model is informed in part by the decision of former British Prime 

Minister Tony Blair’s government in the 1990s to create a Cabinet-level 

Department for International Development (DFID) in the United 

Kingdom. This new independent agency has since been strengthened by 

Prime Minister Gordon Brown’s appointment of two additional ministers 

to DFID. The HELP Commissioners who support an independent 

Cabinet-level department concept believe that development and 

diplomacy are different and distinct functions, each requiring its own 

expertise. They also believe that U.S. development policy, and strategic 

and programmatic goals cannot be attained if development continues to 

be viewed as a lesser priority than either defense or diplomacy. 

These Commissioners argue that the current structure and other options 

considered by the Commission, at best, blur the lines between diplomacy 

and development. They also argue that the current structure and other 

options preclude the United States from formulating and pursuing a 

government-wide, long-term development strategy that is consistent with 

but distinct from our necessarily shorter-term diplomatic activities. These 

Commissioners believe that the model of USAID — as an autonomous 

but sub-Cabinet agency — led to development’s being viewed as 

secondary to defense and diplomacy. These Commissioners also see the 

new arrangement under the “F Process” as subjecting development to the 

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State Department’s distinct and highly political culture and risking 

development being defined as a function of — rather than complement to 

— diplomacy. 

These Commissioners also believe that an independent agency with 

Cabinet-level leadership would provide development a seat at the foreign 

policy table and bring a long-term development perspective to relatively 

shorter-term foreign policy deliberations. As well, it would ensure that the 

allocation of foreign aid resources targeted for development is undertaken 

on the basis of long-term development objectives rather than shorter-term 

diplomatic imperatives. The creation of an independent agency would 

also allow for the development of a professional development corps able 

to make the most of development dollars. It would fill a leadership gap by 

(1) ensuring that a senior member of government has singular 

responsibility and authority for leading and managing U.S. development 

policy and assistance, and (2) easing existing constraints to coordination by 

providing a clear focal point for development within the Cabinet. 

The new, independent agency would be mandated, for the first time, to set 

U.S. development policy at the Cabinet level — just as the Department of 

the Treasury sets fiscal policy, and the Department of Education sets 

education policy. It would also lead in the formulation of a governmentwide development strategy, manage the primary development and 

humanitarian assistance accounts, and implement the U.S. Government’s 

development and humanitarian assistance programs. 

The creation of DID would entail the reallocation of foreign aid resources 

based on the need to draw a clear line between those resources that are 

targeted to development and humanitarian affairs functions and those that 

serve either security or diplomatic objectives. This would allow all major 

development accounts to fall under the leadership of a single, high-level 

official and to conform to a comprehensive strategy, thus allowing for 

greater development policy coherence. Specifically, DID would oversee 

all traditional development accounts as well as the Millennium Challenge 

Account, the President’s Emergency Program for AIDS Relief and other 

major initiatives now situated in the State Department or Executive Office 

of the President. As well, humanitarian assistance would fall under the 

DID, just as resources from Title II of P.L. 480 and resources supporting 

the Office of Foreign Disaster Assistance have traditionally been under 

the authority of USAID. 

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Given our nation’s need to buttress security and diplomatic efforts with 

resources, some foreign aid funding would remain under the jurisdiction 

of the State and Defense Departments. Economic Support Funds (ESF) 

— flexible funding designed to meet security-related, short-term 

imperatives — would remain in the State Department, but be programmed 

jointly with the new Department. International Military Education and 

Training (IMET) and other programs designed to support foreign 

militaries would also remain in the State Department. 

While development funding for international organizations, including the 

World Bank and the UN’s specialized development agencies, would fall 

under the authority of the DID, other international funding — for 

peacekeeping, arms control and narcotics, and other security-related 

functions — would remain under the authority of the Department of 

State. Meanwhile, although it would retain funding and authority for 

clearly-defined foreign assistance programs designed to support operations 

or specific missions, the Department of Defense would slow its current 

efforts to tackle long-term development and cede that responsibility to the 

DID. 

The DID would also manage the primary humanitarian assistance 

accounts to (1) ensure consistency between humanitarian and 

development policies and programming, (2) ensure that the Department is 

able to manage what experts call the “relief to development continuum,” 

and (3) prevent gaps in policy or programming in the crisis, stabilization 

and development phases of a given country’s transition. As has been the 

case for decades, the Department of Defense would continue to provide 

logistical support. Commissioners who support the independent agency 

model share the consensus that it — and indeed all options for structure 

considered by the Commission — must be complemented by a 

coordinating mechanism housed in the Executive Office of the President 

— probably as a joint function of the National Security Council (NSC) and 

National Economic Council (NEC). 

The new Department of International Development would be led by a 

Cabinet-level Secretary appointed by the President and confirmed by the 

Senate. The DID Secretary would, along with counterparts at the 

Departments of State, Defense, and other agencies, be a member of the 

NSC. Also, along with the Secretaries of Treasury and Commerce and 

other Cabinet members, the DID Secretary would serve as a member of 

the NEC. The Department’s internal structure would include regional but 

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also, and importantly, functional bureaus focused on the priorities 

established by the Department’s development policy. Buttressed by 

DID’s authority to set development policy, these functional bureaus 

would allow the United States to address key development challenges that 

are distinct from diplomatic imperatives but that currently suffer from the 

structural absence of designated leadership within the Executive branch. 

Agencies that are exceptionally well run and easily coordinated and that do 

not manage primary development assistance accounts but do provide 

critical and discrete contributions to U.S. development efforts — such as 

the Peace Corps, U.S. Trade and Development Agency (TDA), Overseas 

Private Investment Corporation (OPIC), and the Export-Import Bank 

(Ex-Im Bank) — would be independent of the new Department. 

The Commissioners who support the Cabinet-level option point out that 

the United States Trade Representatives Office (USTR), created in a 1979 

reorganization that consolidated and broadened the former Special Trade 

Representative that had been located in the Executive Office of the 

President and was strengthened under legislation enacted in 1988 that 

effectively raised the USTR to Cabinet level, has been an enormous 

success. Giving the trade function, a Cabinet rank enhanced the 

importance of trade within the Executive branch. As a result, USTR was 

able to attract and retain highly professional staff and build a reputation 

for being both agile and effective. In contrast, the attempt to improve the 

effectiveness of public diplomacy by merging the United States 

Information Agency (USIA) with State has not been considered a success. 

Commissioners who support the independent agency model suggested 

that, in addition to an adapted Office of U.S. Foreign Disaster Assistance 

(OFDA) and cones for management and human resource development, 

functional bureaus should be established. This would bolster the DID’s 

comparative advantage, ability and authority within the Executive branch 

to lead critical development strategies rather than simply oversee project 

funding in key sectors. Specifically, this would mean focusing on: 

1. Capacity-building in support of production and trade, infrastructure 

development, and good governance necessary to strengthen weak 

and failing states and assist their integration into regional and the 

global economy; 

2. United States support for the Millennium Development Goals and 

basic human needs; 

3. Infectious diseases; and 

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4. Addressing strategic vulnerabilities, including the full range of 

transnational threats — such as climate change, international crime, 

and illicit trade — that can undermine development gains. 

Commissioners supporting the creation of a new, Cabinet-level agency 

mandated to lead U.S. development policy cited as their primary rationale 

the need, given a rapidly-changing world, to enhance America’s ability to 

pursue long-term national interests by vesting leadership, authority, and 

resources in a department dedicated to promoting development. While 

these Commissioners believe that the other options might intend to 

elevate development, they concluded that an empowered independent 

agency best ensures that development achieves the status it deserves, 

alongside defense and diplomacy. 

6.3-2 State Integration (SI): Folding U.S. Government Development 

Organizations into the Department of State 

Integrating U.S. Government foreign assistance activities into overall U.S. 

foreign policy by folding most of them into the Department of State is a 

model favored by some other Commissioners. These Commissioners 

believe that this model is closer to successful integration programs tried 

over the years. In the 1960s, the Alliance for Progress co-located State 

Department and USAID personnel. One individual was given dual 

appointment as the Assistant Secretary of State and Assistant 

Administrator for USAID. At some Latin American posts, Ambassadors 

were given appointments as USAID Mission Directors. Similarly in 

Vietnam, USAID and State Foreign Service Officers staffed the CORDS 

program for rural development. In the 1990s, State Department-led 

coordinators worked closely with USAID employees in designing and 

running the U.S. Government assistance programs in Central and Eastern 

Europe and then the former Soviet Union. 

A similar type of merger currently exists with the appointment of a 

Director of U.S. Foreign Assistance with the rank of Deputy Secretary of 

State who also serves as Administrator of USAID. This position also 

coordinates foreign assistance activities housed in different U.S. 

Government bureaus and agencies. Thus, while personnel and contracting 

systems have not been merged, there are precedents for the State 

integration model in policy formulation, program design, and oversight 

and evaluation. 

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The Commissioners supporting this option believe that the reasons for 

integrating foreign aid activities more fully and formally into the State 

Department are threefold: 

First, the post- 9/11 world is one where United States national security is 

threatened by anti-Americanism and terrorism. Thus, the underlying 

principle for integrating USAID and other aid activities into State is geopolitical. As a superpower with the largest presence and political exposure 

in the world, the United States must bring its foreign aid tools into the full 

context of its foreign policy framework, including continued close 

coordination with DoD and a Secretary of State with direct access to the 

President, whose NSC has a serious commitment to foreign aid policy 

matters. 

Second, the developing world has changed dramatically since foreign aid 

was conceived. As described in greater detail elsewhere in the report, the 

economic and political growth in the majority of developing countries has 

spawned new actors in development — entrepreneurs, new corporations, 

new political movements, media outlets, local foundations and charities, 

and a better educated workforce — with whom the State Department has 

traditionally had more active ties. As U.S. private sector activities in the 

developing world have grown increasingly important as compared to U.S. 

Government official aid, these new players and institutions have become 

drivers of growth in the developing world. Thus, the State Department 

has skill sets in economics, trade, business, politics, the media, and civil 

society, and important networks for foreign aid resources as a new world 

of public-private partnerships supplants traditional donor-recipient 

models. Moreover, its public diplomacy apparatus is more sophisticated 

and uniquely geared to better publicizing aid programs and the good deeds 

of the American people — critical to our national security interests. 

Third, the State Department already has numerous programs that 

duplicate or parallel USAID programs in democracy-building, internally 

displaced persons, and economic and trade policy reform promotion. 

Merging these programs with USAID and other aid projects will help 

avoid duplication and improve results. USAID skill sets in procurement, 

project management and certain technical areas will complement State skill 

sets in this new foreign aid business model. At the same time, any new 

structure must reform how foreign aid is delivered and reduce the topdown approaches that prescribe universal prescriptions to problems 

which, in many cases, are no longer even relevant in developing countries. 

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Under this new structure, Under Secretaries of State would be in charge of 

key functional foreign aid areas. Illustrative areas, but not definitive, 

include: (1) Economic Development and Trade Support, which would 

include all sectors of development such as agriculture, energy, health and 

education; (2) Disaster Relief, Refugees, Migration, and Humanitarian 

Assistance, which would include disaster and refugee programs and 

support for transnational pandemics and other overarching humanitarian 

needs; and (3) Political Affairs, Democracy Support, and Public 

Diplomacy. 

Existing offices and personnel from State and USAID working in the 

above areas would be re-assigned to work together within these bureaus 

according to newly combined work plans and budgets. A complete 

merger would require the two personnel systems of USAID and State to 

merge. In this way, lines of authority and accountability would be clearly 

established. This would allow senior positions to be filled by either State 

or former USAID employees, depending on the job requirements and 

skills. The personnel details, however, should be further studied. If it 

makes more sense to keep the two systems separate with both ultimately 

reporting to the Secretary of State through a Deputy Secretary of State for 

Assistance, then this option should be adopted. The important part of the 

integration is that foreign aid programs are consolidated and developed 

within the context of total U.S. foreign policy. 

An example of this merger is existing State Department and USAID 

democracy programs being designed and managed in the same office with 

both State and USAID personnel. The Under Secretary would represent 

the foreign aid issues directly to the Secretary of State using the skills of 

both State Department and USAID personnel. Educational exchanges, 

communications, and public diplomacy programs would be run out of this 

bureau as well. In this way, democracy and civil society programs could 

draw more on the political expertise, prestige and support of the U.S. 

ambassadors and other senior American diplomats here and abroad. With 

foreign aid programs and budgets integrated into State, long-term 

programs can be better coordinated with more immediate short-term 

assistance requirements including disasters, conflicts, and national security 

requirements. 

Assistant Secretaries traditionally have managed their political relations, 

diplomatic functions, and numerous representational duties in Washington 

 74
by way of parallel geographic offices that correspond to the functional 

bureaus mentioned above. Assistant Secretaries and their geographic 

bureaus should continue to perform these duties, and it is essential that 

they be located in Washington in order to interact with the above 

constituencies and to provide the critical interaction with the Secretary of 

State and functional bureaus in foreign aid policy formulation. 

The MCC, TDA, and regional development banks could also come under 

the purview of the State Department integrated model. Peace Corps, 

OPIC, and Ex-Im Bank could stay independent as long as there is good 

coordination and a strong NSC role in foreign aid affairs. 

Advocates of this model believe it would accomplish all the goals adopted 

by the Commissioners with the least bureaucratic displacements and 

disruption of on-going activities. But, most importantly, this model 

responds to critical U.S. national security needs that result from the 

increased threats of terrorism since 9/11 and that require foreign aid to be 

an integral part of our nation’s diplomatic and military strategies. The 

model also responds to the significant political and economic changes in 

the developing world that now require a business model that draws upon a 

wider base of expertise in the U.S. Government and new partners in 

developing countries themselves. 

6.3-3 Option Favored by the Majority — The International Affairs 

Department (IAD): Elevating, Integrating, and Operationalizing 

International Affairs for a New Era

As we considered the independent agency and integration options, some 

Commissioners began to look for an alternative that might start a 

discussion about how our nation can “get the best of both worlds.” In the 

end, a significant majority of Commissioners supported the creation of an 

International Affairs Department (IAD) that reconstitutes the Department 

of State, USAID, and most of the other organizations funded by the

International Affairs Budget into a single, new Cabinet department that 

“replaces” the Department of State. Although likely to retain the name 

“Department of State” because of its historical prominence, the model we 

propose is not the existing Department of State. We refer to it as the 

“International Affairs Department” because it entails a radical 

restructuring and so that it is not confused with the State-Integration 

option outlined above. In fact, unlike the merger option, it assumes that 

issues surrounding foreign assistance are symptomatic of larger areas of 

concern that have to do with policy creation in international affairs. The 

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Commissioners who support this option believe that the successful 

execution of development and other international affairs programs 

requires the reorganization of the entire community to address the 

following: 

1. As discussed in Chapter Two, the U.S. Government’s development 

efforts require an integrated approach. Supporters of the IAD believe that 

such an approach requires that development issues be managed, not only 

by a Cabinet-level department, but one with the political strength of the 

Departments of Defense, State, or Treasury. We feel that in order to 

improve overall operations in international affairs, of which development 

is a significant and important part, all international affairs implementers (at 

all organizational levels) must begin to work together in an environment 

where they can constructively and systematically work out their 

differences. When this becomes the norm, we believe the U.S. 

Government will be better positioned to meet all of its foreign policy 

goals. 

2. The second-tier status of development in relation to diplomacy within 

the international affairs community leads supporters of IAD to believe 

that the 60 year-old model for the international affairs community —

where diplomacy is housed at the Department of State with primacy over 

all other international affairs concerns located in “independent” agencies 

— is fundamentally flawed. We believe that significant structural steps 

must be taken to place development, and probably other international 

affairs functions, on par with diplomacy. 

3. Supporters of the IAD believe that there is a disconnect between those 

who determine international affairs policy, including development policy, 

and those who are responsible for the implementation of these policies. 

The Commissioners in favor of the IAD model believe that the ability to 

set good policy is strengthened by implementation experience, preferably 

across multiple areas. Such experience makes the policymaker attuned to 

what is achievable and to what the challenges, complications, and 

limitations might be of different situations. Therefore, the personnel 

system of any reform should be changed to reward field and operational 

experience across multiple sectors. 

The key components of the IAD address these beliefs as well as the 

principles recommended by all Commissioners in 6.1 and 6.2. They are 

outlined below. 

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Create Sub-Cabinet Departments Organized by Function

All existing organizations funded through the International Affairs Budget 

(the 150 account) would be organized by function and transformed into 

distinct sub-Cabinet departments. Each would be headed by a subCabinet Secretary. This structure is analogous to the Department of 

Defense, where the Secretaries of the Army, Air Force, and Navy report 

to the Office of the Secretary. 

This is not a simple aggregation of existing legacy organizations under one 

Secretary. Instead, regardless of the organization in which they currently reside, 

functions would be grouped together in sub-Cabinet departments, and current 

duplication would be eliminated. Although there are a number of ways that the 

sub-Cabinet Departments could be organized, those favoring the IAD 

propose the following: 

 

• Political and Security Affairs: Manages state-to-state interactions 

(including traditional diplomacy) and promotes political reform, 

human rights, and security. Manages assistance intended for 

political or security impact, such as existing Economic Support 

Funds. 

• Economic Affairs, Development, and Trade: Oversees U.S. activities 

involving economic affairs and works with willing states and 

societies to improve government functions; builds institutions, 

including sustainable health care systems; and helps create jobs and 

economic growth by focusing on activities that can be sustained 

over the long term. 

• Humanitarian Services and Stabilization: Delivers humanitarian services 

in international environments to prevent and/or recover from 

violence, instability, and natural disasters; also provides health care 

and other services to alleviate the conditions of poverty. 

• Public Diplomacy and Consular Affairs: Shows the face of America to 

the world through personal interaction, media and culture. 

Consular Affairs could also be placed within Political and Security 

Affairs, but was placed here because, like Public Diplomacy, it is 

focused on people-to-people interactions. 

While those favoring the IAD prefer as much consolidation and 

integration as possible, they recognize that there might be organizations 

whose operations would exist outside of the sub-Cabinet Departments, 

 77
such as the Ex-Im Bank and Peace Corps. Even if some of these 

independent agencies were not consolidated into the sub-Cabinet 

Departments, they should report nonetheless to the person responsible 

for all international affairs operations and funding, the Secretary of the 

new IAD. 

Significantly, the IAD approach would align different funding accounts with the 

distinct sub-Cabinet Departments. For example, the Economic Support Fund 

would be aligned with the Department of Political and Security Affairs, 

and Development Assistance would be aligned with the Department of 

Economics, Trade and Development. A firewall would be erected around 

each account. We believe this is particularly important to protect the 

long-term development funding and to address any concerns that 

development funding would be “borrowed” or “taken” for other purposes 

and priorities. Supporters of the IAD believe that restructuring accounts 

would more clearly align expectations and accountability with the purpose 

for which any program is designed. Too often, programs funded to 

achieve humanitarian or political goals are expected to achieve 

development goals. This can lead to the spending being labeled a failure 

(e.g. security assistance for Egypt or Pakistan). The IAD’s separation of 

functions and alignment of functions and accounts is intended to reduce 

this confusion and introduce logical performance metrics to each subCabinet Department. This is consistent with our recommendation in 

Chapter Three to rewrite the Foreign Assistance Act with a reduced, 

consolidated, and simplified account structure. 

Integrate at the Regional Level 

Alongside the sub-Cabinet Departments, the IAD would contain regional 

operational platforms covering the different areas of the world. Both 

operational regional platforms and embassies would be staffed by officers 

from each of the sub-Cabinet Departments on a rotating basis. Each subCabinet Department would be represented in every region, and particular 

regions would call on IAD staff most appropriate to their challenges. 

Europe, for example, would likely draw more staff from the Department 

of Political and Security Affairs, while Africa would likely claim more staff 

from the Department of Humanitarian Services and Stabilization and 

from the Department of Economic Affairs, Development and Trade. 

Built on the lessons gleaned from promoting inter-service cooperation and 

preventing “stove-piping” through the Goldwater-Nichols Act, this team 

approach should lessen the adversarial relationships that sometimes exist 

among functions today. 

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Each regional platform would be headed by a Regional Assistant 

Secretary. Ambassadors would report through these platforms as they do 

today and continue to be the representative of the President and the 

Officer-in-Charge of all U.S. Government activities in the country. Staff 

who are posted to a region or an embassy would report to their Regional 

Assistant Secretary and/or Ambassador, and not to their sub-Cabinet 

Secretary. Regions would be defined by the National Security Council and 

would likely have the same definition for both the IAD and DoD. We 

believe this would promote collaboration between IAD regional teams 

and DoD combatant commands for each region. The Commissioners 

supporting IAD suggest that consideration be given to locating each 

regional platform outside Washington and close to its actual area of 

responsibility. 

Train Across Different Areas to Gain Broad Expertise

Training staff across sub-Cabinet Departments is an essential part of this 

model: political officers should get experience in humanitarian relief, and 

those trained in security should understand development. Thus, any 

official who was appointed an Ambassador or to other senior leadership 

positions would be required to have spent time training in a different 

civilian international affairs function. Similarly, officials from all subCabinet Departments would have opportunities to study several areas of 

expertise and be promoted into advanced positions. This is a key 

component of the model: professionals from the development or 

humanitarian sub-Cabinet Departments would have an excellent chance to 

become an ambassador to a developing country after having spent some 

time cross-training in political affairs or public diplomacy. Similarly, 

career ambassadors whose primary training is in political affairs would 

have had to have spent some time cross-training in the areas of public 

diplomacy, development or humanitarian relief. No single sub-Cabinet 

Department should be permitted to dominate leadership positions within 

the Office of the Secretary, the regional platforms, or in countries, 

especially during the initial implementation period. Maintaining balanced 

representation is necessary to ensure an integrated approach to 

international affairs. 

Articulate the Vision through the Office of the Secretary

The Office of the Secretary is the nexus of the IAD and spans all of the 

U.S. Government’s international affairs functions. Functions in this office 

would include strategy, policy, planning, budgeting, management, 

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intelligence, Congressional relations, research, and media. This office 

would be staffed by political appointees, career civil servants, and staff on 

assignment from the sub-Cabinet Departments, who ideally would have 

experience across the different sub-Cabinet Departments. The Office of 

the Secretary would also run a unified planning, budgeting, and evaluation 

system that would allow for integrated, long-range planning, further 

described in Chapter Seven. Most importantly, until the sub-Cabinet 

Departments are successfully collaborating, the Office of the Secretary 

would need to pay careful attention during the transition to ensure that 

one sub-Cabinet Department does not come to dominate any other. 

Supporters of this option believe the IAD provides both the advantages of an 

independent department and the benefit of residing within the most senior Cabinet 

department in the U.S. Government. They believe it accomplishes this by 

preserving the integrity of development while increasing its importance in 

overall foreign policy. It does so in the following ways: 

1. Each of the sub-Cabinet Departments offers a safe and stable 

environment for the respective international affairs functions to 

continue to develop and strengthen their own profession. The 

proposed sub-Cabinet Departments are grouped so that they are 

inhabited by people of similar cultures. Furthermore, each 

Department will have its own style of performance metrics. 

2. Well-trained representatives from each of the different international 

affairs functions have equal access to leadership positions throughout 

the Department. Further, these leaders are cross-trained in different 

functions in order to better understand the work of their peers. 

3. The creation of a clear chain of command, from the country team to 

the regional platforms to the Office of the Secretary, and the staffing 

of all these units with people from each of the different sub-Cabinet 

Departments, provides a system where each of the different functions 

should be able to work out their differences constructively. IAD 

supporters believe the development view (as well as those of other 

functions) will be well heard across the department, not just at senior 

levels. 

4. Instead of each separate organization fighting for a bigger share of the 

international affairs budget, we believe these organizations would be 

united by a common vision and strategy and thus work together to 

seek appropriate funding levels. 

5. We believe that the size of this new department — $37.5 billion for all 

international affairs compared to $12.6 billion for USAID alone and 

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$13.3 billion for State alone (in FY 2005) — combined with the stature 

of the Department of State within the Executive branch, would allow it 

to compete more effectively for resources. 

6. Further, we believe that if development officials have appropriate 

influence over the policy-making process, the stature of the Secretary 

of the International Affairs Department (State) would provide more 

effective representation in the interagency process for development 

concerns than other options. Alternative structures might give 

development officials more flexibility in expressing their views, but 

supporters of the IAD believe they will have significantly less stature. 

The IAD was designed using organizational lessons learned from the 

Department of Defense. When DoD was created in 1947, the different 

branches of armed services were not asked to change their unique 

cultures. Due to lack of coordination, the organizational structure was 

subsequently changed to require them to work together in an integrated 

fashion via the Goldwater-Nichols reforms. Our intent is similar: to 

enable all levels of the organization to interact regularly and to work out 

competing demands. While adherents of this option support the 

recommended NSC coordination mechanism, they also believe that 

through this structure, many other issues will not have to rise to the NSC 

level. Those items, we believe, can best be worked out when all parties are 

under a single roof. 

The Commissioners favoring the IAD believe that it would strengthen 

development rather than isolate it. Supporters of the IAD believe that the 

British experience with DFID is not necessarily comparable because the 

British parliamentary system is very different from our nation’s 

governmental system. 

All Commissioners recognize the importance of ensuring that 

development and humanitarian priorities are not made secondary to other 

foreign policy priorities in the planning process. While recognizing this 

concern, those who favor the IAD believe that a more important issue is 

the need for strong planning, budgeting, and evaluation capability to set 

and achieve a long-range strategic vision for both foreign assistance and 

foreign policy. Accordingly, a core capability of the IAD is such a unified 

system (discussed in more detail in Chapter Seven) which can be 

implemented without needing frequent White House coordination or 

having development and humanitarian priorities made secondary in the 

planning process to other foreign policy priorities. 

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Commissioners supporting the IAD believe it is the best option to 

marshal the tools needed to compete in today’s world. They believe that 

this approach embodies the concepts espoused by Secretary of Defense 

Robert Gates when he said in a speech at Kansas State University: 

My message is that if we are to meet the myriad challenges 

around the world in the coming decades, this country must 

strengthen other important elements of national power 

both institutionally and financially, and create the capability 

to integrate and apply all of the elements of national power 

to problems and challenges abroad. In short..., I am here 

to make the case for strengthening our capacity to use 

“soft” power and for better integrating it with “hard” 

power. 

The Commissioners in favor of IAD recognize that this is a bold option 

and one that some might believe is beyond the Commission’s purview. 

While practical consideration of this option requires rigorous research, 

analysis and debate, a majority of Commissioners believe that it is worth 

the time and effort required. It is our belief that this new organization 

embodies a new approach. Make no mistake; we acknowledge the 

significant and numerous challenges that would be faced in its 

implementation. However, we believe that a new approach — which both 

emphasizes the strengths of the different core disciplines and brings them 

together — is needed for this new era. 

6.4 It is Time to Change

Commissioners believe that piecemeal structural changes will not fix 

existing problems and will not prepare our nation’s international affairs 

agencies for the challenges America faces. Comprehensive structural 

changes are needed. 

We understand that implementing any of the three structural options 

outlined above would be difficult and time-consuming. But the 

imperative for this kind of change far outweighs the challenges of its 

implementation. Of the three, putting in place every aspect of the IAD 

might be the most disruptive to every day business. We acknowledge that 

for any of the three options to succeed, leadership, and goodwill at the 

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highest levels of the government, from both the White House and the 

Congress, would be necessary to implement such a far-reaching change. 

A failure to act leaves a vacuum at a time when development assistance 

must be improved. If no other solution is found, the result might well be 

the continued migration of duties to the Department of Defense, despite 

its stated preference not to be heavily involved in such matters. In a 

November 2007 speech, Secretary of Defense Robert Gates said much the 

same: “...[U]ntil our government decides to plus up our civilian agencies 

like the Agency for International Development, Army soldiers can expect 

to be tasked with reviving public services, rebuilding infrastructure, and 

promoting good governance.” 

The HELP Commission believes that a new era with new challenges 

demands a fresh structural approach to foreign assistance. The U.S. 

Government simply cannot repair what must be fixed without taking on a significant 

challenge that requires commensurate effort from the Executive and Legislative 

branches. There is no dispute: our current system has been broken for decades. Now 

is the time to do something new, something effective, and something 

enduring. 

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Chapter 7: Base Funding on Long-Term Strategy 

Commissioners have different views of the timing and magnitude of 

potential increases in funding. All support increased funding for disaster 

relief and other humanitarian needs when called for. All Commissioners 

believe that all other types of funding should be increased, but under 

varying conditions. The majority recommends that increases in funding 

should come along with implementation of major reforms such as those 

set forth in this report; some believe that our nation should see 

measurable evidence of success prior to increasing funding; and some 

believe that such increases are warranted regardless. 

The late Congresswoman Jennifer Dunn, a member of the HELP 

Commission, captured the views of many Commissioners when she had 

this to say about American funding of foreign assistance: 

“Let's prioritize U.S. funds properly and restructure the process, establish 

greater collaboration, and then evaluate the need for increased funding to 

support the program. If these recommendations are enacted, the funding 

level should be increased in order to support the new process.” 

7.1 Recognize America’s Current Commitment to Foreign 

Assistance 

From 2001 to 2006, the U.S. Government increased its net Official 

Development Assistance (ODA) from $9.581 billion to $22.739 billion. In 

terms of net amount, the U.S. Government is the largest provider of 

ODA, providing approximately $11 billion more than the next largest 

donor, which is Japan. Measured as a percentage of Gross National 

Income (GNI), the percentage of funds devoted to ODA by the United 

States has risen from 0.11 percent in 2001 to 0.17 percent in 2006. Some 

Commissioners believe that this percentage, relative to the size of our 

GNI, should be greater. 

7.2 Base Funding on Needs

As with the ODA/GNI percentage calculation, many donor countries 

believe that development and humanitarian assistance should be based on 

the respective national wealth of each contributing country.6

 While 

sympathetic to increasing ODA, most Commissioners reject the practice 

of basing funding on targets related to national wealth. Those 

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Commissioners believe that this approach overemphasizes the ability of 

donor countries to contribute rather than focusing on the true needs of 

the recipient countries. Further, such formulas usually account for only 

ODA and ignore substantial contributions that fall outside this definition, 

such as diplomatic interventions, security arrangements, and trade 

allowances.7

 

Subject to the timing and magnitude criteria previously described in this 

chapter, the majority of Commissioners believe that our government 

should invest more in development and humanitarian efforts.

7.3 Provide Funds Based on Strategy 

Determining the right amount to invest in our foreign humanitarian and 

development efforts is a complex and sometimes controversial 

undertaking. Our funding must be based on a clear vision of the U.S. 

Government’s intentions for helping each developing country. The 

Commission believes that funding determinations are best made on the 

basis of strategic considerations, some of which might include: 

• What are the countries’ plans for helping their people? 

• What are other actors, including bilateral donors, multilateral 

institutions, the private sector, and philanthropies, doing to help? 

• What is our nation’s comparative advantage in helping these 

countries? 

• What are the best areas in which to focus our efforts: education, 

maternal and child health, HIV/AIDS, malaria and tuberculosis, 

infrastructure, good governance, or others, and what levels of 

funding are needed in these areas? 

Therefore, the HELP Commission recommends that the Executive and 

Legislative branches, working together: 

• Recommendation: Make realistic decisions on a country-by-country 

or region-by-region basis about strategic conditions; establish 

achievable goals for U.S. Government assistance to each developing 

country; and determine the cost of achieving these goals based on a 

long-term commitment with the partner countries. 

This is quite different from the current disconnect between goals (which 

might or might not be supported by the Congress, and which might 

change from administration to administration) and funding levels (which 

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are largely determined by current budget resources and which might 

change based on diplomatic requirements and are often based on a 

currently favored sector). 

7.4 Make Promises We Can Keep

The U.S. Government historically has made a number of very significant 

commitments to fund development efforts. For example, President Bush 

has reaffirmed the long-standing U.S. support of the Millennium 

Development Goals. The United States, when making international 

commitments, should be prepared to remain committed to those 

obligations for the duration. 

• Recommendation: Honor the U.S. Government’s long-term 

commitments to international development goals and make only those 

commitments the U.S. is prepared to honor. 

The majority of Commissioners support funding programs that focus, as 

much as possible, on achieving very specific goals. While imperfect, 

specific goals provide tangible benchmarks that help create the 

momentum to achieve U.S. Government foreign assistance objectives and 

more consistent funding. One of the best examples of a successful 

program with concrete goals is PEPFAR. 

7.5 Consider Government Contributions beyond ODA and 

the Importance of Private Giving

In determining and assessing the appropriate level of U.S. Government 

contributions to foreign assistance, it is vital also to assess both the 

government’s direct and indirect contributions to assistance beyond ODA 

and the increasing importance and magnitude of private giving. 

U.S. Government contributions to the development of low-income 

regions cannot be measured solely by ODA. The government also makes 

very substantial contributions — in some cases uniquely among the 

developed countries — through: its support of an international economic 

structure that encourages free trade and free international financial flows; 

its global defense commitments, that, inter alia, reduce risks and enhance 

security for market-based development in the world economy; and its 

indirect subsidization of philanthropy through tax policies. The Center 

for Global Development rates 21 developed countries on how much they 

help poor countries build prosperity, create good government, and 

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promote security. Of the seven critical policy areas they evaluate, the 

United States scores well in trade, investment, and security. 

Also not included in ODA, American multinational corporations, nongovernmental organizations, faith-based institutions, and universities are 

substantially engaged in assisting the developing world through charitable 

giving and through development activities, which used to be the main 

sphere of the U.S. Government. And since many of these contributions 

are deductible from revenue for federal income tax purposes, they 

represent an indirect but material contribution by the U.S. Government to 

foreign assistance. 

Although the precise amounts of foreign assistance philanthropy are not 

fully known, the methodologies have improved substantially to measure it, 

and these amounts are significant. The Office of Global Development 

Alliance of USAID has prepared a report providing estimates which show 

a sharp and substantial increase in philanthropic giving.8

 Another source, 

the Hudson Institute’s Index of Global Philanthropy has provided higher 

estimates for philanthropic giving.9

 

• Recommendation: Develop strategies that better acknowledge 

and include the impacts from these very substantial private sector 

activities in developing countries. Create opportunities for the U.S. 

Government to invest in and partner with emerging local 

organizations and businesses in developing countries. 

For further discussion of the leveraging of private resources by the U.S. 

Government, see Chapter Five. 

7.6 Create a Unified Policy, Budgeting, and Evaluation 

System

To generate effective development and humanitarian programs and the 

support to fund them, we believe our nation must take the following five 

steps: 

1. Develop a clear picture of the circumstances that cause poverty in 

each country, driven by a local assessment of the country’s own 

Poverty Reduction Strategy Papers (PRSP), and by an assessment of 

our nation’s ability to work with the country to address these issues. 

Produce Country Development Estimates based on this input. 

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2. Create a coherent long-term strategy that acknowledges conditions 

in each region and country and sets forth specific and realistic 

development targets that Americans can support. 

3. Formulate budgets based on our nation’s strategy and desired level 

of effort, the country’s commitment, and other donor activities. 

4. Monitor our government’s efforts, evaluate their impact, and feed 

this knowledge back into the management and resource allocation 

processes. 

5. Commit to funding these plans over the long term, in concert with 

the Congress. 

• Recommendation: Create an integrated policy, budgeting, and 

evaluation system for civilian foreign affairs to unify and integrate 

our nation’s approach to strategy, budgeting, programming, and 

evaluation. 

No such system exists today within the Department of State or USAID, 

nor does one span the dozens of other government organizations now 

involved in foreign assistance. Such a system would consolidate the 

functions from the existing State Department Policy Planning, Resource 

Management, and Director of Foreign Assistance offices into a single, 

integrated office, expanded in scope to cover all international affairs 

spending. These steps are discussed in greater depth below. 

7.6-1 Step 1: Produce Country Development Estimates 

• Recommendation: Produce a Country Development Estimate 

(CDE) for each country assisted by the United States as a 

collaborative effort between the U.S. and recipient governments. 

Draw on the PRSP, which is already prepared by the host country 

in conjunction with the IMF and the World Bank,10 in order to 

reduce the burden on the partner country. Consider aid recipients’ 

relationships with other bilateral and multilateral donors as the 

CDE is developed. 

Include information in the CDE on a variety of important factors 

such as policies, infrastructure, education, healthcare, quality of 

governance, security, political leadership, macroeconomic 

conditions, business environment, natural resource and geographic 

endowments, trade position, and geopolitical position. 

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Phase this procedure in over a five-year period. Produce a CDE 

for all countries once every five years, or when a major event 

occurs, in order to maintain relevance. Extend these estimates over 

a combined 20-year horizon. 

Throughout this process, the U.S. Government must rely on all tools of 

government, not merely assistance, to figure out what it can do or 

promote. Our nation should start by considering the particular needs of 

each country before assessing the extent to which it is in America’s 

national interest. Our government must put in perspective the challenges 

of helping any state develop, with the understanding that our effectiveness 

is limited by the political and social climate of that partner state. Further, 

our nation must understand that U.S. Government assistance will have to 

focus on achieving specific objectives in each country. 

As a result, the U.S. Government plan should determine not only the 

appropriate level of assistance, but also should set forth a comprehensive 

set of actions to mobilize the necessary resources across and beyond the 

U.S. Government. These should include security, trade, investment 

promotion, diplomacy and public diplomacy. 

7.6-2 Step 2: Determine Specific Development Assistance Goals 

Although our government has supported many specific poverty-reduction 

initiatives, neither the Executive and Legislative branches nor the 

American people embrace a common vision for how to help countries 

attack global poverty. Our nation has no apparent overriding common 

goal, as it did in Europe with the Marshall Plan, to help struggling states 

develop working economies and build stable societies. Currently, no 

coherent strategy exists to achieve even the Millennium Development 

Goals. On the basis of the “art of the possible” as defined in the CDEs, 

and in collaboration with other bilateral, multilateral, and private actors, 

the U.S. Government should lay out clear and coherent development and 

humanitarian assistance goals within its overall foreign policy. 

The Commission believes that civilian foreign affairs would be well-served 

by imposing the standard of rigor to our nation’s foreign assistance 

planning that we demand in formulating the nation’s security and defense 

policies. These security policies are guided by long-term strategies, 

developed by the Executive branch, and presented regularly to the 

Legislative branch. 

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• Recommendation: Create two new strategy documents, in 

addition to the existing National Security Strategy (NSS), that will 

articulate our nation’s development and humanitarian goals in a 

comparable formal process. 

The new strategy documents recommended by the Commission are: 

1. National International Affairs Strategy (NIAS): A derivative 

document of the National Security Strategy, this new document 

would further elaborate U.S. international affairs objectives on both 

global and regional levels as well as on a country by country basis. 

It would also outline government-wide capabilities and assistance 

needed to achieve these objectives. This strategy would cover all 

efforts funded by the International Affairs (150) budget function. 

2. Quadrennial Development and Humanitarian Assistance 

Review (QDHR): Given their complexity, U.S. development 

efforts should be reviewed every four years to evaluate their 

effectiveness. This review should propose any needed changes to 

U.S. objectives and to how the government approaches them. The 

contents of this document should influence both the NSS and 

NIAS and should be modeled on the Quadrennial Defense Review. 

Reviews might also be conducted for other functions of civilian 

foreign affairs. 

Each individual embassy’s Mission Performance Plans (MPPs) should 

work to implement these objectives in a specific country, and should be 

expanded to cover all international affairs activities in a country. 

7.6-3 Step 3: Improve Budget Formulation 

The documents described above should inform the budget process, which 

should be further improved by the steps outlined below. 

• Recommendation: Create a Unified National Security Budget that 

includes both the Defense and International Affairs budget 

functions. 

A unified National Security budget could be one way to improve budget 

formulations. This would especially be true if an agreed-upon proportion 

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of the unified budget were spent on the International Affairs function. 

Currently, civilian foreign affairs resources represent approximately five 

percent of the combined Defense and International Affairs Accounts. 

Although most of us believe that this percentage should be higher — and 

many of us believe that it should be as high as ten percent — we agree that 

the precise amount must be an outcome of the process described above. 

Secretary of Defense Robert Gates said in November 2007, “Funding for 

non-military foreign-affairs programs has increased since 2001, but it 

remains disproportionately small relative to what we spend on the military 

and to the importance of such capabilities.” He went on to say, “What is 

clear to me is that there is a need for a dramatic increase in spending on 

the civilian instruments of national security — diplomacy, strategic 

communications, foreign assistance, civic action, and economic 

reconstruction and development....We must focus our energies beyond 

the guns and steel of the military....We must also focus our energies on 

the other elements of national power that will be so crucial in the coming 

years.” 

Unifying the National Security budget and increasing the foreign policy 

portion of it would be a prudent use of resources. Indeed, an integrated 

approach to foreign affairs would require a unified national security 

budget that in turn would subject both defense and civilian instruments to 

the same disciplined oversight. This would enable Congress to vote for 

America’s “smart power” goals in the same budget as our country’s “hard 

power” goals. Similarly, at great savings and benefit to the country, this 

approach would put more resources to work to prevent or solve crises 

before they explode into full-blown emergencies requiring expensive 

military involvement. 

• Recommendation: Provide National Security Guidance through a 

mandatory process to implement strategy through a biennial 

National Security Planning Guidance. 

Just as a unified planning process is needed for civilian international 

affairs, such an approach is also essential for effective coordination. This 

would likely mean establishing a mandatory process to implement strategy 

through a biennial National Security Planning Guidance (NSPG). This 

classified guidance, provided by NSC and OMB with the participation of 

other agencies involved in national security, would focus on U.S. national 

security priorities. It would fill gaps and eliminate overlapping program 

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coverage while directing agencies to emphasize certain activities and 

programs over others. In addition, a joint exercise with strategy and 

policy designers and budgetary enforcers would ensure that agencies focus 

on the most important activities and coordinate them effectively. Also, 

because it would be enshrined in law, this reform would be less 

susceptible to the vagaries of any particular administration, as Congress 

would have oversight vis-à-vis changes to it. In spite of some weaknesses, 

the Pentagon's Planning, Programming, Budgeting and Execution System 

(PPBES) works because it survives the variations among administrations. 

7.6-4 Step 4: Enhance Feedback through Continual Monitoring and 

Evaluation 

Sixty years of foreign assistance have taught us much about what works 

and what does not work to generate development. However, the systems 

our government uses to evaluate development and humanitarian assistance 

programs are either in disarray or do not exist. Current systems tend to 

focus more on outputs, such as counting how many books are delivered to 

a school, rather than on outcomes, such as measuring how many children 

can actually read. Indeed, out of 26,285 impact evaluations that USAID 

conducted between 1996 and 2005, only 30 measured the impact of 

projects. Everyone to whom members of the Commission spoke about 

monitoring and evaluation expressed concern about the inadequacy of the 

existing process. 

The Commission recognizes the vital need for timely and on-going 

performance evaluations of all foreign assistance programs. Some 

programs that promote political and social transformation defy easy 

measurement, but the Commission believes that the investment of 

taxpayer dollars must be effectively monitored and that progress toward 

defined outcomes needs to be clear to all stakeholders. Accurate 

evaluation and measurement allow the creation of institutional knowledge 

of what works and what does not. They will also enable adjustments to be 

timely while programs are still in effect. 

The HELP Commission recommends that the U.S. Government: 

• Recommendation: Reestablish an independent Office of Monitoring 

and Evaluation (OME) within the agency responsible for U.S. foreign 

assistance operations and provide it with sufficient funding to monitor 

and evaluate performance. Make this independent office accountable 

to Congress as well as to the Executive branch. 

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• Recommendation: Harmonize the reporting formats, benchmarks, 

and frequencies of the various government entities providing 

development or humanitarian assistance to eliminate unreasonable 

burdens on foreign assistance recipients. 

• Recommendation: Collaborate with other donors throughout the 

world to adopt the good donor initiatives that have been established 

through multilateral agreements. 

• Recommendation: Adopt best practices in monitoring and 

evaluation by working closely with the private sector, educational 

institutions, cooperatives, private voluntary organizations, and NGOs. 

• Recommendation: Ensure that evaluation strategies rely as much as 

possible on control groups and randomization, particularly as project 

settings become more mature and rich with data. 

• Recommendation: Consider new ways evaluators can assess projects, 

including using professional associations or accreditation agencies. 

• Recommendation: Build, in collaboration with other bilateral and 

multilateral donors, the capacities of recipient governments to create 

and report on reliable baseline data. 

7.6-5 Step 5: Work Closely with Congress to Improve the Funding 

Process 

The Commission strongly believes that up-front Congressional support 

for the foreign assistance funding process is critical if the United States is 

to achieve its long-term goals. At every point in the process, the 

Legislative branch must be involved in: concurring with the long-term 

vision set out by the Executive branch; agreeing to fund the programs that 

fit the strategy; monitoring progress toward achieving the vision; and 

continuing to fund those programs that are achieving results and 

successfully fulfilling the mission. An integrated government commitment to fund 

development goals over the long term must be shared not only by the top officials of the 

aid agency and the State Department, but also by the President and by the leadership of 

both parties of the House and Senate. 

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7.7 Spend Enough to Achieve America’s Goals

This report recommends many changes to our nation’s current foreign 

assistance programs. If our nation carries them out, our national 

investment will be more effective and will allow the United States better to 

address vast global needs. Some of the specific recommendations that will 

require new funding include the following: 

• Setting up a robust monitoring and evaluation system; 

• Increasing support to small and medium-sized enterprises; 

• Creating emergency response funds; 

• Increasing development agency staff and their capabilities; 

• Expanding funding for technology for developing countries; 

• Increasing funding for public-private partnerships; and 

• Strengthening the capacity to deal with new challenges posed by 

failed and failing states. 

The HELP Commission recommends that funding decisions be based on 

country needs and be consistent over the long term. Until the United 

States determines what needs to be done, it cannot determine the overall 

cost, as host country resources and other donor efforts affect the U.S. 

share. In turn, inconsistent funding damages our nation’s relationships 

with other countries and interferes with meaningful reform. When the 

United States withdraws or reduces its commitments prematurely, 

regardless of the logic of the explanation, it can hurt public perception of 

the United States as a donor, as well as harm the leaders of the recipient 

country. 

 

The Commission believes that if assistance is delivered in a new business 

model based on real partnerships; if the assistance is demand driven; if it 

creates lasting institutions and human capabilities; and if impacts can be 

responsibly monitored and evaluated, then our government should 

increase assistance funding substantially. These funds should focus on 

increasing peoples’ productivity and on rewarding recipient countries that 

take steps to open their markets, improve their governments, abide by the 

rule of law, respect property rights, and reduce corruption, so that they 

can move toward full integration into the global community. 

In all cases, we understand that additional spending will create expanded 

expectations, and thus we acknowledge and believe in the need for 

heightened accountability to the American people, including high-quality 

 94
monitoring and evaluations communicated through increased public 

education and involvement. 

To be clear, no one is advocating an increase in funding simply to preserve the status 

quo. The HELP Commission’s recommendation to boost funding is based 

on the assumption that more money would be applied to better programs 

and to supporting developing countries’ own commitments to reform. 

The Commission believes that our nation’s institutions can indeed 

perform better. In the end, the Commission’s funding recommendation 

emerged from our desire to strike a balance between looking at past 

failures realistically and developing a hopeful and intelligent vision for the 

future. 

President Bush said in a speech to the United Nations in September 2007, 

...we can build a world where people are free to speak, 

assemble, and worship as they wish; a world where 

children in every nation grow up healthy, get a decent 

education, and look to the future with hope; a world 

where opportunity crosses every border. America will 

lead toward this vision where all are created equal, and 

free to pursue their dreams. This is the founding 

conviction of my country.... And with our 

determination, it can be the future of our world. 

It is incumbent on Americans to recognize the duty we owe to the world, 

and to ourselves. Blind to partisanship, we unanimously believe in investing today to 

help those in the developing world improve their lives and fully participate in building a 

more stable and prosperous world. 

 95
Chapter 8: Reform is Needed Now 

Over the past 45 years, many exceptional groups have produced sound 

and creative recommendations for reforming U.S. development and 

humanitarian programs. The HELP Commission has benefited greatly 

from this work and has drawn from these reports in making our own 

recommendations for change. 

The Peterson and Carlucci Commissions created powerful work that 

sought to make better use of our nation’s foreign aid during the Cold War. 

The Wharton Report and Hamilton-Gilman Task Force offered proposals 

for reforming America’s foreign assistance once the showdown ended 

with the Eastern bloc. Yet these proposals and initiatives have been 

largely ignored or only partly carried out. 

More recently, the Bush Administration established, with the Congress, 

the Millennium Challenge Corporation (MCC) to link foreign aid to 

country performance. In addition, via a non-legislative initiative, the 

Administration started to coordinate the fragmented efforts of USAID 

and the State Department. 

The HELP Commission believes that only when bold leadership is prepared to enact 

bold, enduring changes through legislation, can our nation fix the now long-standing 

problems. It must be grounded in policy agreement between the Executive and 

Legislative branches. It must elevate development in the foreign policy establishment. 

And it must create a new model for foreign aid that expands the tools available for use. 

The development challenges our partner countries face today require the 

focus of the entire U.S. Government. They demand that the substantial 

efforts of private individuals and institutions be integrated into the 

delivery of foreign assistance. We urge our national leaders to concentrate 

the varied and powerful tools across our government institutions to help 

developing countries reduce poverty. 

Our nation must confront these global challenges not only out of moral 

duty. Helping move the world’s poorest into the global marketplace, 

working to eliminate preventable scourges, and bringing hope to those in 

despair also serves America’s own national interest. 

 96
The following must guide our nation’s reform efforts: 

• Development is strategically important to our country to secure our 

nation, bolster our economy, and uphold our moral responsibilities. 

• The world has changed since the last Foreign Assistance Act was 

written more than 45 years ago. Our programs, as well as the 

structures that manage the programs, have not kept pace. 

• Foreign assistance by itself will not generate growth. 

• Economic growth and jobs are needed to build long-term 

sustainable development. The key ingredients to sustainable 

economic growth are pro-growth policies and committed local 

leadership. 

• Our nation must be willing to support the countries that make 

these necessary policy reforms. The United States needs to listen to 

its local partners, help them adapt to change, and measure to 

achieve real results. 

• America needs an integrated, coherent approach to development 

assistance. Getting it right will require using a new model that 

involves the private sector and takes a comprehensive approach to 

development. This means implementing trade, investment, security 

measures, and public diplomacy and partnering with nongovernmental actors and other donors. 

• America needs a clear and common vision for development, shared 

by the Executive and Legislative branches of government. This 

shared vision must encompass the belief that development is truly 

on a par with defense and diplomacy, and both branches must work 

together to achieve it. 

The HELP Commission acknowledges the challenges that other reformers 

have faced when it came time to implement their recommendations. The 

diverse opinions and countless vested interests in foreign assistance 

programs no doubt interfered with change. But we believe that our 

country cannot wait any longer for genuine and far-reaching reform. Our 

nation’s approach to development and humanitarian crises must change. 

 97
The Commission believes that the international system today is going 

through a dramatic re-ordering that rivals the period after each World War 

in its potential for opportunity and danger. Our experience after World 

War I should show us what can happen when we ignore potential threats. 

Just as President Truman and the Congress made changes after World 

War II to strengthen our collective ability to face new challenges, so too 

must our leaders now take bold action. Our nation must take the right 

steps today to keep us from facing greater costs and more pernicious 

dangers in the future. 

Former Secretary of State George C. Marshall asserted sixty years ago in 

his speech announcing the Marshall Plan: 

Aside from the demoralizing effect on the world at large and 

the possibilities of disturbances arising as a result of the 

desperation of the people concerned, the consequences to 

the economy of the United States should be apparent to all. 

It is logical that the United States should do whatever it is 

able to do to assist in the return of normal economic health 

in the world, without which there can be no political stability 

and no assured peace. Our policy is directed not against any 

country or doctrine but against hunger, poverty, desperation, 

and chaos. Its purpose should be the revival of a working 

economy in the world so as to permit the emergence of 

political and social conditions in which free institutions can 

exist. Such assistance, I am convinced, must not be on a 

piecemeal basis as various crises develop. Any assistance that 

this Government may render in the future should provide a 

cure rather than a mere palliative. 

Although the goal of the Marshall Plan — to rebuild Europe — was very 

different from today’s challenge, it offers some lessons. After World War 

II, the United States determined that it was in its own national interest that 

Europe be restored to its former place in the world. We understood that 

our own prosperity was dependent on a restoration of Europe’s economy. 

Our nation’s efforts succeeded because we worked with willing countries 

and mobilized four integrated and powerful tools which were all necessary 

for success: aid; enlightened trade policies, including an authoritative new 

trade agreement and the reversal of trade barriers; support for democracy 

and good governance; and security. The HELP Commission believes that 

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eliminating extreme poverty and promoting development in poor 

countries is, like the reconstruction of Europe, in America’s own national 

interest. 

The Marshall Plan was funded at a level that was sufficient to achieve its 

objectives because Americans were serious about helping Europe rebuild. 

Today, America is asking the developing countries to take difficult steps 

and to be serious about their own growth. We are asking them to reform 

their governments, to win the battle against corruption, and to commit to 

democratic principles. We are asking the leaders of our partner countries 

to show commitment and provide accountability and principled 

responsibility. 

In return, the United States must decide to be serious about reforming our 

foreign assistance. The Commission knows that we need to involve all of 

the government in a coordinated, coherent, strategic approach. We know 

that the President, the Congress, and the American people must commit 

to a common vision of a better world. We must be willing to put in place 

the policies and programs that reflect the world today, by reaching out to 

the private sector and capitalizing on its strengths. And we must be 

willing to commit the resources to help the developing world achieve 

more rapid economic and social progress. 

If our nation takes such bold steps, it increases the prospects for those 

brave people in the developing world who are fighting for a better life for 

their children. For in the end, a better life for those children means a 

better world for everyone. 

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Endnotes 

 

1 This number refers to the entities that disburse Official Development Assistance. In Calendar Year 

2006 These entities were: Departments of Agriculture, Commerce, Defense, Energy, Health and Human 

Services, Justice, Labor, State, the Interior, and the Treasury, and the following independent agencies: 

African Development Foundation, Environmental Protection Agency, Export-Import Bank, InterAmerican Foundation, Millennium Challenge Corporation, Open World Leadership Program, Peace 

Corps, Trade and Development Agency, U.S. Agency for International Development, and U.S. Institute 

for Peace. In some years they are joined by other departments and agencies. 2 See Appendix 7 for more information on the strategic planning exercise 3 See Appendix 9 for an elaboration on the dynamics of change, endorsed by some Commissioners. 4 See Appendix 9 for an elaboration on the procurement and grant functions, endorsed by some 

Commissioners. 

5 According to the PEPFAR website, the New Partners Initiative “includes a competitive process for 

$200 million in grants” for organizations that “have the capability to reach people who need HIV/AIDS 

services, but which lack experience in working with the U.S. Government and its processes. Community 

and faith-based organizations, in particular, represent vital but underutilized resources. Many such 

organizations are well-established within communities and well-placed to reach out to those infected and 

affected by HIV/AIDS.” 

6 The original target of .7% of GNP was first articulated by the UN General Assembly in 1970 and 

refers to the target as a calculation of ODA (see definition in footnote 8 above. United Nations General 

Assembly Resolution 2626: International Development Strategy for the Second United Nations 

Development Decade, 24 October, 1970, page 43. Link available at: 

http://www.un.org/documents/ga/res/25/ares25.htm 7 The OECD’s Development Assistance Committee (DAC) defines ODA as: “Grants or Loans to 

countries and territories on Part I of the DAC List of Aid Recipients (developing countries) which are: 

(a) undertaken by the official sector; (b) with promotion of economic development and welfare as the 

main objective; (c) at concessional financial terms [if a loan, having a Grant Element (q.v.) of at least 25 

per cent]. In addition to financial flows, Technical Co-operation (q.v.) is included in aid. Grants, Loans 

and credits for military purposes are excluded. For the treatment of the forgiveness of Loans originally 

extended for military purposes, see Notes on Definitions and Measurement below. Transfer payments 

to private individuals (e.g. pensions, reparations or insurance payouts) are in general not counted.” 

DAC’s Glossary, Development Cooperation Directorate-DAC. Link available at: 

http://www.oecd.org/glossary/0,3414,en_2649_33721_1965693_1_1_1_1,00.html#1965586 8 USAID,"Guide to the 2005 Resource Flows Analysis; USAID Global Development Alliance, June 

2007 http://www.usaid.gov/our_work/global_partnerships/gda/pie_analysis.pdf 9 “The Index of Global Philanthropy, 2007” Center for Global Prosperity, the Hudson Institute, Pages 

18-23: http://gpr.hudson.org/files/publications/IndexGlobalPhilanthropy2007.pdf

• $13.4 billion from private voluntary organizations; 

• $2.8 billion in volunteer time

• $5.4 billion from faith-based groups; 

• $4.6 billion from universities and colleges; 

• $2.2 billion from U.S. foundations; and 

• $5.1 billion from American corporations. 

• $61.7 billion from individual remittances 
APPENDIX 1: Members of the HELP Commission 

The Honorable Mary K. Bush, Chairman 

Mary K. Bush has served three U.S. Presidents — as the U.S. Government’s representative on the IMF Board, head of 

the Federal Home Loan Bank System, and Board member of Sallie Mae. She has led the creation of ground-breaking 

financial transactions in the private capital markets — for Fannie Mae and several Fortune 500 companies — and at the 

IMF — the Structural Adjustment Facility (the SAF, later called ESAF). Since 1991, Ms. Bush has been President of 

Bush International, LLC, and she currently serves on the boards of United Airlines, Discover Financial Services, 

ManTech International, Briggs & Stratton, Private Export Funding Corporation, and the Pioneer Family of Mutual 

Funds. 

The Honorable Carol C. Adelman, Vice Chairman 

Carol Adelman is a senior fellow and director of Hudson Institute's Center for Global Prosperity, where she publishes 

the annual Index of Global Philanthropy, the first comprehensive guide to philanthropic flows to developing countries. 

Adelman served as a Presidential appointee at USAID, heading U.S. foreign aid programs to Asia, the Middle East, and 

Central and Eastern Europe when the Wall fell. She is currently the Vice Chair of USAID’s Advisory Committee on 

Voluntary Foreign Aid, a Vice Chair of the Atlantic Council, member of the Council on Foreign Relations, and is a 

frequent commentator and writer on global development issues in the national media. 

Leo Hindery, Jr., Vice Chairman 

Leo Hindery, Jr. is currently Managing Partner of InterMedia Partners. He is an Executive-in-Residence at Columbia 

Business School, a member of the Board of Advisors at Columbia School of Journalism, a member of the Council on 

Foreign Relations, and the author of two books. Mr. Hindery founded the YES Network and served as its Chairman 

and CEO until 2004. Prior to that he served as President of Tele-Communications, Inc. (TCI) and CEO of AT&T 

Broadband.

Steven K. Berry, Esq. 

Steve Berry is executive vice president for government and consumer affairs at the Direct Marketing Association. 

Previously, he was President of Steven K. Berry, LLC and a consultant to The Livingston Group. Mr. Berry has an 

extensive background in government service and has held such positions as Republican Chief of Staff for the House 

Foreign Affairs Committee; Assistant Secretary of State for Legislative Affairs, Department of State; and Chief Counsel 

and Director of International Operations and European Affairs for the Senate Foreign Relations Committee. 

Jerome F. Climer

Jerome F. Climer was President of both the Congressional Institute, Inc. and the Public Governance Institute, Inc. at the 

time of his appointment. Mr. Climer’s experience in public administration began in the late '60s and early '70s, when he 

served as Assistant to the Secretary of Agriculture. He also served as Chief of Staff to Congressman Ed Bethune of 

Arkansas and later as a member of the U.S. House Republican Leadership staff. 

Congresswoman Jennifer Dunn

The HELP Commission deeply regrets the passing of their friend and colleague Jennifer Dunn. Jennifer Dunn was a Member of Congress from Washington State (1993–2005) where she became the highest ranking 

woman in the House of Representatives when she was elected Vice Chair of the House Republican Conference. She 

represented both the Reagan and Bush Administrations at meetings of the U.N. Commission on the Status of Women 

and traveled extensively during her time in office. Most recently, she was employed as a senior advisor in DLA Piper 

Rudnick Gray Cary’s Government Affairs practice group specializing in issues relating to tax, trade, and homeland 

security.

Dr. Nicholas N. Eberstadt 

Dr. Nicholas Eberstadt holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute and is 

Senior Advisor to the National Bureau of Asian Research. He frequently serves as a consultant for the U.S. Census 

Bureau and other government organizations on such topics as demography, international development, and East Asian 

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security. Dr. Eberstadt is a prolific author; he has published over 200 studies and articles in scholarly and popular 

journals and has written or edited over a dozen books. 

Glenn E. Estess, Sr. 

Glenn Estess was elected Chairman of the Rotary Foundation, one of many leadership roles he has held in the 

organization. Through his work with Rotary, Mr. Estess has visited numerous humanitarian aid programs around the 

world and he has received several awards for his distinguished service. Among other positions, Mr. Estess has served as 

chairman of the Baptist Health Systems, President of the Birmingham Sales and Marketing Club,and Director of the 

Better Business Bureau of Central Alabama. 

Lynn C. Fritz 

Lynn Fritz is the founder of Fritz Institute, a non-profit specializing in the application of processes and performance 

standards from the business world to humanitarian aid organizations. Until May 2001, Mr. Fritz was the Chairman and 

CEO of Fritz Companies. He serves on several boards, is a member of the World Economic Forum’s Logistics and 

Transportation Governors, and is founder and member of WEF’s Disaster Response Network. 

Alonzo L. Fulgham (representative of the Administrator of USAID, who serves ex-officio) 

Alonzo Fulgham is the Chief Operating Officer at USAID and serves as the USAID Administrator’s representative for 

the HELP Commission. Mr. Fulgham is a member of the Senior Foreign Service. Most recently, he served as Mission 

Director in Afghanistan from June 2005 to July 2006. Prior to that, he served as the Director for South Asian Affairs in 

the Bureau for Asia and the Near East (ANE). Mr. Fulgham joined USAID in 1989 and was a Peace Corps Volunteer in 

Haiti from 1984-1986. 

Benjamin K. Homan

Benjamin Homan has been the Chief Executive Officer of Food for the Hungry since 2001. He is a past President of 

the Association of Evangelical Relief and Development Organizations (AERDO) and a former Chairman of USAID’s 

Advisory Committee on Voluntary Foreign Aid. Previously, Homan taught on the faculties of Chaffey College, Biola 

University, the University of Nebraska, and the University of California-Irvine, and served on boards of several 

businesses in the People’s Republic of China.

The Honorable Walter H. Kansteiner III 

Walter Kansteiner is a founding Principal of The Scowcroft Group. In addition to his business experience in emerging 

markets, Mr. Kansteiner served three years as Assistant Secretary of State for African Affairs and was the President’s 

personal representative to the G8 Africa Process. He chairs the Africa Policy Advisory Panel, and serves on various 

private corporation boards in the U.S. and Africa. 

Thomas C. Kleine, Esq. 

Thomas C. Kleine, Esq., is a partner with the international law firm of Troutman Sanders LLP. 

From 1996-1997, Mr. Kleine served as Chief Counsel to the United States Committee on Foreign Relations. Prior to his 

service to the Foreign Relations Committee, Mr. Kleine served as an Associate in what is now Troutman Sanders LLP. 

From 1989 to 1991, and periods from 1992-1994, he served as a Professional Staff Member for the Senate Foreign 

Relations Committee. 

William C. Lane 

William C. Lane is Washington Director for Governmental Affairs for Caterpillar. Mr. Lane is co-chair of the U.S. - 

Latin America Trade Coalition and the U.S. Global Leadership Campaign. Previously, Mr. Lane founded and chaired 

the USA Engage Coalition and helped lead the business advocacy efforts in support of the Australia and Chile Free 

Trade Agreements, as well as Trade Promotion Authority. Mr. Lane is an Adjunct Professor at the Elliott School of 

International Affairs at George Washington University.

Dr. Martin L. LaVor 

Marty LaVor is a freelance photojournalist. Much of his international work has focused on under-developed countries 

experiencing famine, refugees, and related difficulties. Prior to becoming a photojournalist, Mr. LaVor held several 

senior staff positions in Congress, including Senior Professional for the House Education and Labor Committee; Senior 

 102
Professional for the Senate Committee on Aging; and Senior Consultant for the House Select Committee on Hunger. 

C. Payne Lucas 

C. Payne Lucas is chief executive officer of Lodestar, LLC, a domestic and international business consulting firm. In 

1971, Mr. Lucas co-founded Africare, the oldest and largest African-American nonprofit organization specializing in aid 

to Africa. He served as its president until retiring in 2002. Mr. Lucas’s service in the Peace Corps as an overseas 

representative began in 1971. He later went on to serve as director of the Africa Region and director of the returned 

volunteers for the organization. He is co-author of a book on the Peace Corps. 

The Honorable Robert H. Michel 

Robert Michel is Senior Advisor for Corporate and Governmental Affairs with Hogan & Hartson LLP. He joined the 

firm in 1995 after serving 38 years in Congress as the United States Representative from the 18th Congressional District 

of Illinois, including 14 years as House Republican Leader. He was elected to his first leadership position as Chairman of 

the Congressional Campaign Committee in 1972, and then served as Republican Party Whip from 1974 until he was 

elected House Republican Leader in 1980.

Eric G. Postel 

Eric G. Postel is the founder of Pangaea Partners, an international investment banking and consulting company focusing 

on emerging markets. Mr. Postel served on the Sub-Saharan African Advisory Committee at the U.S. Eximbank in 1999-

2000, the second year as Chairman. He is an active Board member for multiple organizations and an author of a number 

of professional articles. Mr. Postel also served as Vice President at Citibank in Tokyo and New York from 1983 to 1989. 

Jeffrey D. Sachs 

Jeffrey Sachs is Director of the Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health 

Policy and Management at Columbia University. He is also Special Advisor to United Nations Secretary-General Ban KiMoon. From 2002 to 2006, he was Director of the UN Millennium Project and Special Advisor to United Nations 

Secretary-General Kofi Annan on the Millennium Development Goals. Professor Sachs is a Research Associate of the 

National Bureau of Economic Research. He has been an advisor to the IMF, the World Bank, the OECD, the World 

Health Organization, and the UNDP, among other international agencies, and is the author of numerous books and 

articles. 

Gayle E. Smith 

Gayle Smith is a Senior Fellow at the Center for American Progress. She served as Special Assistant to the President and 

Senior Director for African Affairs at the National Security Council from 1998-2001, and as Senior Advisor to the 

Administrator and Chief of Staff of the U.S. Agency for International Development from 1994-1998. As a journalist, 

Ms. Smith was based in Africa for almost 20 years. She has also consulted for a wide range of NGOs, foundations, and 

governmental organizations. 

David A. Williams 

David Williams is president and CEO of the Make-A-Wish Foundation. Before joining the Make-A-Wish Foundation, 

Mr. Williams spent 10 years at Habitat for Humanity International, rising to executive vice president and chief operating 

officer there. Mr. Williams began his work in nonprofit leadership by serving as executive director of The Houston Food 

Bank for 11 years. 

 103
Appendix 2: The Writers Group 

Mary K. Bush 

Chairman 

Leo Hindery, Jr. 

Vice Chairman 

Thomas C. Kleine, Esq. 

Commissioner 

William C. Lane 

Commissioner 

Eric G. Postel 

Commissioner 

Gayle E. Smith 

Commissioner 

Margot E. Machol 

Chief of Staff 

Linda Flanagan 

Executive Editor 

Wesley Wilson 

Director of Policy Development 

Larry Nowels 

Consultant 

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APPENDIX 3: HELP Commission Staff 

Margot E. Machol, Chief of Staff 

HELP Commission Senior Staff 

Thomas Briggs, Executive Director 

Phil Christenson, Senior Advisor 

Wesley Wilson, Director of Policy Development 

HELP Commission Staff 

Elizabeth Becton, Scheduler 

Megan Blackburn, Policy Analyst 

Christopher Fava, Management and Program Analyst 

Melissa Griswold, Research Analyst 

HELP Commission Part Time Staff 

Linda Flanagan, Executive Editor 

Larry Nowels, Consultant 

Ellen Yount, Consultant 

 

 HELP Commission Former Staff HELP Commission Interns 

Catherine Cleland, Consultant Katharine Davis 

Liana del Papa, Research Analyst Clare Gallager 

Monica Dudas, Research Analyst Melike Harfouche 

Christina Duffy, Executive Director Anne Pacheco 

 Bob Lester, Consultant Emily Prichard 

Cecily Mango, Advisor O. Dillon Smith 

 Joseph Pegues, Consultant Brittany Vasseur 

Susan Raymond, Consultant 

Jeffrey Spector, Consultant 

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APPENDIX 4: Study Tours by the HELP Commission 

The members of the HELP Commission, in fulfilling their mandate to observe and analyze current 

and past US foreign assistance programs and recommend ways to improve them, traveled to 18 

developing countries over a span of 10 months. These trips provided us with invaluable insight into 

the way foreign assistance works on the ground in a wide variety of situations. Meetings with 

USAID mission and Embassy personnel, private contractors and NGO workers in the field, 

government officials, and aid recipients greatly contributed to the Commission’s final 

recommendations. 

Countries Commissioners visited, in chronological order: 

• Haiti August 5-9, 2006 

• Dominican Republic August 9-13, 2006 

• Honduras October 16-19, 2006 

• Colombia October 19-24, 2006 

• Egypt January 7-11, 2007 

• Jordan January 11-15, 2007 

• Sri Lanka January 21-24, 2007 

• India January 24-25, 2007 

• Pakistan January 25-28, 2007 

• Ethiopia March 19-20, 2007 

• Djibouti March 20-23, 2007 

• Kenya March 23-26, 2007 

• Uganda March 26-28, 2007 

• South Africa May 5-7, 2007 

• Malawi May 7-9, 2007 

• Mozambique May 9-12, 2007 

• Liberia May 13-16, 2007 

• Ghana May 16-19, 2007 

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APPENDIX 5: HELP Commission Meetings 

The HELP Commission officially convened on the following dates: 

• February 22, 2006 

• March 29, 2006 

• April 24, 2006 

• May 8, 2006 

• June 8, 2006 

• June 26-27, 2006 

• July 31-August 1, 2006 

• September 14-15, 2006 

• October 5, 2006 

• October 31-November 1, 2006 

• November 29-30, 2006 

• January 18-19, 2007 

• February 8-9, 2007 

• March 12, 2007 

• April 25-26, 2007 

• May 21-22, 2007 

• June 26-27, 2007 

• July 16-18, 2007 

• September 19-20, 2007 

• October 10, 2007 

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APPENDIX 6: Experts Consulted during official 

Commission meetings

Gordon Adams, Professor at George Washington University, April 25, 2007 

John Ambler, Senior Vice President for Programs at Oxfam America, April 24, 2006 

Paul Applegarth, former CEO of Millennium Challenge Corporation, February 8, 2007 

Richard Armitage, former Deputy Secretary of State, March 7, 2006 

J. Brian Atwood, former Administrator of USAID, May 8, 2006

Akhtar Badshah, Senior Director of Community Affairs for Microsoft, October 5, 2006 

Joel Barkan, Senior Consultant on Governance in the Public Sector Reform Unit of the Africa 

Region at the World Bank, January 19, 2007 

Thomas Barnett, Senior Managing Director of Enterra Solutions, LLP, January 18, 2007 

David Beckmann, President of Bread for the World, April 26, 2007 

François Bourguignon, Senior Vice President for Development Economics and Chief Economist 

at the World Bank, April 20, 2007 

Lael Brainard, Vice President and Director of the Global Economy and Development Center at 

the Brookings Institute, April 24, 2006, January 18, 2007 

Sam Brownback, U.S. Senator, June 8, 2006 

Lisa Chiles, Deputy Assistant Administrator at the Bureau for Asia and the Near East at USAID, 

November 1, 2006 

Paul F. Clayman, Minority Chief Counsel for the Senate Foreign Relations Committee, November 

30, 2006 

Robin Cleveland, former Counselor to former World Bank President Paul Wolfowitz, April 20, 

2007 

Paul Collier, Professor of Economics at Oxford University Economics Department and Director 

of the Centre for the Study of African Economies, September 28, 2007 

Patrick M. Cronin, Senior Advisor at the International Institute for Strategic Studies, April 25, 

2007 

 108
Nisha K. Desai, Democratic Clerk and Staff Director for the Foreign Operations Subcommittee on 

the Committee on Appropriations in the U.S. House of Representatives, November 30, 2006 

Thomas C. Dawson II, former Director of the External Relations Department in the International 

Monetary Fund, November 30, 2006 

Dirk Dijkerman, Chief Operating Officer in the Office of the Director of Foreign Assistance at the 

U.S. Department of State, October 31, 2006 

William Easterly, Professor of Economics at New York University and Co-Director of NYU’s 

Development Research Institute, June 26, 2006 

David Eckerson, Chief Human Capital Officer at USAID, November 29, 2006 

Michèle A. Flournoy, President of the Center for a New American Security, February 8, 2007 

Christian J. Foster, Assistant Deputy Administrator for International Cooperation and 

Development at the U.S. Department of Agriculture’s Foreign Agricultural Service, March 

29, 2006 

Edwin Futa, General Secretary of Rotary International, May 8, 2006 

William H. Gates, Sr., Co-Chair of the Bill & Melinda Gates Foundation, October 5, 2006 

Sam Gejdenson, former U.S. Congressman, April 25, 2007 

Michael Gerson, Senior Fellow at the Council on Foreign Relations, January 18, 2007 

Thomas R. Gibian, CEO of Emerging Markets Partnerships (EMP) Africa, July 31, 2006 

Thomas Gibson, President of the Institute for SME Finance, July 31, 2006 

Newt Gingrich, former Speaker of the House, July 10, 2006 

Rachel Glennerster, Executive Director of the Abdul Latif Jameel Poverty Action Lab at the 

Massachusetts Institute of Technology, March 12, 2007 

Robert Goldberg, Deputy Associate Director for International Affairs at the Office of 

Management and Budget, October 31, 2006 

David Gordon, Director of Policy Planning at the U.S. Department of State, July 17, 2007 

Andre Groenewald, First Secretary of the Socio-Economic Section at the Embassy of South Africa, 

February 8, 2007 

Lawrence E. Harrison, Senior Research Fellow and Adjunct Lecturer at the Fletcher School at 

Tufts University, March 12, 2007 

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Karen Hughes, Under Secretary for Public Diplomacy and Public Affairs at the U.S. Department 

of State, March 16, 2007 

Tamela Hultman, Co-founder, Chief Strategy and Content Officer, and Director of AllAfrica, June 

27, 2007 

Jennyfer Jones, acting Deputy Assistant Secretary of State for Foreign Assistance Programs and 

Budget, March 29, 2006 

Craig Kennedy, President of the German Marshall Fund, June 26, 2006 

Janet Kerley, former Team Leader for USAID’s Initiative to Re-Vitalize Education, August 1, 2006 

Mark Kirk, U.S. Congressman, June 8, 2006 

Jim Kolbe, former U.S. Congressman, April 25, 2007 

Stephen Krasner, former Director of Policy Planning at the U.S. Department of State, January 18, 

2007 

Christopher J. Lamb, Senior Research Fellow at the Institute for National Strategic Studies at the 

National Defense University, February 8, 2007 

Carol Lancaster, Associate Professor and Director of the Mortara Center for International Studies 

at Georgetown University and former Deputy Administrator of USAID, June 26, 2006 

Nancy Linborg, President of Mercy Corps, March 12, 2007 

James Locher, former Assistant Secretary of Defense for Special Operations and Low-Intensity 

Conflict, January 19, 2007 

Rudolph Lohmeyer, Senior Policy Analyst in the Office of Strategic and Performance Planning at 

the U.S. Department of State’s Bureau of Resource Management, April 26, 2007 

Clay Lowery, Assistant Secretary for International Affairs at the U.S. Department of the Treasury, 

November 30, 2006 

Robert Mallett, Senior Vice President for Corporate Affairs for Pfizer Inc., June 26, 2006 

Dale Mathias, Founder of GlobeVest, LLC, June 27, 2007 

Dick McCall, Senior Vice President for Programs at Creative Associates International, Inc., January 

18, 2007 

David McCormick, Deputy National Security Advisor for International Economic Affairs at the 

National Security Council, April 20, 2007 

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Michael McNerney, Director of International Capabilities- Stability Operations in the Office of 

the Secretary of Defense, May 8, 2006 

Sue Mecklenburg, Vice President for Sustainable Procurement Practices at Starbucks Coffee 

Company, June 26, 2006 

 

Douglas Menarchik, Assistant Administrator for Policy and Program Coordination at USAID, 

March 29, 2006 

Todd Moss, Senior Fellow at the Center for Global Development, April 26, 2007 

Kenna Mphonde, Deputy Chief of Mission at the Embassy of Malawi in Washington, February 8, 

2007 

Jeffrey Nadaner, Deputy Assistant Secretary of Defense for Partnership Strategy at the Department 

of Defense, February 8, 2007 

Andrew S. Natsios, former Administrator of USAID, April 24, 2006 

Rodney W. Nichols, Consultant on Science and Technology Policy, February 9, 2007 

John Niepold, Portfolio Manager for Africa and the Middle East at Emerging Markets 

Management, LLC, July 31, 2006 

Jeremiah Norris, Senior Fellow at the Hudson Institute, April 24, 2006 

Scott Norwood, Deputy Director for Global Strategic Partnerships, Joint Chiefs of Staff, February 

8, 2007 

Marina Ottaway, director of the Middle East Program at the Carnegie Endowment for 

International Peace, January 19, 2007 

Carlos Pascual, Vice President and Director of and Senior Fellow in Foreign Policy Studies at the 

Brookings Institution, November 1, 2006 

Thomas Pickering, former Under Secretary of State; Vice Chairman of Hills & Company, July 17, 

2007 

Roy Prosterman, Founder and Chairman Emeritus of the Rural Development Institute (RDI), 

October 5, 2006 

Colin Powell, former Secretary of State, March 7, 2006 

Steve Radelet, Senior Fellow at the Center for Global Development, April 24, 2006 

Condoleezza Rice, Secretary of State, March 16, 2007, September 10, 2007 

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Daniel F. Runde, Head of Partnership Development at the International Finance Corporation, 

June 26, 2006 

Brett Schaefer, Jay Kingham Fellow in International Regulatory Affairs at the Heritage Foundation, 

April 24, 2006 

Caroline Sergeant, Alternate Executive Director to the United Kingdom at the World Bank, 

November 29, 2006 

Charles O. Sethness, Vice President for the Department of Accountability at the MCC, August 1, 

2006 

Ira Singh, Manager at the Consultative Group to Assist the Poor (CGAP), July 31, 2006 

Amy Smith, Instructor at the Edgerton Center at MIT, February 9, 2007 

Andrew Stern, Associate Partner at Dalberg’s Washington, D.C. office, September 15, 2006 

Peter A. Stollery, Chair of the Standing Senate Committee on Foreign Affairs in the Canadian 

Senate, April 17, 2007 

Patty Stonesifer, CEO of the Bill & Melinda Gates Foundation, October 5, 2006 

Julia Taft, former President and CEO of InterAction, April 24, 2006 

Robin Tilsworth, Acting Deputy Administrator for Export Credits at the U.S. Department of 

Agriculture’s Foreign Agricultural Service, March 29, 2006 

Randall L. Tobias, former Administrator of USAID and Director of U.S. Foreign Assistance, May 

8, 2006 

Ian Vasquez, Director of the Cato Institute’s Project on Global Economic Liberty, April 24, 2006 

John M. Walker, Jr., United States Circuit Judge of the United States Court of Appeals for the 

Second Circuit, January 19, 2007 

George F. Ward, Jr., Senior Vice President for International Programs at World Vision, April 24, 

2006 

Dennis Whittle, Chairman and CEO of GlobalGiving, May 8, 2006 

Paul Wolfowitz, former President of the World Bank, April 20, 2007 

Clayton Yeutter, former US Trade Representative, and Secretary of Agriculture, January 18, 2007 

Andrew Young, Chairman of GoodWorks International, March 12, 2007 

Philip Zelikow, Counselor of the U.S. Department of State, May 22, 2007 

 112
 113

APPENDIX 7: Scenario Planning Workshop

The HELP Commission used the scenario-based planning approach and the “future worlds” created 

for Project Horizon to assess the viability of twenty of its draft recommendations against a range of 

alternative future operating environments (or “scenarios”). Taken as a set, these five scenarios 

attempt to capture the full range of future challenges and opportunities that the nation will face over 

the next 25 years. Project Horizon is an effort initiated by the Department of State to create a 

standard planning tool for all U.S. Government agencies involved in offshore operations. The 

scenarios used by the HELP Commission were first used by the United States Coast Guard. 

Almost 60 experts in international development and foreign policy from across the country 

participated in the two and a half day workshop. They were asked to “live” in one of the Project 

Horizon worlds, developing an in-depth understanding of the challenges and opportunities it would 

present for the U.S. Government. Each group discussed the requirements of their world and then 

utilized their perfect “foreknowledge” of the world of 2030, as well as their expectation of what that 

environment would demand of the U.S. foreign aid establishment, to assess whether the U.S. 

Government’s pursuit of a particular HELP Commission draft recommendation in 2007 would 

improve the US Government’s preparedness for the future of 2030. 

The scenario planning exercise helped the Commission clarify the effectiveness of development and 

humanitarian assistance programs over the next quarter century. The exercise provided insight into 

how our proposed reform of foreign assistance could best work in an uncertain future. 

The Commission would like to thank those who took time out of their busy schedules and devoted 

their knowledge, experience and creativity to the exercise. Participants and their affiliations are listed 

below: 

Ted M. Alemayhu Founder and President US Doctors for Africa 

Robert E. Anderson Consultant 

Dolika Banda Special Assistant to the VicePresident, Asia and Latin America International Finance Corporation 

Tony Barclay CEO DAI 

John Becker Southern Africa Regional 

Coordinator 

Office of the Director of US 

Foreign 

Assistance, US Department of 

State 

Karol Boudreaux Senior Research Fellow Mercatus Center, George Mason 

University 

Steve Brent Chair, Department of Acquisition Industrial College of the Armed 

Forces 

Reuben Brigety 

Assistant Professor of Government 

and Politics Department of Public 

and International Affairs 

George Mason University 

Mike Brody Senior Environmental Scientist USEPA, Office of the CFO 

Robert Calderisi Author 
 114

Joe Call Strategic Advisor to Commandant USCG 

Judith Chambers Consultant 

Cynthia Clapp-Wincek Consultant 

RAdm Robert Clark 

Director, Maritime Partnership 

Programs, U.S. Naval Forces 

Europe—Sixth Fleet 

U.S. Navy 

Don Cooke Office of Strategic and Performance 

Planning US Department of State 

Deb Derrick Executive Director The Better World Campaign 

David Devlin-Foltz Director, Global Interdependence 

Initiative The Aspen Institute 

Richard N. Dreiman President and CEO Chemonics 

Sally Everett Consultant DTS 

Sarah Farnsworth Consultant 

Jane Floyd Assistant Professor/Senior Advisor National Defense University 

Glenn Gardner Global Security Affairs (Partnership 

Strategy) Office of the Secretary of Defense 

Capt. Sinclair Harris Chief, Security Assistance Division 

Strategic Plans and Policy Directorate Joint Chiefs of Staff, DoD 

Charles Ho COO Lithcon Group of Companies 

Stephen Horblitt Director External Relations Creative Associates International, 

Inc 

Bob Houdek Retired National Intelligence Council 

Tami Hultman Chief Strategy Officer AllAfrica.com 

Kenneth A. Lanza Managing Director, Emerging 

Markets BearingPoint 

Craig Lasher Senior Legislative Policy Analyst Population Action International 

Heather Lauver Assistant Director, Global Operations 

Worldwide Public Affairs and Policy Pfizer 

Ellen Levinson 

President, Levinson Associates; 

Executive Director, Alliance for Food 

Aid 

Levinson & Associates; 

Alliance for Food Aid 

W. Meredith Long Vice President, Planning and 

Integration World Relief 

Rebecca Maestri General Business Specialist USAID, Asia Bureau 

Dick McCall Sr. VP for Programs Creative Associates International, 

Inc. 

Christine McDaniel Deputy Assistant Secretary for Policy 

Coordination US Department of the Treasury 

Jim McDonald Vice President, Policy & Programs Bread for the World 
 115

Malcolm Morris Chairman Millennium Water Alliance 

Rod Nichols Consultant on Science and 

Technology Policy 

 Raymond C. Offenheiser President Oxfam America 

Steven Parker Lead Economics and Trade Advisor DAI 

Don Pressley Principal Booz Allen Hamilton 

Anne C. Richard VP, Government Relations & 

Advocacy International Rescue Committee 

Shelia Ronis Chair, Vision Working Group Project on National Security 

Reform 

Dan Runde Head of Partnership Development International Finance Corporation 

Tessie San Martin VP for International Development Abt and Associates 

Enrique Sanchez-Armass Senior Investment Officer International Finance Corporation 

Brett Schaefer Jay Kingham Fellow Heritage Foundation 

Jeannine Scott Senior Vice President Africare 

Dennis Shin Strategic Issue Advisor for Foreign 

Assistance Catholic Relief Services 

Fred Tipson Sr. Policy Counsel & Director for 

International Development Policy Microsoft 

Noam Unger Senior Manager, Foreign Aid Reform 

Project Brookings 

Connie Veillette Specialist in Foreign Assistance Congressional Research Service 

George Ward Sr. VP for International Programs WorldVision 

Oren Whyche- Shaw 

Senior Advisor, Office of African 

Nations, International Affairs 

Department 

US Department of the Treasury 

Gregg Willhauck Congressional and Public Liaison Center for International Private 

Enterprise 

Laura Wilson Policy Director Center for US Global Engagement 

Tom Woods Vice President of International 

Development Hudson Consulting Group 

Sam Worthington CEO InterAction 
 116

APPENDIX 8: Legislative Mandate and the HELP 

Commission Report 

HELP Commission Act, P.L 108-199 

The Commission Shall— 

(A) Identify the past and present objectives of United States development assistance, identify cases in 

which those objectives have been met, identify the beneficiaries of such assistance, and what 

percentage of the funds provided actually reached the intended beneficiaries 

• The study of past and present objectives of our development assistance programs, successes in 

meeting them, and our relationships with beneficiaries served as the basis for much of the report, 

particularly Chapter 5: Create a New Business Model for Growth to Capitalize on What We Do Best 

and Chapter 6: Change the Structure. Several successful programs are outlined in Chapter 1: 

Introduction. Finally, the “What Works What Doesn’t” Working Group also conducted a detailed 

analysis of these topics (see appendix 10). 

(B) Identify cases in which United States development assistance has been most successful, and analyze 

how such successes may be transferable to other countries or areas 

• Select examples of past success are outlined in Chapter 1. In addition, Chapter 5 discusses best 

practices for development programs on the ground and makes recommendations on how to create a 

new approach to development assistance based on eight core principles. 

(C) Study ways to expand educational opportunities and investments in people, and assess infrastructure 

needs 

• In Chapter 5, Section 5.2-6, the report details the importance of education in the building of human 

capital. 

• The Commission addresses the need to invest in people in Chapter 5. Specifically, Principle 6: Focus 

on Programs that will lead to Economic Growth, discusses the need to focus on job creation, skills 

development, and technology transfer in developing countries in order to foster long term growth. 

The Commission supports the creation of an initiative to support small and medium enterprises and 

the expansion of agricultural assistance as two ways of filling that need. 

• Infrastructure is addressed in Chapter 2: Apply a New Integrated Approach to Development, section 

2.1-3: Remove Physical Trade Barriers with Infrastructure. 

(D) Analyze how the United States could place conditions on governments in countries receiving United 

States development assistance, in light of and notwithstanding the objectives of the Millennium 

Challenge Account 

• The Commission’s view was that country or recipient “ownership” of projects, particularly the 

establishment of a robust partnership for development, is one of the most important conditions for 

development assistance. Several sections in the report discuss this and other important conditions as 

well as MCC’s model for assistance. 

(E) Analyze ways in which the United States can coordinate its development assistance programs with 

those of other donor countries and international organizations 

• The Commission looked repeatedly at issues involving 1) coordination with other donors, 2) different 

donors focusing on what they do best and 3) the challenges inherent in different donor states having 

different styles of government. The report contains statements about cooperation among donors. 

(F) Analyze ways in which the safety of development assistance workers can be ensured, particularly in 

the midst of conflicts 

• The Commission discusses the important relationship between security and development in Chapter 2 

Section 2.2: Ensure Coordination between Security and Development. 
 117

(G) Compare the effectiveness of increased and open trade with development assistance, and analyze the 

advantages and disadvantages of such trade and whether such trade could be a more effective 

alternative to United States development assistance 

• The need for a trade policy that better complements our development activities is outlined in Chapter 

2 Section 2.1: Support Trade and Infrastructure. 

(H) Analyze ways in which the United States can strengthen the capacity of indigenous non-governmental 

organizations to be more effective in grassroots development 

• In Chapter 5, one of the core principles of the new business model is promoting local ownership and 

leadership. Adopting policies and programs based on collaboration with national leaders and civil 

society within a country will strengthen these groups and enable them to be more effective in serving 

the needs of citizens in the future. 

(I) Analyze ways in which decisions on providing development assistance can involve more of the people 

of the recipient countries 

• Local ownership is the first core principle of the new business model outlined in Chapter 5. The 

principle is also discussed in Chapter 7 Section 7.6: Create a Unified Policy, Budgeting, and 

Evaluation System. The section outlines the importance of basing our development strategies on 

individual country development estimates and consultation with the recipient countries. 

(J) Analyze ways in which results can be measured if United States development assistance is targeted to 

the least developed countries 

• Monitoring and Evaluation strategies are found in Chapter 7 Section 7.6-4: Enhance Feedback 

through Continual Monitoring and Evaluation and improved monitoring and evaluation is one of the 

principles of Chapter 5’s new business model. 

(K) Recommend standards that should be set for ‘‘graduating’’ recipient countries from United States 

development assistance 

• Country graduation is discussed as one of the principles in Chapter 5 Section 5.1-5: Reward 

Graduation. 

(L) Analyze whether United States development assistance should be used as a means to achieve United 

States foreign policy objectives 

• Integrating our development and humanitarian efforts more closely into our foreign policy is one of 

the main ideas upon which the Commission’s assertions about the need for change was based and one 

of the major themes running through the report. Chapters 1, 2, 6, and 8 contain sections on elevating 

development assistance to the same level as diplomacy and defense in America’s foreign policy. 

(M) Analyze how the United States can evaluate the performance of its development assistance programs 

not only against economic indicators, but in other ways, including how to measure the success of 

United States development assistance in democratization efforts; and evaluate the existing foreign 

assistance framework to ascertain the degree of coordination, or lack thereof, of the disparate foreign 

development programs as administered by the various Federal agencies, to identify and assess the 

redundancies of programs and organizational structures engaged in foreign assistance, and to 

recommend revisions to authorizing legislation for foreign assistance that would seek to reconcile 

competing foreign policy and foreign aid goals 

• Monitoring and Evaluation strategies are found in Chapter 7 Section 7.6-4: Enhance Feedback 

through Continual Monitoring and Evaluation and improved monitoring and evaluation is one of the 

principles of Chapter 5’s new business model. 

• Democracy and Governance programs are discussed in Chapter 5, Section5.1-8.

• Chapter 6 discusses the need to eliminate redundancies in foreign assistance and strategies for doing 

so.

(N) And study any other areas that the Commission considers necessary relating to United States 

development assistance 
 118

• Other topics considered by the Commission include:

i. The role of the Department of Defense: Chapter 2 Section 2.2: Ensure Coordination 

between Security and Development

ii. Public Diplomacy: Chapter 2 Section 2.3: Expand Public Diplomacy

iii. The Role of Congress: Chapter 3

iv. Funding and the Budget Process: Chapter 7

v. Human Resource issues: Chapter 4 Sections 4.11and 4.2

vi. Operating Expense Budget: Chapter 4 Section 4.3

vii. Procurement and Contracting: Chapter 4 Section 4.4

viii. Support for Small and Medium Enterprises: Chapter 5 Section 5.2-1: Create an Initiative to 

Support Small and Medium Enterprises

ix. Technology: Chapter 5 Section5.2-2: Create a Technology Research and Development 

Institute

x. Food Aid: Chapter 5 Section 5.2-3: Increasing Local Purchase for Food Aid

xi. Agriculture: Chapter 5 Section 5.2-5: Agriculture Development Programs
 119

APPENDIX 9: A History of Executive-Legislative Relations 

The two branches of our government share responsibility for ensuring that foreign development is 

viewed as vital to America’s national security, economic and moral interests, and then for putting 

mechanisms in place to translate that vision into action. 

Reforming the organization, structure, and management of development programs is dependent on 

a healthy relationship between the Executive and Legislative branches that is built on trust and 

respect for the roles each branch plays in our system of government. Creating a responsible process 

to balance the legislative powers of the purse with the executive powers vested in the President to 

conduct foreign policy is critical to manage U.S. foreign assistance programs effectively. 

Each branch has critical, but in some cases unique, roles to play: The Executive branch proposes 

and conducts policy, as directed by the President. The Legislative branch enacts those polices, 

oversees executive policy implementation and decides how to best allocate taxpayer resources. 

Unfortunately, however, the Executive and Legislative branches, as they have through successive 

administrations, frequently clash when it comes to foreign assistance. Policy differences between the 

two branches, of course, are hardly limited only to foreign aid matters. But at various points over 

the past several decades, the relationship concerning foreign assistance issues has been especially 

antagonistic and unconstructive, leading to a sense of mistrust, and an imprecise and at times 

contradictory interpretation of the division of labor between the two branches on the management 

of foreign aid. 

Some tension and differences between the two branches are to be expected, in fact, are desirable in 

the interplay of checks and balances that help to ensure that foreign assistance is used effectively and 

is responsive to the American people. But some fundamental reforms in the relationship are long 

overdue. As we move forward, it is important that rather than falling back on complex rules and 

other antics to invalidate or modify policy decisions, that the principals should maintain respect for 

each branch’s prerogatives. To question the other branch’s intentions and motives first, rather than 

address the differences directly is not constructive, and often serves to delay aid delivery. Improved 

communications and strong leadership from the Executive and Legislative branches are needed to 

overcome these problems. One former chairman of the Senate Foreign Relations Committee 

advised that the two branches “must agree to disagree, agreeably” in matters of foreign aid. The 

members of the HELP Commission believe this is the spirit in which a better and more effective 

relationship can be forged. 

The history of this relationship suggests that friction transcends partisan politics and is more 

imbedded in institutional tensions. For example, a bi-partisan legislative effort (Hamilton-Gilman 

Task Force) in the late 1980s to re-write the Foreign Assistance Act broke down when the 

Administration felt it had not received adequate flexibility in the draft legislation. More recently, 

when the Democratic Party controlled both branches in the early 1990s, executive efforts to produce 

a new Foreign Assistance Act (the Peace, Prosperity and Democracy Act) collapsed over policy 

differences between Administration officials and Senate leaders. 
 120

Perhaps the most difficult confrontation between the two branches came during the mid-to-late 

1990s when Congress and the White House argued about improving the accountability of foreign 

assistance, focusing primarily on where and how to position USAID within the Executive branch. 

The Republican-led Congress contended that USAID should be merged into the State Department, 

while the Democratic White House countered that the aid agency should be given greater autonomy 

from the Department of State. Both positions had merit in their time, and the debate — about the 

placement, structure, stature and nature of development resources, as well as accountability for 

implementation — continues today. In fact, where our nation’s primary assistance organization 

belongs remains one of the central elements of the current discussion about aid reform. Ultimately, 

an uneasy compromise was reached in which USAID became an independent agency but whose 

Administrator came under the direction and policy guidance of the Secretary of State. But the 

“reform effort” of the late 1990s has repercussions that linger today. These outstanding problems, 

detailed below, must be addressed if the legitimate roles of both branches of government are to be 

effectively balanced and channeled in pursuit of common goals. 

First, the debates about USAID’s position cemented views within the Executive branch that it must 

tighten its control over foreign assistance, based on its mandate to conduct foreign policy, and resist 

Congressional interference. This reinforced a parallel view within the Legislative branch that the 

Executive branch must be watched closely, constrained from too much independent action by 

legislative means, and forced to be both more consultative and more transparent. A year ago, for 

example, the Department of State argued that it had the legal authority to undertake the reform that 

led to the recent creation of the Foreign Aid Bureau within the Department without a legislative act 

by Congress. At the same time, both parties in Congress argued that the reform process, whether or 

not legislation was needed, required far more consultation with lawmakers and a much higher degree 

of transparency. Both sides are correct. But both sides are distracted from the critical task of 

making foreign assistance an effective instrument by engaging in a rhetorical argument about who is 

in charge. Unfortunately, flexibility and innovation have been the unintended casualties of these 

internecine battles. It is time to move forward in a positive spirit of cooperation. 

Second, the debate reinforced the long-standing notion that each branch needs to take independent 

actions perceived as necessary to prevent the other branch from exercising too much control. From 

the legislative side, this means earmarking funds for certain programs. For the Executive branch, this 

means introducing “Presidential Initiatives” to target specific policies and programs, or operating 

new programs out of non-150 account agencies to avoid Congressional funding restrictions. From 

the legislative side, growing mistrust translates into increasing policy and spending directives 

opposed by the administration. For the Executive, it means providing to Congress only the minimal 

budgetary detail required by law and ignoring Congressional spending priorities in newly submitted 

budget plans. The Commission recognizes that earmarks are a reflection of Congress’ 

representational role and its duty to reflect the priorities of constituents, and that Presidential 

Initiatives are intended to reinforce and lend stature to Executive branch priorities. Nevertheless, 

excessive earmarking and Presidential Initiatives frequently reduce resources available for other 

worthwhile activities and can be disruptive to maintaining coherency of development goals and 

strategies. The Commission would hope that both branches recognize the consequences — often 

unintended — of earmarks and new Initiatives and explore options for minimizing these effects. 

Third, and perhaps most important, a fundamental and growing mistrust causes both branches to 

focus more on who controls foreign assistance than on how they can effectively co-manage these 
 121

resources or work together to overhaul a system that needs major reform. Indeed, one of the great 

disappointments of the foreign aid reform debate of the late 1990s was that the focus on USAID’s 

status distracted both parties and both branches of government from examining larger questions of 

strategy, coordination, coherence, and accountability. As we enter a new era, leaders must determine 

what policies, tools and institutional arrangements are needed to tackle global poverty and serve our 

national interests. Real reform cannot sidestep these challenges. 

The HELP Commission believes that the distinct but potentially compatible roles played by the 

Executive and Legislative branches, including a certain degree of tension, are of equal importance. 

We believe that the Executive branch legitimately demands flexibility and respect for the President’s 

mandate to conduct foreign policy. At the same time, Congress is right to insist on consultation, 

respect for its power of the purse and oversight role, and its representative function of the American 

people. But we also believe that strategic and effective aid reform cannot be achieved unless and 

until the two branches can operate on the basis of a common vision, a clear division of roles, the 

bureaucratic means to collaborate, and a process of reform that encourages trust. 
 122

APPENDIX 10: Issue Papers 

Issue Papers, in each case, provide an expanded discussion on specific recommendations 

contained in the main body of the Help Commission report. They do not necessarily 

represent the views of all Commissioners, but all Commissioners accept their inclusion in 

the report. 

Foreign Assistance Grant and Contract Procurement Processes

The following paper represents the views of the authors and the signatories: 

Written by Commissioners C. Payne Lucas and Eric G. Postel, and Phil 

Christenson 

Endorsed by HELP Vice Chairmen Carol Adelman and Leo Hindery Jr., and 

Commissioners Steven K. Berry, Jerome F. Climer, Nicholas N. Eberstadt, Glenn E. 

Estess Sr., Lynn C. Fritz, Benjamin K. Homan, Walter Kansteiner III, Thomas C. 

Kleine, William C. Lane, Martin LaVor, Robert H. Michel, Gayle E. Smith, David A. 

Williams 

Introduction

The processes used to award foreign aid grants and contracts may first appear to be an unimportant 

topic for the Commission to address. Many mistakenly believe that these processes are 

administrative matters of little intrinsic importance. We strongly disagree. 

Since 1980 foreign aid has shifted from government-to-government programs. Today aid is 

delivered in most countries by U.S. agencies awarding grants and contracts directly to private sector 

entities to implement projects. The key to accomplishing an agency’s mission today has therefore 

become excellence in designing projects, defining requirements, drafting solicitations, determining 

performance standards, evaluating proposals, awarding grants and contracts, and monitoring 

performance. 

The shift from government-to-government programs substantially increased the workload on aid 

agencies because foreign governments no longer assume the responsibilities for project 

implementation. 

Other U.S. foreign aid agencies also depend on grants and contracts to deliver aid programs abroad. 

The Commission’s conclusion, after studying grant and contract processes, particularly at USAID, is 

that while many aspects of these activities are performed well despite multiple mandates and 

pressures, they nonetheless suffer from chronic neglect dating back two or three decades. This 

neglect cannot be attributed solely to USAID’s management. The agency is also affected by 

management decisions at the State Department, OMB and Congress that have led to the neglect we 

found. 
 123

More recently, the very large recent increases in USAID responsibilities in difficult environments, 

such as Iraq, Afghanistan, and southern Sudan, have stretched the agency’s management systems 

beyond the breaking point. These systems have been so starved for personnel and other resources 

that today it is an open question whether the agency is able to conduct its business at the high 

standard a foreign policy activity requires. 

The Commission interviewed U.S. Government procurement officers and other employees engaged 

in the grant and contract processes, representatives of aid contractors and grantees, and nationals of 

the recipient countries. We encountered many examples of good contracting, not to mention many 

dedicated and competent staff. However, it was also clear that there are multiple and important 

deficiencies in the U.S. grant and contract award process, among them: 

1. Constriction of Competition in USAID Grant and Contract Awards 

A major coping mechanism in recent years increased workload and personnel shortfalls at USAID 

has been a concerted effort to reduce or constrict the use of fully competitive grant and contract 

award procedures. These mechanisms also appear to have been adopted to cope with a budget and 

congressional notification process that delays the availability of funds until very late in the fiscal year. 

This creates an unnecessary crisis atmosphere, and a need to rush to obligate funds before the end 

of the fiscal year. 

USAID has transformed its grant and contract activities to rely heavily on indefinite quantity 

contracts or “IQCs”, on a newly created "Leader with Associates" (LWA) grant mechanism, on 

umbrella grants and grants-under-contract mechanisms, on "annual program statements" 

mechanisms that require applicants to apply first for permission to apply for grants, and on a broad 

use of amendments to existing grants and contracts to launch new activities. These mechanisms are 

allowable under federal law and regulation. Their use, however, can raise questions about their 

desirability when used as extensively as now is the case with many USAID grants and contracts. 

Under the IQC mechanism, as implemented by USAID, the agency packages some of its possible 

needs within an expansively-defined sector into a single Request for Proposals and seeks proposals 

from organizations, almost invariably consortia, that can offer the very expansive list of services. 

The agency then awards multiple multi-year contracts but each group receives only a nominal award 

($25,000-50,000) that it will be paid even if it is unsuccessful in bidding on task orders under the 

IQC. Successful bidders are, however, then eligible to compete among themselves for individual 

task orders that can be valued at $100 million or more that are issued against the contract. 

The range of services bundled into a single IQC can be surprising. Under its Water IQC the agency 

demanded that contractors be able to provide services ranging from household point of use (leaking 

faucets and toilets), hydroelectric power generation, agricultural irrigation, weather forecasting, coral 

reef protection, ocean fishing, aquaculture, urban sewer systems, gender mainstreaming, global 

climate change, and water-related tourism. An RFP for a health, population and nutrition IQC 

called for the contractors to be able to provide services in agriculture, community organizing, 

education, gender dynamics, micro-finance, peace building, refugee resettlement, poverty, private 

sector investment and development, water and sanitation. 

Under an IQC, the rights of unsuccessful bidders for a task order are limited. They can complain to 

an in-house "task order ombudsman" but cannot appeal to the GAO. The ombudsman cannot 
 124

overturn task order awards and has no obligation to investigate a complaint. Federal law requires 

the ombudsman to be a senior agency official independent of the contracts officer. While the 

ombudsman at other agencies is a Deputy Assistant Secretary or equivalent, at USAID the job is 

held by a mid-level (GS-15) employee in the contracting office with little independent authority or 

influence. One leading contractor also reported that “countless issues have been submitted to the 

ombudsman and remain unresolved.” 

In 1999 USAID created a "Leader with Associates" grant mechanism under which it holds a 

competition for a small grant — at times less than a million dollars spread over several years — but 

the small grant carries the right to receive an unlimited number and dollar amount of "associate" 

grants without further competition. LWA awards are for five years, can be approved for extension 

for another five years without further competition. The associates awards can extend five years 

beyond the life of the LWA. 

The LWAs blur the distinction between grants and contracts. Correspondence from USAID staff to 

the authors described the distinction as follows: “We believe that LWAs, when awarded and 

managed as intended, are true grant programs in that the purpose of the grant is to deliver 

development or assistance, not to ultimately benefit the US Government or to provide goods or 

services to the US Government.” 

Yet, LWA awardees market themselves to USAID missions as providing services to the missions. 

For example, one grantee’s web site states (emphasis added) “FIELD-Support, the Financial 

Integration, Economic Leveraging, Broad-Based Dissemination and Support program, is a single 

award, five-year, Leader with Associates (LWA) cooperative agreement created to advance the stateof-the-practice in microenterprise development and microfinance and assist USAID Missions and 

other Operating Units to design and implement innovative, integrated, and market-based approaches 

to sustainable economic growth with poverty reduction.” This example clearly shows that USAID is 

indeed a beneficiary of this grant. 

A grant is supposed to be to an organization to carry out an activity for the grantee’s own purposes. 

In correspondence with the Commission, USAID stated that “to access an associate award, the 

project officer defines the requirement within a pre-negotiated scope of work, receives a proposal 

from the LWA awardee, and then awards a ‘grant’.” In our opinion, this statement with its use of 

contract language about “requirements” and “scope of work” illustrates the blurring between 

contracts and grants. 

Like the IQC contracts, LWAs package a surprising array of activities within a single award. A 

recent request for applications (RFA) for a global health LWA, for instance, went far beyond the 

healthcare to encompass the right to noncompetitive grants in fields such as democracy and 

governance, agriculture, anti-corruption, women's rights, biodiversity and natural resources. 

To conduct any given activity, USAID project officers may be able to choose from multiple 

overlapping IQCs and multiple overlapping LWA grants. To conduct a democracy project, for 

instance, a project officer may choose a democracy IQC contract or perhaps choose to use the 

healthcare LWA grant that includes democracy and governance. 
 125

LWAs for a specific activity may be awarded to more than one NGO. In such instances, USAID 

employees are free to choose one NGO over another to award a multimillion dollar associate grant 

without further competition or justification. The LWA consortia are quite large. One has 10 

principal consortium partners and 17 "resource organizations." Having won an LWA award in 

2005, these 17 organizations quickly obtained $70 million in additional non-competitive grants in the 

first year, and expect to receive $350 million over the initial five-year term of the award.1

USAID has also expanded its use of umbrella grants and grants-under-contract mechanisms. There 

has been a long history of using umbrella grant mechanisms to administer small grant programs for 

grants too small to justify a direct USAID management. Today individual sub-grants under umbrella 

mechanisms are normally less than $100,000, but a recent RFA USAID indicated it planned to use 

the grant to award individual sub-grants up to $20 million and that the sub-grantees had already 

been chosen prior to the issuance of the RFA. 

Another mechanism, once rarely used, has soared in popularity at USAID in the past few years. 

Under the Annual Program Statement (APS) mechanism, USAID issues a description of its program 

interests in a country and groups are invited to submit a concept paper to seek federal funding. 

These concept papers, often limited to five pages, are reviewed by USAID and then applicants are 

notified whether the agency is willing to consider a formal proposal from them. Although an APS is 

officially intended for use when "USAID intends to support a variety of creative approaches by the 

non-governmental community to develop their own methodologies in assessing and/or 

implementing activities which are in keeping with strategic objectives," the current practice include 

using an APS as an alternative to contracting for services. One $160 million APS makes clear that 

"one of the purposes of the APS is for the UGM [umbrella grants manager] to relieve USAID from 

some of the management function," and that the prime grantee will work under close USAID 

supervision.2

 

Another USAID initiative to reduce competition in grant and contract award activities has been to 

use grant and contract amendments to launch new activities. This was essentially how the 

Presidential Emergency Program for AIDS Relief was launched using a waiver to competition. 

During its first year it was decided that rather than engage in competitive procedures, the program 

would "ramp up" existing grants and contracts, and $776 million was awarded noncompetitively 

through that mechanism. It is not unusual for the agency to amend an existing grant or contract 

without further competition to launch a new program activity, and later issue a competitive 

solicitation for its continuation. By creating streams of funding and helping one organization build 

capacity for that activity prior to the competitive solicitation, other potential grantees and 

contractors are often placed at an overwhelming disadvantage. While true emergencies may call for 

such efforts to short-circuit the competitive process, the use of this process in non-emergency 

situations has expanded. 

 

1 Statement of USAID Assistant Administrator Jacqueline Schafer to the House Committee on International Relations, 

July 27, 2006. 

2 APS 674-07-001, "Pre-bid conference", 19 October 2006
 126

2. Failure to Distinguish Between Different Types of NGOs

USAID has a large group of not-for-profit organizations that receive grants and compete for 

contracts from the agency. Some of them are genuinely public charities, while others appear to be 

little more than employee-controlled government consulting firms whose founders decided to 

organize as not-for-profit instead of for-profit entities in order to qualify for federal grants. Some of 

the groups USAID classifies as “private, voluntary organizations” are so dependent on the agency 

that their private character is in doubt, while the salary and benefit packages for their senior 

employees appear to be out of character for a supposed charity. One grantee whose president and 

senior vice president are husband and wife paid the two of them a combined total of $1,572,891 in 

salary, pension plan contributions and deferred compensation in 2005. On a lower scale, but still 

quite generous, one NGO created by USAID in the 1970s pays its CEO $300,000 a year for a threeday workweek and responded to its windfall from USAID’s increased spending on HIV/AIDS by 

raising the salaries of its senior staff by 40% over a period of two years. 

Congressional and public support for USAID’s work with the nonprofit sector has been based on an 

assumption that these were public charities paying adequate but far from luxurious salaries and 

benefits. There appears to be little differentiation at USAID between public charities that pay 

moderate salaries and bring to the table a deep commitment to development and humanitarian 

assistance, often with significant private resources, and those nonprofit entities that are 

indistinguishable from any other contractor seeking business from the agency. 

3. USG Often Not Designing Its Own Programs

An essential element in the grant and contract award process is the drafting the solicitation 

documents to define the government’s requirements and project design and set forth criteria for 

evaluating proposals. Increasingly USAID relies on outside contractors to conduct assessments, 

define requirements and draft these documents. This creates subtle or potential conflicts of interest 

as many of the individuals who design projects and draft solicitation documents are free-lancers who 

revolve constantly among the contractor and grantee communities. 

In addition to overtly relying on outside contractors to draft solicitation documents, even where the 

USAID staff draft the documents, the solicitations are often so general or value that the contractors 

end up defining the U.S. Government’s requirements and designing the projects. 

Best practice in government and private sector procurement of outside services first defines 

requirements through extensive internal consultation and analysis, and seeks the buy-in of senior 

management and other stakeholders before deciding on the precise goods or services to be provided 

by the contractors. It then calls for solicitation documents (Requests for Proposals for contracts, 

Requests for Applications for grants) that set forth in detail the requirements identified through this 

consultation and analysis. Due to staff cutbacks, it appears USAID is losing or has lost the internal 

capacity to carry out these crucial steps. 

4. Suspicions of Pre-Determined Outcomes 

It is a basic principle of government that the actions of an agency must not only avoid impropriety, 

they must avoid the appearance of impropriety to maintain public confidence in the public service. 

Some outside groups consider USAID contract and grant procedures to be less than fair and believe 
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that many solicitations are issued with pre-determined outcomes. Others note that the revolving 

door between USAID and its contractors fuels these suspicions. 

It was possible to find USAID solicitations specifying individuals by unusual and detailed 

descriptions of the key personnel qualifications which suggest that a contractor had already been 

chosen prior to issuing the solicitation. Retired USAID employees and contractors have indicated 

that one frequent technique to produce a pre-determined outcome is to pick the “right” IQC for a 

project. One example cited was of a contracting officer who had a personal dislike of one firm, and 

who therefore competed projects via task orders under an IQC in which the firm was not awarded 

the umbrella contract, thus barring them from the project. Another example was of a firm asked by 

the mission to choose the vehicle under which it would then “compete” for an award. 

Artificially short deadlines are sometimes imposed. This can lead to suspicions that this was done to 

benefit certain contractors. One solicitation was issued in late afternoon on Christmas Eve giving 

potential bidders only six working days to prepare a bid during the most popular time of the year for 

long-scheduled family vacations. In other instances, specifications clearly indicate to potential 

bidders or applicants that the deal is already done. One solicitation issued by a USAID mission in 

Central Asia specified that the consortium submitting a proposal had to include a minority-serving 

U.S. educational institution. This is allowable under the Federal Acquisition Regulations, but since 

there was only one such consortium operating in-country, this supposedly full and open competition 

appeared to resemble a sole-source award and predictably ended up with the award going to a 

consortium with that institution as a member. 

5. Excessive Use of Grant Mechanisms Weakens Program Responsibility 

USAID has over the past two or three decades moved a large portion of its projects from contracts 

to grants (either grants or cooperative agreement grants). 3 This was done partly because grants are 

simpler to award and cannot be protested, and because continuing cuts in the workforce created 

incentives to find ways to spend funds with fewer agency personnel. 

Grants have a proper use in the conduct of foreign aid. Many outside groups with whom the 

Commission consulted have indicated that in some circumstances the lines between grants, 

cooperative agreements and contracts have been blurred. Using a grant when a contract would be 

more appropriate weakens program effectiveness and responsibility. Multiple USAID officers 

reported they had fewer avenues to use when faced with poor project performance by a grantee. 

Another consequence has been a loss of the foreign policy and public diplomacy benefit from wellpublicized “branded” projects. Many grantees in trying to raise private funds to meet matching 

requirements and other needs tend to minimize the level of credit given to USAID or other 

government. 

6. Contracting Methods Not Always Conducive to Performance 

Most USAID contracts are done on a “time and materials” or “cost plus fixed fee” basis. As such, 

contractors are paid for every hour they work up to a maximum budget amount. While many 

 

3 For example, in FY 1995 USAID spent 46% of its funds for acquisition and assistance through contracts, in FY 2006 

contracts were 31% of its total spending 
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projects’ dependence on external actors or the open-ended nature of the assignments makes this a 

logical method of contracting, the system has few incentives for fast, efficient work or for attention 

to the big picture. To use a time and materials or cost plus fixed fee contract often requires that 

agency personnel involved with the contract devote extensive attention to project design, contractor 

oversight and project design revision as circumstances on the ground change. 

One feasible alternative in some cases would be to use completion-type contracts with fixed fee 

payments tied to things which the contractors can control. Without qualified, trained personnel to 

design projects that can be awarded as a completion-type contract USAID has been unable to take 

advantage of this form of contracting. 

In a few circumstances, such as projects involving tangible goods or services with carefully designed 

outcomes within the contractors’ control, some contracts could be performance-based contracts that 

many believe would provide incentives for better completion of fixed, controllable requirements. 

However, performance-based contracting requires a federal agency to make substantial up-front 

investments of time to define project objectives and detailed performance measures. 

Since USAID suffers from a chronic lack of human resources, it lacks the capacity to move toward 

performance-based or completion type contracting. 

7. Inconsistent Rules on Working Capital 

Smaller for-profit organizations and overseas NGOs are handicapped as a result of their inability to 

fund working capital (money used to pay costs prior to receiving payment). U.S. non-profits have 

the advantage that they can get advance funding from the agencies with which they are working. 

Large for-profit firms have such a large book of business that they can more easily obtain bank 

financing for the working capital needed and absorb its costs. Smaller for-profit firms cannot draw 

on government advanced funding or obtain bank financing. 

8. Weak Discipline 

For almost twenty-five years, successive Administrators have attempted to stop the agency's 

employees from requiring prior USAID experience for individuals or organizations to work under 

agency contracts and grants. In 2003, Administrator Andrew Natsios prohibited the use of prior 

USAID experience as a mandatory or preferential requirement. Yet, the Commission was easily able 

to identify USAID solicitations in 2007 that stated "prior USAID experience preferred" or "prior 

USAID experience is desired but not required," or lengthier qualifications that require prior 

experience in working with U.S. Government agencies and in the field of foreign assistance that are 

just wordy ways of saying "prior USAID experience required." Regardless of the merits of Natsios’s 

decision, the inability of the Administrator to get the agency staff to comply with directives after 

four years suggests the overall weakness in management discipline. 

Similarly, according to a wide range of sources, USAID has so blurred the distinction set forth in the 

Federal Grant and Cooperative Agreement Act of 1977 between grants, cooperative agreements and 

contracts that it has become almost meaningless. 
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At one time USAID had an performance evaluation office responsible for inspecting overseas 

mission contract and grant procedures as a means to impose agency-wide policies and standards. 

According to USAID, due to funding and staffing shortages this agency for several years was unable 

to perform as intended. USAID reports that for the past three years it has focused its efforts on 

revitalizing evaluations and that more needs to be done. 

9. Lack of Country Ownership 

Elsewhere in the Commission report we discuss the importance of country ownership. According 

to a leading development executive host country involvement in technical proposal review varies 

widely and unpredictably from mission to mission, and there is less involvement that there used to 

be. Grant and contract mechanisms provide no reliable mechanism for host country civil society 

and/or government personnel to participate as equals in the development of solicitation documents, 

determination of outcomes sought, setting of evaluation criteria, or evaluation of proposals. 

USAID correctly points out any move to increase host country involvement may require changes in 

existing US procurement integrity and competition-in-contracting laws. Enforcement of proper 

conflict of interest and anti-corruption standards would also be needed. But, these issues must be 

solved if we are to make country ownership a reality. Certainly, a common agency standard to 

determine how missions approach host country involvement in proposal review is achievable within 

existing law and regulation. 

10. Excessive, Inconsistent or Micro-Managed Rules and Practices

USAID acquisition and grant rules and regulations often attempt to micro-manage every single 

aspect of USAID grants and procurement. At a Commission meeting with five large USAID 

contractors, they reported that it is not unusual for thousands of dollars of labor to be used up 

discussing such minor matters as whether to pay foreign nationals working for the contractors 2.70 

or $2.74 an hour. 

There is a lack of a consistent approach to decision-making — there is no “USAID way” to do 

business. Contractors, both large and small, reported that there is "too much entrepreneurship" by 

contracting officers and no apparently accountability to the Office of Acquisition and Assistance 

when they work overseas. One contractor described two almost identical solicitations issued 

simultaneously by the same contracting officer. One called for a “time and materials” contract, the 

other for “cost plus fixed fee.” When he asked for an explanation, none was forthcoming. An 

NGO described how one overseas mission requires that NGOs to submit financial reports using 

QuickBooks, while the mission in a neighboring country requires a different accounting package. 

NGOs also find that the process to establish NICRA (Negotiated Indirect-Costs Recovery 

Agreement) rates is sometimes opaque, confusing, and out-of-date. 

USAID has unique rules that cap the reimbursement for the salary or individual consulting fee paid 

to any individual working on an aid project to a rate often below private sector rates. It is a limit on 

salary and fee and not a limit on the all-in unit cost per hour or day that a contractor firm can charge 

for that individual’s services after adding fringe benefits, overheads and other markups. Even 

though two contractors may have the same all-in billing rate, the one with higher salaries yet lower 
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other costs may be rejected. USAID is reported to be unique among federal agencies in its salary 

cap practices. 

Some firms who do business with other government agencies report that they do not impose this 

salary cap. They report they use their regular employees for work at other agencies, but rely on 

"custom recruitment" for employees and consultants to work on USAID projects at the lower rates. 

This inevitably handicaps the agency’s ability to obtain the best available services. 

The expansion of the number of U.S. agencies conducting foreign aid programs in each country has 

led to confusion among recipients as different agencies interpret and apply federal rules differently. 

Inconsistencies in advice and decisions about routine issues such as what is an allowable expense can 

add unnecessary complexities for the partner organizations. 

11. Inability to Move Rapidly

In Djibouti, a first class Petty Officer told the Commission that when he identified projects to 

undertake there, such as a school addition, he could initiate projects up to $100,000 within a matter 

of days with only the approval of his direct superiors on location. He estimated he could undertake 

projects up to $500,000 upon receipt of approvals from CentCom, which normally take less than 30 

days to obtain. At USAID this would be impossible. While there are significant differences 

between the DoD program and the USAID program, the fact that another government agency 

could act with such speed while USAID cannot does suggest that USAID management, and perhaps 

the Congress, need to explore ways that USAID could be allowed to move more rapidly to meet the 

expectations of both senior Executive Branch officials and the Congress. 

The Office of Foreign Disaster Assistance and the Office of Transition Initiatives stand out as the 

major exceptions through their liberal use of their “notwithstanding authority”4

Fully competed USAID contracts took upwards of 150-245 days to complete in FY2006. This 

could be shortened if the agency had more staff and stuck to firm deadlines. One expert noted firm 

deadlines would be the more important of these measures and that “there is no reason why technical 

panel reviews should take more than a few days — many take weeks or months.” 

Causes

1. Inadequate Senior Level Commitment and Attention

In 2006 a GAO report on government-wide contracting issues noted that "ensuring the federal 

workforce has the capacity and capability to manage contractor-reliant operations is a critical 

challenge.” It noted that "agency leaders have not recognized or elevated the importance of the 

acquisition profession within their organizations." The report further noted that unlike government 

“many companies have recognized the bottom-line importance of the acquisition function, 

essentially transforming and adopting a supply management focus and putting into those positions 

top managers and highly paid professional staff. The private sector treats procurement of services 

 

4 “Notwithstanding authority” is the term of art used to describe the law that authorizes emergency assistance to be 

provided “notwithstanding any other provision of law” or other restrictions. 
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as essential to company success, and thus considers those responsible for that procurement as 

occupying very strategic, high-value positions in the company.”5

The foreign aid program suffers from these handicaps. Senior managers do not appear to 

comprehend the crucial role that activities funded through grants and contracts play in the agencies' 

ability to accomplish their missions. They treat these activities as administrative support functions 

of little intrinsic importance. 

Illustrative of the lack of high level attention is the continuing workforce shortages in the USAID 

Office of Acquisition and Assistance (M/OAA). The office experiences a chronic 20-30% vacancy 

rate because of high turnover. There appears to be no senior appointee leadership to fill these 

vacancies or to raise salaries to a more competitive level. On July 5, 2007, a search of job listings on 

the USAID website and its job listings on the Office of Personnel Management’s website did not 

indicate it was recruiting contracting officers. Instead, the agency appears to have focused its human 

resources efforts on hiring of additional generalist project officers. 

Senior leadership has also failed to stem the rapid turnover in the management of the office. The 

office director position was filled by three different individuals in the first six years of the current 

Administration. No organization can prosper with a 50% turnover rate in the leadership of one of 

its core functions. 

M/OAA is part of the Bureau for Management at USAID. In recent years the Bureau has also been 

plagued by long-term vacancies at the Assistant Administrator and Deputy Assistant Administrator 

levels. This has led to both a lack of supervision over the Office and a lack of support for its 

leadership and employees. 

There is also a surprising lack of participation by senior level management of the agency's largest 

contracting decisions. A billion dollar contract, representing the equivalent of 8-12 percent of the 

agency's entire budget, can be awarded without senior managers' reviewing and approving the 

solicitation, evaluation and award. Given the key role contract and grant solicitations and awards 

now have in the accomplishment of the agency’s mission, these activities should be closely 

supervised by assistant administrators and their deputies. A contract review board reviews all 

contracts greater than $10 million, but this is no substitute for agency leadership taking direct 

interest in the project design, the specifications for government requirements placed in the RFPs, 

and the determination of evaluation criteria.

2. Inadequate Staffing

Over the course of more than two decades, multiple Congresses and Administrations have reduced 

USAID's funding for direct hire personnel without making an in-depth study of the relationship of 

the personnel staffing to the nature and volume of work to be performed. While there may have 

been “fat” in the system, that day is long past. The decisions to abandon government-togovernment aid programs had practical consequences of requiring a larger workforce in USAID 

grant and contract offices to handle the increased workload. The massive expansion of foreign aid 

under USAID management in recent years, while desirable as a foreign policy decision, had 

 

5 Highlights of a GAO Forum: Federal Acquisition Challenges and Opportunities in the 21st Century, October 2006. 

GAO-07-45SP, p. 14 
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workload consequences that have been ignored when OMB and Congress have failed to provide the 

agency with the operating expense budget it needs to hire additional staff to perform the increased 

work. 

This general phenomenon is illustrated in the narrow area of USAID’s Office of Acquisition and 

Assistance (M/OAA) in Washington. This office has an authorized staffing level of 132 employees, 

down from 154 in 2006, and from 175 in 1999/2000. It currently has an 8% vacancy rate. Even if 

fully staffed at the 2006 authorized level, there is reason to question whether the total of 154 

employees in this core function is adequate. At 132 employees, the M/OAA office is asked to 

handle almost five times the per-capita contracting volume of other U.S. Government procurement 

offices. 

3. Weak Oversight

The Commission was informed by the USAID Office of the Inspector General (IG) that while the 

IG office is charged with reviewing government agency activities for waste, fraud and abuse, the IG 

has rarely conducted performance management reviews of the agency's processes for contracts and 

grants to identify possible waste of government resources through inefficiencies and/or 

management deficiencies. With training in how to evaluate program planning, contracting, and 

implementation of development projects, the IG staff could make a major contribution to improved 

agency’s efficiency. 

USAID management oversight of grant and contract processes appears weak to non-existent. Some 

of this may be due to the decision to eliminate the formal performance review process for its 

overseas contract officers cited earlier. 

Currently most contracting officers assigned overseas have their performance ratings (which serve as 

the basis for promotion decisions) written by their clients (mission directors) which creates potential 

conflicts of interest. 

4. Inadequate Training for Project Officers

Good contracting requires the involvement of both contracting specialists and project officers who 

are well trained to carry out their responsibilities in the process. Project officers are responsible for 

developing the solicitation documents, deciding on the evaluation criteria, and sitting on the 

evaluation panels. Unfortunately many have little or no training to carry out their key role in the 

process. 

Training project officers is particularly difficult when USAID relies on a constantly changing pool of 

personal service contractors on short-term (two-three year) contracts to serve as overseas project 

officers. Moreover, the chronic shortage of funds for operating expenses, from which training 

programs must be funded, makes it difficult if not impossible for the agency to design and 

implement a training program at the level of intensity needed for the agency to address long-term 

failure in the past to train its workforce. 
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Consequences

The circumstances described above have negative consequences for the foreign aid program and its 

intended beneficiaries. 

1. The USG and intended beneficiaries do not get best value from foreign aid spending 

It is a well-established principle in government contracting that the government gets best value by 

contracting for well-defined requirements through full and open competition. By limiting 

competition to a narrow group of IQC contract holders or relying on other umbrella mechanisms, 

the government loses the possibility of getting the nation's best expertise and services for a specific 

project activity at the best prices. As a former USAID contract manager notes, these umbrella 

mechanisms are awarded to entities that at some earlier point in time appeared to be well-qualified 

based on general qualifications, but may not be the best qualified organizations to execute a specific 

project in a specific country a year or more later. 

Awarding recipients of grants and contracts on the basis of bureaucratic ease is not a process to 

guarantee best outcomes. 

2. Excessive Concentration of Foreign Aid in the Hands of a Few Entities

There has been a dramatic shift in the concentration of USAID contract and grant awards into the 

hands of a handful of groups, mostly concentrated in Washington, D.C. and its suburbs. According 

to numbers provided to the Commission by USAID, two all-purpose consulting firms in the 

Washington area received almost $810 million out of the agency's $2.2 billion in contracts in 

FY2005. 

During the early years of the Clinton Administration, a senior presidential appointee at USAID 

promised to open up the contract process and stated that if the same contractors were still 

dominating the agency’s contract awards, he would consider it a failure. In February 2004, the 

agency’s Procurement Executive told the Senate Foreign Relations Committee that Secretary of 

State Colin Powell and USAID Administrator Andrew Natsios placed a high priority on bringing in 

new partners and opening up the agency’s contract and grant processes. The Procurement 

Executive assured the Committee that the agency was fully committed to this goal. Despite the bipartisan commitment by senior agency leadership to open the grant and contracting processes, the 

agency has continued to move rapidly in the opposite direction. From fiscal year 1996 to fiscal year 

2005, according to USAID, the share of agency contracts awarded to the top five contractors rose 

from 33% or $57.3 million to 58% or $1.4 billion6

. 

While some of this concentration may be due to large contracts for programs in Iraq and 

Afghanistan, it is clear that there are other causes as well. The IQC and LWA mechanisms have the 

effect of limiting awards to entities willing to be all-purpose, worldwide USAID grantees or 

contractors. Combining tourism with hydro-electric power generation and climate change into a 

single contract, for instance, does not attract prime bidders with genuine expertise and global 

reputation in any one of these disciplines. Entities, including NGOs and faith-based groups, with 

 

6 Data provided by USAID Washington DC procurement personnel to the HELP Commission 
 134

particular strengths in particular regions or activities cannot compete for these global, all-purpose 

grants and contracts. Faith-based organizations are particularly disadvantaged since their mission 

does not include seeking to become general government contractors. 

USAID and the large contractors holding these IQCs and LWAs argue that smaller, more 

specialized firms, faith-based organizations and other non-governmental organizations can 

participate in the IQCs as sub-contractors. This is partially correct, but such roles can be little more 

than serving as “temp agencies." Sub-contractors complain that prime contractors take as much 

work as possible for themselves before tasking the sub-contractors. Being relegated to a subcontractor status often leaves organizations frozen out of the chances to run projects. Moreover, 

prime contractors can credential themselves with the work done by the sub-contractors. 

The excessive concentration is also contrary to overall government policy that small business and 

minority-, women-, and Veteran-owned business enterprise. In the FY 2006 SBA Small Business 

Prime Contracting Achievement and Small Business Procurement Scorecards, USAID received the 

lowest possible score. 

3. Lack of Transparency

The IQC, LWA and other non-competitive processes have the effect of removing much of foreign 

aid spending from public view. Unlike full and open solicitations that are posted for public 

inspection, under the IQCs system the requests for task order proposals are issued privately to pool 

of IQC contractors. The task orders are normally awarded without public disclosure. Similarly, the 

Associate awards under the LWA grant system are conducted by private negotiations with the 

grantee. 

 

4. Failure to Work Effectively with Public Charities Working Abroad

Given the rising levels of private philanthropy and its increasing role in international humanitarian 

and development efforts, USAID’s inability to distinguish between public charities that have 

substantial private financial support and the NGOs that are only non-profit government contractors 

may be hindering the development of closer public-private partnerships with foundations and other 

sources of private resources. 

5. Too Much Project Spending Devoted to Overhead - Not Project Deliverables 

The use of umbrella contract and grant mechanisms can create additional layers of program 

administration and add to program costs because it injects a prime contractor as the intermediary 

between the agency and the sub-contractor executing the project. While some of these expenses are 

costs that would be incurred as operating expenses if USAID or another federal agency dealt with 

the sub-grantees directly, there is an inevitable increase in costs when an agency must conduct all its 

business with the sub-grantees or sub-contractors through an intermediary. USAID was unable to 

provide figures to the commission concerning the cost consequences of using layered procurement 

and grant mechanisms. 

These mechanisms, while more costly, appear to be imposed on the agency because of a lack of 

staff. The additional costs are passed to the program funds while saving money would require using 
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more scarce Operating Expense funds. Ironically, while the OE account was originally established 

to reduce administrative expenses, it may be producing an opposite result. 

6. U.S. Foreign Aid Programs Fail to Serve as a Model for Other Countries

U.S. foreign aid programs today heavily promote full and open competition and transparent 

processes for other countries' grant and contracting activities. U.S. officials, grantees and 

contractors engage in advocacy campaigns in recipient countries to demand transparency, to demand 

that contract specifications and evaluations not be tailored to benefit favored contractors and 

grantees, and everything be done through full and open competition. 

High standards for government acquisition and assistance activities are part of the good governance 

criteria by which the U.S. Government measures foreign governments for possible qualification for 

Millennium Challenge Corporation assistance. 

The U.S. Government undermines its own policy goals when its own systems are moving in an 

opposite direction and reducing transparency and full and open competition, and when solicitations 

at times appear to be tailored to produce pre-determined results. 

Recommendations

The U.S. foreign aid program should conduct its grant and contract procedures in a manner that sets 

a global standard for public integrity, transparency, and full and open competition. Key 

recommendations to accomplish that are: 

1. Senior agency leadership, especially at U.S.AID, should recognize that grant and contract awards 

are at the heart of the agencies' ability to accomplish their mission. They must devote sustained 

high-level attention to the substance of program design, the selection of implementers, the postaward surveillance of performance, and the processes by which these are accomplished. The 

personnel involved in these processes should be recognized as key contributors to each agency’s 

success. 

2. U.S. foreign aid agencies should be given sufficient staff and related funding so that grant and 

contract operations proceed in a timely fashion, and use to the maximum extent practicable 

transparent, competitive processes. This will require, at a minimum, a major increase in U.S. 

procurement personnel (e.g., perhaps as many as 125 additional personnel) at USAID. 

3. When umbrella contracts and grants are used, they should be limited in size, range of activity, and 

number awarded. Large, multi-year multi-million dollar projects should be subject to full and open 

competition. The use of umbrella contracts and grants reduced or eliminated. 

4. Procurement practices, guidelines and policies across all major foreign assistance programs 

should be harmonized as much as possible and reflect state-of-the-art procurement practices. 

We recommend USAID adopt and enforce policies and procedures that a) are uniformly 

followed, both in Washington and in the field missions; b) resolve common contract and grant 

issues consistently; and c) handle post-award interventions similarly. Such policies and 

procedures can be crafted to achieve the sought-after uniformity of process without 
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compromising the ability of overseas missions to tailor development assistance to local 

conditions. Because “tied aid” requiring the sole use of American suppliers often significantly 

adds to the costs borne by taxpayers, use of such procurement rules should be minimized.

5. Barring extraordinary circumstances, only well supervised and trained, direct-hire employees of 

the U.S. Government should be called upon to write Requests for Proposals (RFPs) and Requests 

for Grant Assistance (RFAs). 

6. As a consequence of other Commission recommendations that recipients be integrated into the 

process of determining how development assistance will be used, and that there be an increased 

effort to monitor and evaluate the effectiveness of development assistance, new procurement 

processes and vehicles should be designed which help implement these recommendations. 

7. Legislative authority should be sought to include host country recipients, civil society and 

government officials as substantive participants in the grant and contract scoring and award 

processes, in order to assure country ownership of the projects being implemented. 

In order to achieve a best-practices standard of procurement and contracting, additional steps to be 

taken include: 

• Foreign assistance agencies must be given the funding and invest those funds to develop and 

implement a world-class training program for all employees participating in the grant and 

contract award processes, including intensive training for program office personnel who have a 

key role to play in properly defining government requirements, drafting solicitation documents, 

evaluating proposals and conduct post-award surveillance of grant and contract performance. A 

model for such a training program (which would not be a one-time or single course) may be 

found in the Defense Acquisition University's rigorous and extensive training for DoD 

acquisition personnel. 

• The Administrator of USAID should immediately strengthen the independent evaluation unit 

within M/OAA to monitor contract officers' performance and help ensure checks and balances. 

USAID needs a strengthened central operations unit within its contract and grant functions to 

develop, implement and monitor a renewed emphasis on the highest standards. 

• The Inspector General at USAID should make program audits of the agency’s performance of 

its contract and grant functions a high priority so that an independent voice can assist the 

Administrator address what are believed to be a large number of entrenched management and 

administrative failings. While the IG’s current focus on fraud and abuse is admirable, even 

greater savings might be achieved by more attention to issues of inefficiencies and other waste in 

grant and contracting processes. To the extent the IG has been unable to work in this area due 

to inadequate resources, we recommend additional funding be provided to the IG’s office. 

• We recommend the USAID Administrator take effective steps to provide the agency's Office of 

Acquisition and Assistance with leadership that will remain in place the minimum of five years7

 

7 The purpose of the five year term is to give sufficient time to identify the problems, find solutions, implement them 

and be accountable for the results. 
 137

that we project will be necessary to re-invigorate the agency's grant and contract award systems 

and to inculcate the values of the new systems. 

• The USAID administrator should establish an ambitious internal goal for developing 

partnerships that encourage greater use of minority, disadvantaged, women-owned and other 

small business and minority companies and with minority and smaller NGOs as prime 

contractors and grantees. Increased initiatives to access new types of development partners and 

funding sources, such as is the case with PEPFAR’s New Partners Initiative8

, should be 

undertaken as much as possible provided it is not done via formal set-asides. 

• USAID policies that serve no significant public purpose, such as restricting the amount an 

individual can be paid in salary, should be abolished. 

 

• The distinction set forth in the Federal Grant and Cooperative Agreement Act of 1977 among 

grants, cooperative agreements and contracts should be respected. Program and contract 

officers should be trained to maintain a consistent application of criteria in choosing among the 

different mechanisms, and their decisions should be subject to stringent review. 

 

Closing

These recommendations seek to address systemic problems in the foreign aid grant and contract 

processes that are, to a large extent, due to the drastic cuts in USAID's direct-hire personnel levels. 

Agency employees have for too many years been placed in situations in which they do not have the 

personnel and other resources to do the agency's mission properly. There has been relentless 

pressure to find what are called "work-arounds" that involve short-cutting the proper process just to 

get the work done on time. No matter how dedicated an employee to doing a job right, ultimately 

he or she needs the time to do it right. 

As personnel ceilings were cut from 3,400 US-citizen direct-hire employees in 1992 to 2,400 today, 

much of the agency's management structure has been cannibalized to provide personnel to do the 

day-to-day work and handle the daily crises. Workforce planning, the human resources needed to 

design and implement training programs, the personnel "float" needed to provide for employees to 

be absent from their duties to attend training programs, the personnel in the human resources 

offices needed to recruit to fill vacancies, and the personnel needed to make, promulgate and 

enforce agency policies — all have largely disappeared over the past 20 years. 

We do not seek to assign individual culpability. One has sympathy for office managers and 

employees placed in the impossible position of not having enough personnel to do the work 

properly while being relentlessly attacked for the predictable and inevitable results of that shortage. 

Instead we emphasize that many of these problems are the pernicious effects of repeated 

 

8 PEPFAR’s New Partners Initiative provided approximately $200 million in grants to organizations have the capability 

to reach people who need HIV/AIDS services, but which lack experience in working with the U.S. Government and its 

processes. Community and faith-based organizations, in particular, represent vital but underutilized resources. Many 

such organizations are well-established within communities and well-placed to reach out to those infected and affected 

by HIV/AIDS. 
 138

decimations of the agency's workforce taking place simultaneously with constant additions to the 

work expected of the agency. 

We recognize that much of the authority to solve these problems ultimately resides outside the 

agency. We urge these recommendations be adopted. 
139 

Appendix 1: Sources

1. Extensive interviews were conducted on a confidential basis in the United States and 

overseas with a wide range of organizations and individuals with long experience in the 

foreign aid grant and contract award processes. 

2. Multiple project site visits in Africa, Latin America and Asia 

3. Private correspondence from a number of individuals working on donor-funded projects 

4. “Federal Contracting: Use of Contractor Performance Information,” testimony by William 

T. Woods, US GAO Director - Acquisition and Sourcing Management, before the 

Subcommittee on Government Management, Organization, and Procurement, House 

Committee on Oversight and Government Reform. GAO-07-1111T, July 18. 

5. Figures on Concentration, NGOs vs. For-Profits and Lead Times provided by USAID 

January 22, 2007 and October 18, 2007 

6. “In Washington, Contractors Take On Biggest Role Ever,” New York Times, February 4, 

2007 

7. “Iraq Reconstruction: Lessons in Contracting and Procurement,” Special Inspector General 

for Iraq Reconstruction, July 2006. 

8. “Iraq Reconstruction: Lessons in Human Capital Management,” Special Inspector General 

for Iraq Reconstruction, January 2006. 

9. “Iraq Reconstruction: Lessons in Program and Project Management,” Special Inspector 

General for Iraq Reconstruction, March 2007. 

10. IRS form 990s filed by US Non-Profits receiving USG funding 

11. “More Dollars, Less Sense: Worsening Contracting Trends Under The Bush 

Administration,” United States House Of Representatives Committee On Oversight And 

Government Reform, Majority Staff, June 2007 

12. “Testimony of Samuel A. Worthington (CEO of InterAction) Before the Senate Foreign 

Relations Subcommittee on Foreign Assistance,” June 12, 2007 and “InterAction Response 

to Question for the Record: Senator Lugar,” July 2, 2007. 

13. "U.S. Jobs Shape Condoms’ Role in Foreign Aid,” New York Times, October 29, 2006 

14. "USAID Contracting Policies," Hearing Before the Senate Foreign Relations Committee, 

Subcommittee on International Economic Policy, Export and Trade Promotion, February 

25, 2004 
140 

Appendix 2: Data Provided by USAID

USAID Obligations FY1996-FY2006 - By Type of Instrument 

 

FY TYPE AMT_OBLIG PERCENTAGE LEGEND 

1996 ACQUISITION $172,921,180.05 46% GOVERNMENT TRANSFERS 

1996 ASSISTANCE $205,799,055.98 54% GOVERNMENT OF GERMANY 

1996 Inter Agency Agreements $1,069,906.00 0% GOVERNMENT OF ISRAEL 

 $379,790,142.03 100% 

GOVERNMENT OF ISRAEL 

(MASHAV) 

 GOVERNMENT OF PAKISTAN 

1997 ACQUISITION $190,012,083.90 34% 

INTERNATIONAL FUND FOR 

IRELAND (IFI) 

1997 ASSISTANCE $308,658,410.88 56% 

1997 

GOVERNMENT 

TRANSFER $39,200,000.00 7% ASSISTANCE 

1997 Inter Agency Agreements $17,623,831.47 3% A-Cooperative Agreement 

 $555,494,326.25 100% G-Grant 

 F-Associate Grant 

1998 ACQUISITION $910,656,433.34 36% X-Ribbon PASA 

1998 ASSISTANCE $1,557,862,750.79 62% 

1998 Inter Agency Agreements $54,962,869.45 2% 

Inter Agency Agreements 

(US GOVERNMENT) TRANSFERS

 $2,523,482,053.58 100% 

P-Participating Agency Service 

Agreement (PASA) 

 

R-Resources Support Services 

Agreement (RSSA) 

1999 ACQUISITION $983,673,485.87 28% 

T-Participating Agency Program 

Agreement (PAPA) 

1999 ASSISTANCE $2,339,686,821.03 67% 

1999 

GOVERNMENT 

TRANSFER $39,200,000.00 1% ACQUISITION 

1999 Inter Agency Agreements $123,279,579.53 4% B-Basic Ordering Agreement (BOA) 

 $3,485,839,886.43 100% 

C-Contract (other than BOA, DQC, 

 IQC, PO, RC and PSC) 

 D-Definite Quantity Contract (DQC) 

2000 ACQUISITION $2,642,687,567.37 31% E-Blanket Purchase Agreement (BPA) 

2000 ASSISTANCE $5,151,333,731.68 61% I-Indefinite Quantity Contract (IQC) 

2000 

GOVERNMENT 

TRANSFER $17,000,000.00 0% M-GSA Schedule Order (DO) 

2000 Inter Agency Agreements $600,821,281.66 7% N-Other Federal Schedule Order 

 $8,411,842,580.71 100% O-Purchase Order (PO) 

 Q-Requirements Contract (RC) 

2001 ACQUISITION $1,326,861,381.60 25% S-Personal Services Contract 

2001 ASSISTANCE $3,685,221,817.59 68% V-VISA Transaction 

2001 

GOVERNMENT 

TRANSFER $47,470,000.00 1% Z-Ribbon Contract (Buy-In) 

2001 Inter Agency Agreements $352,493,773.12 7% 

 $5,412,046,972.31 100% 
141 

 

2002 ACQUISITION $607,639,026.17 12% 

2002 ASSISTANCE $2,924,120,158.16 58% 

2002 

GOVERNMENT 

TRANSFER $1,322,000,000.00 26% 

2002 Inter Agency Agreements $222,264,725.23 4% 

 $5,076,023,909.56 100% 

 

2003 ACQUISITION $3,375,757,182.55 42% 

2003 ASSISTANCE $3,746,345,411.59 46% 

2003 

GOVERNMENT 

TRANSFER $646,936,724.00 8% 

2003 Inter Agency Agreements $327,455,919.90 4% 

 $8,096,495,238.04 100% 

 

FY TYPE AMT_OBLIG PERCENTAGE

2004 ACQUISITION $3,917,576,118.11 48% 

2004 ASSISTANCE $3,585,428,856.13 43% 

2004 

GOVERNMENT 

TRANSFER $477,328,000.00 6% 

2004 Inter Agency Agreements $262,045,867.76 3% 

 $8,242,378,842.00 100% 

 

2005 ACQUISITION $2,688,855,105.66 33% 

2005 ASSISTANCE $4,662,848,530.94 58% 

2005 

GOVERNMENT 

TRANSFER $393,862,784.00 5% 

2005 Inter Agency Agreements $290,319,883.83 4% 

 $8,035,886,304.43 100% 

 

2006 ACQUISITION $2,517,379,270.12 31% 

2006 ASSISTANCE $5,085,664,732.14 63% 

2006 

GOVERNMENT 

TRANSFER $240,000,000.00 3% 

2006 Inter Agency Agreements $274,609,292.71 3% 

 $8,117,653,294.97 100% 

 
142 

 

 

FY1996 

 VENDOR NAME AMT_OBLIG

1 

FONDO MEXICANO PARA LA CONSERVACION DE LA NATURALEZA 

(FMCN) $19,500,000.00

2 AMERICAN UNIVERSITY IN BULGARIA $14,882,670.00

3 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $9,534,857.00

4 

WINROCK INTERNATIONAL INSTITUTE FOR AGRICULTURAL 

DEVELOPMENT (WINROCK) $8,748,500.00

5 WORLD WILDLIFE FUND, INC. (WWF) $7,282,796.00

6 THE ASIA FOUNDATION (TAF) $7,243,740.00

7 MANAGEMENT SCIENCES FOR HEALTH, INC. (MSH) $6,750,000.00

8 APPROPRIATE TECHNOLOGY INTERNATIONAL (ATI) $5,739,107.00

9 INTERNATIONAL FOUNDATION FOR ELECTION SYSTEMS (IFES) $5,300,000.00

10 FINANCIAL SERVICES VOLUNTEER CORPS, INC. (FSVC) $3,515,237.00

 

 

FY1997 

 VENDOR NAME AMT_OBLIG

1 SOUTHERN AFRICA ENTERPRISE DEVELOPMENT FUND (SAEDF) $20,000,000.00

2 WORLD EDUCATION, INC. (WEI) $15,319,238.00

3 WORLD VISION RELIEF AND DEVELOPMENT, INC. (WVRD) $11,332,121.00

4 

NATIONAL ASSOCIATION OF THE PARTNERS OF THE AMERICAS, 

INC. $8,653,020.00

5 INTERNATIONAL RESCUE COMMITTEE, INC. (IRC) $8,348,718.00

6 INTERNATIONAL REPUBLICAN INSTITUTE (IRI) $8,055,253.95

7 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $7,637,650.00

8 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $7,391,503.00

9 PATHFINDER FUND, INC. $7,034,487.00

10 

ADVENTIST DEVELOPMENT AND RELIEF AGENCY INTERNATIONAL 

(ADRA) $6,601,086.36

 

 

FY1998 

 VENDOR NAME AMT_OBLIG

1 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $100,855,375.02

2 JOHNS HOPKINS UNIVERSITY (JHU) $92,639,838.00

3 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $88,578,645.89

4 ASSOCIATION FOR VOLUNTARY SURGICAL CONTRACEPTION (AVSC) $87,469,353.00

5 EURASIA FOUNDATION $67,816,000.00

6 CITIZENS NETWORK FOR FOREIGN AFFAIRS, INC. (CNFA) $45,628,227.00

7 

PEOPLE-TO-PEOPLE HEALTH FOUNDATION, INC. - PROJECT HOPE 

(PH) $30,876,734.00

8 WORLD VISION RELIEF AND DEVELOPMENT, INC. (WVRD) $27,936,816.36

9 CATHOLIC RELIEF SERVICES (CRS) $26,096,471.43

10 

WINROCK INTERNATIONAL INSTITUTE FOR AGRICULTURAL 

DEVELOPMENT (WINROCK) $21,046,695.46

 

USAID TOP 10 VENDORS (ASSISTANCE AND NON-PROFIT)
143 

 

FY1999 

 VENDOR NAME AMT_OBLIG

1 CATHOLIC RELIEF SERVICES (CRS) $103,869,959.71

2 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $99,703,830.64

3 INTERNATIONAL EXECUTIVE SERVICE CORPS (IESC) $98,265,424.25

4 JHPIEGO CORPORATION $68,728,618.03

5 

INTERNATIONAL MAIZE AND WHEAT IMPROVEMENT CENTER 

(CIMMYT) $52,558,998.00

6 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $50,906,207.01

7 INTERNATIONAL INSTITUTE OF TROPICAL AGRICULTURE (IITA) $50,337,260.00

8 INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI) $46,910,000.00

9 MERCY CORPS INTERNATIONAL (MCI) $39,039,940.70

10 EASTERN VIRGINIA MEDICAL SCHOOL $34,876,890.00

 

 

FY2000 

 VENDOR NAME AMT_OBLIG

1 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $217,201,531.18

2 GEORGETOWN UNIVERSITY $195,177,957.86

3 PATHFINDER FUND, INC. $176,028,195.59

4 CATHOLIC RELIEF SERVICES (CRS) $175,712,339.25

5 FAMILY HEALTH INTERNATIONAL (FHI) $175,167,691.00

6 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $114,721,815.78

7 EURASIA FOUNDATION $89,856,762.00

8 AMERICAN INTERNATIONAL HEALTH ALLIANCE, INC. (AIHA) $87,408,955.00

9 MANAGEMENT SCIENCES FOR HEALTH, INC. (MSH) $75,820,883.56

10 WORLD WILDLIFE FUND, INC. (WWF) $72,005,057.84

 

 

FY2001 

 VENDOR NAME AMT_OBLIG

1 POLISH-AMERICAN ENTERPRISE FUND, INC. (PAEF) $254,500,000.00

2 JOHNS HOPKINS UNIVERSITY (JHU) $181,232,786.00

3 UNITED STATES RUSSIA INVESTMENT FUND (TUSRIF) $162,000,000.00

4 FAMILY HEALTH INTERNATIONAL (FHI) $142,488,922.00

5 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $138,073,159.13

6 WESTERN NIS ENTERPRISE FUND (WNISEF) $129,000,000.00

7 CENTRAL ASIAN AMERICAN ENTERPRISE FUND (CAAEF) $106,000,000.00

8 CATHOLIC RELIEF SERVICES (CRS) $93,709,527.72

9 POPULATION COUNCIL $78,906,441.00

10 HUNGARIAN-AMERICAN ENTERPRISE FUND $72,500,000.00

 

 
144 

FY2002 

 VENDOR NAME AMT_OBLIG

1 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $113,661,088.78

2 FAMILY HEALTH INTERNATIONAL (FHI) $92,745,402.00

3 EURASIA FOUNDATION $86,392,464.00

4 CATHOLIC RELIEF SERVICES (CRS) $75,873,405.75

5 POPULATION SERVICES INTERNATIONAL (PSI) $61,671,372.00

6 COOPERATIVE HOUSING FOUNDATION (CHF) INTERNATIONAL $60,200,064.00

7 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $53,949,397.41

8 VACCINE FUND $53,000,000.00

9 PATHFINDER FUND, INC. $43,977,257.00

10 JOHNS HOPKINS UNIVERSITY (JHU) $42,932,175.00

 

 

FY2003 

 VENDOR NAME AMT_OBLIG

1 FAMILY HEALTH INTERNATIONAL (FHI) $155,522,931.00

2 CATHOLIC RELIEF SERVICES (CRS) $140,734,593.13

3 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $107,080,528.02

4 WORLD VISION, INC. (WVUS) $105,052,004.73

5 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $70,859,927.43

6 ACADEMY FOR EDUCATIONAL DEVELOPMENT (AED) $67,015,922.00

7 RESEARCH TRIANGLE INSTITUTE (RTI), INC. $60,249,916.00

8 VACCINE FUND $58,000,000.00

9 JOHNS HOPKINS UNIVERSITY (JHU) $51,515,936.00

10 COOPERATIVE HOUSING FOUNDATION (CHF) INTERNATIONAL $50,465,235.00

 

 

FY2004 

 VENDOR NAME AMT_OBLIG

1 CATHOLIC RELIEF SERVICES (CRS) $150,554,858.68

2 

CONSORTIUM FOR ELECTIONS AND POLITICAL PROCESSES 

STRENGTHENING (CEPPS) $136,635,348.00

3 FAMILY HEALTH INTERNATIONAL (FHI) $116,788,490.00

4 WORLD VISION, INC. (WVUS) $101,946,833.47

5 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $98,708,865.26

6 ACADEMY FOR EDUCATIONAL DEVELOPMENT (AED) $78,931,001.03

7 EURASIA FOUNDATION $68,073,045.00

8 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $63,895,017.20

9 VACCINE FUND $59,640,000.00

10 JOHNS HOPKINS UNIVERSITY (JHU) $58,425,717.00

 

 
145 

FY2005 

 VENDOR NAME AMT_OBLIG

1 CATHOLIC RELIEF SERVICES (CRS) $171,093,308.37

2 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $167,727,637.80

3 

CONSORTIUM FOR ELECTIONS AND POLITICAL PROCESSES 

STRENGTHENING (CEPPS) $146,938,255.00

4 FAMILY HEALTH INTERNATIONAL (FHI) $140,020,281.00

5 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $101,713,805.06

6 INTERNATIONAL RELIEF AND DEVELOPMENT, INC. (IRD) $97,962,054.22

7 ACADEMY FOR EDUCATIONAL DEVELOPMENT (AED) $71,974,833.00

8 VACCINE FUND $64,480,000.00

9 JOHNS HOPKINS UNIVERSITY (JHU) $63,860,465.15

10 WORLD FOOD PROGRAM (WFP) $62,954,694.00

 

 

FY2006 

 VENDOR NAME AMT_OBLIG

1 

COOPERATIVE FOR ASSISTANCE AND RELIEF EVERYWHERE, INC. 

(CARE) $175,541,357.00

2 FAMILY HEALTH INTERNATIONAL (FHI) $123,320,024.00

3 WORLD VISION, INC. (WVUS) $116,766,249.20

4 CATHOLIC RELIEF SERVICES (CRS) $114,262,423.98

5 COOPERATIVE HOUSING FOUNDATION (CHF) INTERNATIONAL $105,643,300.00

6 ACADEMY FOR EDUCATIONAL DEVELOPMENT (AED) $96,751,582.31

7 INTERNATIONAL RELIEF AND DEVELOPMENT, INC. (IRD) $78,810,231.00

8 SAVE THE CHILDREN FEDERATION, INC. (SCFI) $78,193,317.18

9 VACCINE FUND $69,300,000.00

10 PRIVATE AGENCIES COLLABORATING TOGETHER, INC. (PACT) $61,714,848.00

 
146 

USAID Top 5 Contractors: FY 1996-2005 

FY1996 

 CONTRACTOR NAME AMT OBLIG % 

1 PACE INTERNATIONAL, INC. $14,999,971.00 8.67%

2 DEVELOPMENT ALTERNATIVES, INC. (DAI) $11,941,620.00 6.91%

3 TETRA TECH EM, INC. $10,789,707.00 6.24%

4 KPMG PEAT MARWICK MAIN & CO. $10,046,650.72 5.81%

5 LOUIS BERGER INTERNATIONAL GROUP, INC. $9,500,000.00 5.49%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $172,921,180.05 

 

 

FY1997 

 CONTRACTOR NAME AMT OBLIG % 

1 CHEMONICS INTERNATIONAL, INC. $20,629,204.00 10.86%

2 DATEX, INC. $13,479,359.49 7.09%

3 

ASSOCIATES IN RURAL DEVELOPMENT, INC. (ARD)/CHECCHI - 

JOINT VENTURE $11,410,001.00 6.00%

4 DEVELOPMENT ASSOCIATES, INC. $8,343,739.00 4.39%

5 JOHN SNOW, INC. (JSI) $7,651,961.00 4.03%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $190,012,083.90 

 

 

FY1998 

 CONTRACTOR NAME AMT OBLIG % 

1 WYETH-AYERST INTERNATIONAL, INC. $59,669,205.31 6.55%

2 KPMG PEAT MARWICK MAIN & CO. $55,147,143.77 6.06%

3 FUTURES GROUP INTERNATIONAL, INC. $54,646,266.33 6.00%

4 POPULATION COUNCIL $53,361,354.72 5.86%

5 ABT ASSOCIATES, INC. $53,040,864.11 5.82%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $910,656,433.34 

 

 

FY1999 

 CONTRACTOR NAME AMT OBLIG % 

1 PARTNERSHIP FOR CHILD HEALTH AND CARE, INC. $95,045,120.13 9.66%

2 KPMG PEAT MARWICK MAIN & CO. $89,460,203.26 9.09%

3 ORC MACRO INTERNATIONAL, INC. (MIRI) $49,738,459.73 5.06%

4 LONDON INTERNATIONAL GROUP, INC. $38,362,500.00 3.90%

5 CHEMONICS INTERNATIONAL, INC. $36,135,916.84 3.67%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $983,673,485.87 

 

 
147 

FY2000 

 CONTRACTOR NAME AMT OBLIG % 

1 PRICEWATERHOUSECOOPERS, LLP. (PWC) $149,236,926.15 5.65%

2 JOHN SNOW, INC. (JSI) $146,176,995.15 5.53%

3 ACADEMY FOR EDUCATIONAL DEVELOPMENT (AED) $141,573,836.47 5.36%

4 DEVELOPMENT ALTERNATIVES, INC. (DAI) $95,011,468.03 3.60%

5 CHEMONICS INTERNATIONAL, INC. $93,359,635.79 3.53%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $2,642,687,567.37 

 

 

FY2001 

 CONTRACTOR NAME AMT OBLIG % 

1 DEVELOPMENT ALTERNATIVES, INC. (DAI) $92,451,736.07 6.97%

2 ABT ASSOCIATES, INC. $79,161,554.25 5.97%

3 INSTITUTE OF INTERNATIONAL EDUCATION (IIE) $69,889,264.00 5.27%

4 DELOITTE TOUCHE TOHMATSU EMERGING MARKETS GROUP $64,827,409.39 4.89%

5 ORC MACRO INTERNATIONAL, INC. (MIRI) $61,870,554.00 4.66%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $1,326,861,381.60 

 

 

FY2002 

 CONTRACTOR NAME AMT OBLIG % 

1 LOUIS BERGER INTERNATIONAL GROUP, INC. $81,403,964.00 13.40%

2 DEVELOPMENT ALTERNATIVES, INC. (DAI) $33,340,793.50 5.49%

3 FUTURES GROUP INTERNATIONAL, INC. $28,085,000.00 4.62%

4 WYETH-AYERST INTERNATIONAL, INC. $24,806,368.80 4.08%

5 ORC MACRO INTERNATIONAL, INC. (MIRI) $21,854,631.00 3.60%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $607,639,026.17 

 

 

FY2003 

 CONTRACTOR NAME AMT OBLIG % 

1 BECHTEL CORPORATION, INC. $1,167,600,000.00 34.59%

2 CHEMONICS INTERNATIONAL, INC. $240,796,107.43 7.13%

3 DEVELOPMENT ALTERNATIVES, INC. (DAI) $130,781,533.34 3.87%

4 CREATIVE ASSOCIATES INTERNATIONAL, INC. $130,305,908.00 3.86%

5 ASSOCIATES IN RURAL DEVELOPMENT, INC. (ARD) $125,229,213.00 3.71%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $3,375,757,182.55 

 

 
148 

FY2004 

 CONTRACTOR NAME AMT OBLIG % 

1 BECHTEL CORPORATION, INC. $1,443,359,782.00 36.84%

2 DEVELOPMENT ALTERNATIVES, INC. (DAI) $394,183,133.23 

3 LOUIS BERGER INTERNATIONAL GROUP, INC. $310,635,372.00 

4 BEARINGPOINT, INC. (KPMG - CONSULTING, INC.) $255,866,501.00 

5 RESEARCH TRIANGLE INSTITUTE (RTI), INC. $194,354,317.00 

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $3,917,576,118.11 

 

 

FY2005 

 CONTRACTOR NAME AMT OBLIG % 

1 DEVELOPMENT ALTERNATIVES, INC. (DAI) $434,500,564.87 16.16%

2 CHEMONICS INTERNATIONAL, INC. $375,543,354.00 13.97%

3 RESEARCH TRIANGLE INSTITUTE (RTI), INC. $204,737,909.00 7.61%

4 BEARINGPOINT, INC. (KPMG - CONSULTING, INC.) $128,358,175.00 4.77%

5 LOUIS BERGER INTERNATIONAL GROUP, INC. $112,189,246.00 4.17%

 

 TOTAL OBLIGATIONS (ACQUISITIONS) $2,688,855,105.66 

 

 
149 

Executive Summary of Foreign Assistance: What Works and 

What Doesn’t with Recommendations for Moving Ahead 

The following paper represents the views of the authors and the signatories: 

Full Paper posted to the HELP Commission website 

www.helpcommission.gov 

Written by Vice Chairman Carol Adelman and Commissioner Nicholas 

Eberstadt, with assistance from Susan Raymond and Melissa Griswold 

Endorsed by HELP Commissioners Jerry Climer, Glenn Estess, Sr., Walter 

Kansteiner III, and Marty LaVor 

Introduction 

In preparing the full-length paper on What Works and What Doesn’t, over 100 reports, 

books, and articles were reviewed. We examined evaluations from USAID, other bilateral 

aid agencies, multilateral donors, foundations, charities and corporations, and met with 

various evaluation officers and experts. We conducted meetings with current and former 

USAID evaluation officials which proved highly useful in better understanding the history 

and issues involved with evaluation of foreign aid programs. Many of these evaluation 

officers continued to send their views to HELP Commission staff which was greatly 

appreciated. 

Looking back to the historical record, the paper summarizes the literature on why countries 

grow, whether foreign aid has an impact at the macro level, i.e. on aggregate economic 

growth, and whether foreign aid has impact at the micro or project level, on such specific 

factors as school attendance, health improvements, agricultural production and employment 

through specific aid interventions. Based on projects identified as successful by the donor 

community and those that were deemed not successful, we identified the characteristics of 

successful projects. 

Looking forward, the research uses a variety of data sources, including the IMF, World 

Bank, United Nations Population Division and WHO to project social, economic and 

demographic changes in the developing world over the next 10 years. The prospective 

changes are of two types. First, there are projected economic and demographic changes 

including declining fertility and infant mortality and rising life expectancy, which stand to tilt 

the locus of health problems in developing countries toward such chronic diseases as cancer 

and cardiovascular and diabetes and away from the traditional problems of infectious 

diseases and child survival (still predominant in African countries). Furthermore, the 

projected rise in the pool of trained professionals and entrepreneurs in developing countries 

suggests there will be steadily increasing opportunities to work with local talent, thereby 

enhancing opportunities for “local ownership”, self reliance and sustainability in aid projects. 

 These prospective changes within developing countries will call for a new flexibility in 

USAID programming — for avoiding “one size fits all” solutions for a diverse world. U.S. 
150 

assistance will need to be tailored to each country’s rapidly changing conditions and 

development opportunities. 

Second, there are major streams of international financial resources available today (some of 

them entirely new) that were not present when foreign assistance was conceived after World 

War II. Private resources now dwarf government aid to developing countries, and they have 

opened up new opportunities for addressing problems in entirely new ways. 

The paper concludes with recommendations for USAID funding mechanisms, 

programming, project design, implementation, and evaluation that emanate directly from the 

research of past effectiveness and projections of future economic, social and demographic 

changes and thus opportunities. 

Why Countries Grow and the Role of Foreign Aid 

There is general agreement that countries are much more likely to grow when they embrace 

policies that create open economies, encourage trade, private investment, business creation, 

savings, and innovation. Of course good governance and the development of a sturdy 

institutional domestic framework (rule of law, individual rights, property rights, etc.) are also 

critical to prosperity. 

Numerous scholars since the 1950s have debated whether and to what extent foreign aid 

helps countries grow. The studies largely conclude that the overall effect on macroeconomic 

growth is negligible at best. We reviewed 8 major studies and the majority shows no 

relationship between aid and growth, with only one asserting an unqualified positive 

relationship. The rapid growth of post-Mao China and of India during the past two 

decades—two major sources of global poverty reduction over the past generation—are not 

attributable in any appreciable measure to flows of foreign assistance. On the other hand, the 

ratio of aid to GDP is generally quite high in sub-Saharan countries: but clearly, more 

foreign aid has not resulted in increased per capita GDP within this region, since a majority 

of countries have experienced declining growth as aid has increased, and long-term increases 

in foreign aid have accompanied long-term declines in per capita output in more than a few 

of these states. 

Reasons given in the literature for the lack of a generally positive identifiable macroeconomic 

impact of foreign aid in these studies include the arguments that aid inhibits competitiveness, 

creates dependency, and absorbs or misallocates political resources in recipient countries; 

that aid is motivated by non-development donor and contractor interests; and that aid 

engenders lack of feedback and accountability, host country graft and corruption. 

Do Foreign Aid Projects Work and Why? 

Since recipient country policies are far more important than the volume of foreign assistance 

in explaining why countries grow, we need to ask: where and how does foreign aid matter? 

From the nearly $2.7 trillion in official development aid transferred to recipient countries 
151 

since 19609, what evidence of program success do we have? And why have the projects 

been successful? Determining these characteristics of how foreign aid has positively affected 

the lives of individuals and communities in poor countries can instruct us in what changes 

can be made to future foreign aid projects. 

In recent years, many bilateral donors have examined the effectiveness of their foreign 

assistance. In its stark evaluation of Canadian foreign aid, the Canadian Parliament Senate’s 

Foreign Affairs Committee concluded that Canada’s development agency, CIDA, has failed 

to make a difference in sub-Saharan Africa, despite $12.4 billion in aid expenditures there 

between 1968 and 2007, due to slow, unaccountable and poorly-designed development 

assistance and ineffective foreign aid institutions in Africa. Concluding that vibrant 

economies and good governance are the answer to prosperity, and that these can only be 

generated from within African countries themselves, the Committee recommended that 

Canada move to a foreign aid model similar to the Millennium Challenge Corporation: 

providing assistance to only those countries that have shown progress in building strong 

private sectors, creating employment and strengthening their political and economic 

governance. 

The Netherlands, Ireland, Sweden, and Australia have also completed assessments of their 

aid programs that call for improved evaluation, more local ownership and better institutional 

capacity in governments. They found that successful projects involved local initiative, good 

governance, measured results, and the creation of local institutions for sustainability. 

Other donors, particularly the World Bank, have attempted to measure programs for results 

such as poverty reduction. The Bank evaluation unit found that poverty reduction remains a 

substantial challenge. In a 2006 evaluation of 25 Bank-assisted countries, only 11 were said 

to have reduced the incidence of poverty between the mid 1990s and early 2000s, with 

poverty either stagnating or increasing in the remaining 14 countries. With some notable 

exceptions, foundations, private and voluntary organizations, and corporations have not 

generally evaluated their projects for results at the impact level. 

USAID has a long history of evaluation using primarily process and output measures. While 

some serious impact-level evaluations have been conducted, the numbers have been low 

relative to total projects and money obligated by USAID. Nor does information from these 

evaluations or others seem to be used to inform USAID design and implementation 

decisions. We have reviewed projects from the Impact Evaluation Series and some 

illustrative successful projects identified by USAID, the World Bank, foundations, 

corporations, and think tanks as ones that have been evaluated at the impact level. We then 

analyzed them for their shared characteristics. 

Some of these generally-agreed-upon successes are: Rural Electrification in Bangladesh, 

Consultative Group on International Agricultural Research (CGIAR), River Blindness 

Control and Mectizan Distribution, The Health Partnerships Program, Foreign Academic 

Training, Democracy Building: Results of a Quantitative Study, the Amman Stock Exchange, 

 

9 Total estimated transfer to recipient countries amounts to $ 2.665 trillion; estimates are in 2005 dollars, for 

net disbursements of ODA as defined by the OECD, for the period 1960-2006. Calculations based on data 

from www.oecd.org. 
152 

and Hurricane Mitch. (Obviously, the projects just mentioned are not an exhaustive list; 

other additional examples have been cited in various reviews.) 

Examination of programs that were both successful and unsuccessful brings to light the 

shared characteristics or principles of foreign aid projects that work. 

Conclusions and Shared Characteristics of Successes 

• Ownership and initiative must be local. Successful programs and project 

initiatives reflect actual needs of the recipient countries as expressed by local actors, 

rather than simply reflecting instructions of what projects and programs may be 

available for local recipients from USAID. Local ownership increases the prospects 

for long-term success by involving local institutions. Such partnerships can, indeed, 

lead to the continuation of institutional relationships between American and partner 

leaders long after the end of USAID funding. 

• Partnership is the Premise. Successful projects and programs evidence 

collaboration between American and developing country institutions, especially 

private—especially private institutions. Indeed, such collaboration seems virtually 

essential for a sustained engagement that brings benefits valued by all. The U.S. 

government should always attempt to ensure partners are committed to a program 

before it makes an investment; as a general rule, U.S. dollars should be the second or 

third dollar on the table, not the first. When everyone is committed to common 

priorities and has made an investment, then everyone will be accountable for the 

results. With mutual accountability comes sustainability. 

• Leverage is the New Framework. USG funds can take advantage of the myriad 

new sources and techniques of global support for developing countries including 

foundations, PVOs, corporations, universities, and remittances. USAID alliances 

with the multitude of new American philanthropic activity overseas can help leverage 

resources that far exceed those contained in Federal budgets. These partnerships 

should recognize priorities and expertise of philanthropic leaders and their 

institutions. Similar strategies should link U.S. programs to emerging local business 

leadership in developing countries. Within this framework, USAID becomes not the 

controlling task-master of U.S. development programs, but the aggregator or 

facilitator of effort, the creator of syndicates of resources targeted at self-reliance. 

• Flexibility is critical. Problems and potential solutions must respond to the 

perceived priorities of partners, not to decades-old legislative mandates. Where the 

nature of the problems and opportunities for change are evolving, AID must be able 

to respond, and indeed to anticipate such changes and initiate innovative discussions 

with partners to address them. 

• Peer to Peer Approaches are Valuable. US foreign assistance should seize the 

chance to address issues on which America’s professionals and institutions have 

expertise and build firm relationships between U.S. and developing country 

counterparts that will endure on the basis of perceived professional self-interest long 
153 

after AID’s financial role has ended. This peer-to-peer approach should replace the 

contractor model that currently dominates USAID programming. 

• Technology Adaptation and Adoption Matter. Some of the most widely 

acknowledged foreign assistance successes, such as the Green Revolution, have at 

their core the application of technology to improve the human condition. As the 

scientific and technological capacity of developing countries expands, the potential 

for technology partnerships in foreign assistance also increases. Local ownership is 

also important in this context, as integration of technology such as bed nets and oral 

rehydration salts is vital to ensuring their effective use within the individual 

communities where they are introduced. 

• Leaders and Policy Must Drive Toward Self-Reliance. The most important 

steps taken to improve the long-term development success of developing nations will 

come from within those countries. Local leaders must therefore be the engines of 

change. Encouraging leadership and good policies may mean ending or reducing aid 

to a country. We must not be afraid to withdraw funds to ensure that assistance does 

not result in dependency in recipient countries. 

• Continual Information Loops Contribute to Learning and Adjustment. The 

best evaluation systems are not simply tasks that result in reports. They are continual 

feedback loops that give information to managers in real time so programs can be 

constantly adjusted to improve performance. Success comes from a continual 

process, not one event, and requires flexibility to adjust programs to changing 

situations. 

• Risk is necessary. A partnership and venture funding culture implies a tolerance 

for risk and USAID must be willing to experiment with new approaches to 

development assistance. USAID will need to develop a mechanism for rewarding 

the willingness to take calculated risks within its own personnel and programs. 

Recommendations 

The lack of evidence of significant impact from past foreign aid efforts, the changing nature 

and capabilities of the developing world, and the emergence of new sources and approaches 

to resource transfers for development all point toward a single conclusion: U.S. foreign 

assistance needs an entirely new business model. The report’s recommendations are based 

on the above conclusions and provide suggestions for the creation of that new model. 

1. Sectoral and project earmarks, directions, and limitations in foreign aid legislation 

should be removed, with the exception of those that are deemed essential to U.S. 

national security. U.S. foreign assistance programs should be able to respond fully 

and flexibly to demand-driven opportunities emerging within the specific context of 

each developing country. Programmatic limitations on the problems or 

opportunities that development dollars can address should be removed. 
154 

2. U.S. foreign assistance programs, focused in any area of development, with the 

exception of those deemed essential to U.S. national security, should not expend U.S. 

resources without monetary or monetized resources co-invested in the developing 

country itself. These in-country organizations may include local affiliates of U.S. 

NGOs and corporations, indigenous foundations, local businesses, or public 

agencies. Expenditures of U.S. foreign aid should drive toward sustainable publicprivate partnerships in the host country. 

3. Competition for U.S. foreign assistance dollars should not be among consultants, but 

among ideas coming from the multiple actors now involved in foreign aid and 

philanthropy, particularly on the demand side of the equation in developing 

countries. Those who wish to attract U.S. development investment resources should 

bring to USAID their best ideas and their own resource contributions from private 

sources, defended in terms of economic and social impact, local ownership, 

partnership with local institutions, and achievement of community self-reliance. 

USAID should operate more like a foundation, not a disbursement agency, 

articulating areas or problems of interest and inviting competition for best-in-class 

approaches. 

4. USAID should create a “venture fund”, through which any individual or 

organization with a new idea about how to solve a problem in development in an 

innovative way, that has economic impact, and creates community self-reliance, can 

apply for a seed grant. The grant would be for limited duration and limited amounts 

of money. Risk will be welcomed. The judgment on awardees would be made twice 

a year by a peer board. No one receiving USAID money (or who has received 

USAID money in the last three years) would be allowed to sit on the Board. 

Grantees would report directly to a panel consisting of all the USG agencies 

contributing to Official Development Assistance (ODA) of the USG. 

USAID should establish a mechanism, e.g. advisory board, for regular and full discussion 

and consultation with private resources flowing into global development that are now almost 

four times the amount of ODA. These groups include foundations, charities, corporations, 

religious organizations and individuals who are sending remittances to their home countries. 

USAID must be aware of the vast array of new players in global development who are 

transforming the landscape of how assistance is delivered, i.e. through more efficient means 

of volunteerism and e-philanthropy, more venture capital approaches, more hands-on and 

people-to-people approaches, and more results- oriented projects. This mechanism should 

issue an annual “State of Partnership” report on public-private investment collaboration for 

development. 
155 

Foreign Assistance Is About Change

The following paper represents the views of the authors and the signatories: 

By Commissioner Jerome F. Climer 

Endorsed by HELP Chairman Mary Bush, Vice Chairman Carol Adelman, and 

Commissioners Steven K. Berry, Nicholas N. Eberstadt, Glenn Estess Sr., 

Thomas C. Kleine, Marty LaVor, Hon. Robert H. Michel and Eric Postel 

The vast majority of U.S. foreign assistance dollars and programs are designed to stimulate 

change, for the benefit of the recipients. We spend the money because we believe that in 

advancing the interests of the recipients, it will enhance our national interests and/or address 

the moral and humanitarian imperative. We try to help recipients respond to short-term 

crises and tackle long-term projects in order to improve their sustenance and health care, 

education, justice and anti-corruption systems, infrastructure, governance, and their job and 

resources development. Except when our assistance is given for purely political purposes, we 

don’t make these investments because we want to see the status quo maintained; we want 

change and so do the recipients. And if they don’t want change, we should not invest U.S. 

taxpayer’s funds in long-term development assistance, except in rare circumstances. 

By change, we are referring to deliberately launched modifications of the status quo that 

have major impact on those affected. All change, intentional or not, necessarily disrupts the 

way individuals live their lives. For that reason, resistance to change should be considered a 

natural reaction, which advocates and sponsors of change should anticipate. There are a few 

fundamental characteristics about change: 

o Change is a process. 

o Change is not as mysterious as most people think. 

o Change typically unfolds in a manner that can be recognized and predicted. 

o Humans assimilate change at different rates. 

o We can help ourselves and others recover more quickly and effectively from the 

effects of change. 

Too often, here at home as well as abroad, public leaders do not understand the nature and 

process of change and are knocked off course when resistance occurs. Or alternatively, they 

mistakenly think that a logical policy decision will automatically be adopted and create the 

outcomes they anticipate. 

But changing public programs or political policies entails more than rejecting the way things 

are and simply moving to the way you want them to be. Because change is a process, it 

happens in three phases: the present state, the transition state, and the desired state. 

The present state is another term for the status quo, the existing condition. No matter what 

the project — immunizing children, improving education, improving government, or fixing 

water or electricity distribution systems — it is vital to understand that there is a “why” 

behind the existing program/process/procedure, even if dysfunctional. Objective observers 

might agree that this “why” is irrational or obsolete or has become too costly. Yet, in the 
156 

past, that program, process or procedure made sense to someone, and therefore, a kind of 

legitimizing mechanism keeps it in place. By default, the status quo has supporters, because it 

is familiar. 

To successfully implement change, our foreign development personnel must not 

underestimate the affect “why” has as an anchor that keeps the status quo in place. That 

applies to our Washington policy structures as well as to the field’s promotion of new 

programs in developing countries. 

Expectations, either positive or negative, along with a comforting familiarity with existing 

conditions, are two forms of the legitimizing mechanisms that hold the status quo in place, 

even when the present state’s many drawbacks are obvious. To understand the persistence of 

the present state, and the related resistance to change, is to see why you can’t move directly 

to the new desired state. First comes a struggle with a “why” that does not easily forfeit its 

legitimacy, no matter how flimsy. 

Therefore, all who are influenced by a particular change project, including the leaders who 

are fostering the change, must go through a transitional state that simultaneously replaces the 

old while creating the new. It’s a difficult passage, and the place where most change 

initiatives falter. 

Because change is our objective, it is logical that those representing the United States should 

be knowledgeable about the nature and process of change, whether acting as directemployees of the government or as agents of our citizens acting through NGOs, religious 

institutions, educational groups, or others. 

Leading or managing change is not as mysterious or as intuitive as once thought.10 But it is 

much more than just making the right policy decision or selecting the right leaders. All the 

evidence argues that the percentage of successful implementations is even lower in 

governmental operations than in the private sector. Why? Because public leadership is less 

hierarchal and thus the ability to sanction behaviors (positively or negatively) is weaker. Yet, 

even though the private sector has applied the lessons learned about managing change over 

the past thirty years, few in government give more than lip service to the topic. Happily, the 

principles remain the same in both the public and private realms. 

Travels by HELP Commissioners illustrated the validity of these conclusions. In certain 

cases, it was clear to some that the right policy decision had been made but that 

implementation of a given program had failed. Colombia, where the national leadership at 

the urging of the U.S. has agreed to our defoliation of illegal drug crops, offers a good 

example. The goal of reducing the flow of such drugs into the U.S. is a good policy decision. 

But the implementation is destined to failure because it does not create a workable 

alternative way for the indigenous farmers to make a living or to combat the drug lords. The 

farmers could make more money growing food crops, but there are no roads to market, 

therefore there is no income from their efforts. The drug lords see the eradication as one 

more overhead cost to be offset by planting of additional acres. In essence, at our urging a 

change is being imposed on local people — by the U.S. military, Colombians and 

 

10 Studies show that within the private sector, 70% of the right decisions fail to be implemented successfully. 
157 

contractors — that they cannot implement effectively. The problem is not with the policy 

decision; it is with the implementation of the change. 

The sad thing is that people knowledgeable in change management could have predicted this 

failure long before the first dollar was spent. Yet, rather than understand why they failed, too 

often observers claimed that there had not been enough money dedicated to the effort or 

that the leadership had been weak, or the timing off, etc. 

In another country, we heard complaints about our efforts to improve basic education. But a 

fundamental flaw in the effort to change those schools related not to U.S. money or to the 

intent of the country’s leadership, but to the fact that the nation’s leadership did not have the 

knowledge needed to manage their own agents of change: the teachers assigned to the local 

schools. They were being treated as political patronage when they should have been treated 

as true agents of the national leaders and thus trained in the imperative value of the change, 

namely improved teaching. If they were not willing to become implementers of those 

changes, it is questionable that they were the right people in the first place. They weren’t, 

which left proponents of educational improvement wondering if this was just another case 

of needing more money. More money going into a failed structural implementation of 

change will not produce desirable outcome. Here again, the policy is sound but the 

implementation is flawed. 

Frequently, the failure is due to a lack of knowledge about how change occurs. Ideas, 

whether good or bad, will always be resisted. It is the nature of humans to resist change. Too 

often, because they do not anticipate resistance, the designers of programs shift their 

objectives or fall back on their implementation plans upon seeing the first signs of resistance. 

This is particularly true of political leaders, here or abroad. Too often, our advocates in a 

country have done little to help local leaders understand what they have to be willing to do 

to make the project successful, beginning with an understanding that resistance is natural and 

can and must be anticipated and accommodated. Additionally, too often our advocates have 

not listened carefully enough to local leaders about what needs to be done to obtain local, 

sustainable change. Had they done so, they and the partnering nation would have had an 

appreciative understanding of the resistance and thus been informed inferentially about ways 

to accommodate or modify the resistance without forfeiting the objectives of the change 

program. 

Having a local leader agree to let us spend our money addressing their problem is not 

sufficient local ownership. The local leader must develop sufficient ownership of the project 

that they will be adversely affected (professionally, politically or emotionally) if it fails. 

Otherwise, failure is something they can accept. When leaders of change understand the 

nature and process of change, they recognize that there are serious consequences for failure, 

as well as rewards for success, and they undertake the project fully informed about those 

risks and knowledgeable about how to succeed. In other words, change does not occur 

without able and willing committed leadership, and that commitment must be informed and 

serious. 

As the Commission traveled, some of us noticed how often our Government’s agents would 

comment on the natural leadership ability of leaders involved in successful projects. While 
158 

such charismatic leadership is intuitive or natural to a few people, most are not lucky enough 

to possess it. But, with education and exposure, office holders and program managers can 

learn how to become effective leaders of change. Learning how to evaluate the ability, 

willingness and commitment of leaders is not hard, but our foreign assistance establishment, 

both government and non-government, must decide that obtaining and applying that 

knowable is an imperative. Otherwise, there is little reason to believe that more money or 

different structures will produce better results. 

Another reality of change deals with resilience — the ability to cope with and recover from 

things that are not totally within your control and/or expectations. Recent studies 11 have 

shown that there is a link between national resilience and GDP. Resilient nations, 

organizations and individuals are positive, focused, organized, flexible and committed. There 

are established and proven ways 12of measuring an individual’s or organization’s resilience, 

and the science is rapidly moving to having verifiable ways of measuring it in nations. 

Granted, it is hard to be resilient when you have confronted many years of seemingly 

intractable problems and have had little control throughout lengthy colonial periods, 

dictatorships and/or elite-controlled governments/economies, wars or famines. But it is not 

as clear-cut as you might imagine. War and other calamities actually demand a great deal of 

resiliency from the survivors. The challenge for leaders is to refocus that resiliency to 

constructive, productive and non-defensive purposes. But unless competent local leadership 

knows how to tackle such a challenge, some crisis-torn victims will become dysfunctional, 

even dangerous, and/or enter a state of future shock or immobilization. These are more 

reasons that our advocates and mentors need to be highly schooled to recognize the warning 

signs of dysfunctional or immobilized behavior and to know something about the paths 

toward building and refocusing resiliency. 

Without knowledge of how resilience plays into change dynamics, too many representatives 

of the U.S. have launched projects that were doomed to failure because the resilience needed 

for successful implementation simply was not present and could not be developed in a 

timely fashion. There are ways to develop resilience, but it does not happen over night and it 

is a challenging undertaking. But good leaders can do it as Winston Churchill proved in 

World War II. He recognized intuitively that if resilience was low the nation could not 

succeed in the rapidly changing environment of a war setting. He showed his leadership 

skills and increased the positive, focused, organized, flexibility and commitment 

characteristics of England’s people. 

Understanding the role of resiliency is critical for our advocates of change as well as for the 

managers of the project and recipient country’s leadership. In some cases, increasing that 

resiliency must take precedence over other changes. In other cases, the absence of resilience 

in the target audience may necessitate delaying or forfeiting a given project. Importantly, 

there are ways to measure resiliency and ways to enhance the characteristics. But in spite of 

the existence of these tools, too many practitioners are tempted to say that the pending 

problem is just too dire and that therefore the project has to be launched even if there is slim 

 

11Lynn Talerico, Ph.D., 2007, Leadership, Context and Culture Resilience: Social Capital Redefined, 9th INFER Annual 

Conference, Loughborough, UK 

12 Daryl Conner, methodologies developed by ODR, Inc and Conner Partners, Atlanta, GA 
159 

to no chance sufficient resiliency exists to succeed. It may make them feel better, it may 

make leaders in Washington, D.C. feel that they tried, but it could also be doing harm and 

making future success even less likely. 

When leaders repeatedly launch change projects and then fail to successfully implement 

them, it creates a mental expectation of failure in the target groups. That regrettably leads to 

a loss of respect for the leadership or, if the U.S. is highly visible in the failing launches, for 

the U.S. It is foolhardy to launch projects that do not have a reasonable potential for 

success, and it is harmful to the advocates and the local leaders because it undermines their 

credibility. Credibility, or, as some would call it, political capital, is a leader’s most important 

asset and destruction of it invariably hurts future prospects for success. 

Understanding other characteristics of the nature and process of the change dynamic can 

enable our foreign development professionals to better support other nations in reaching 

their desired goals. Knowing if a project is designed to respond to an immediate crisis, an 

anticipated crisis, an immediate opportunity or an anticipated opportunity alone is extremely 

important. 

Education is a classic area that emphasizes long term, anticipated opportunity over 

immediate consumption or reward. Yet too often, programs are promoted that focus on the 

long-term education of children whose parents see them as essential assets in ensuring that 

food be found for tomorrow’s table. The proponents of the educational programs should 

acknowledge that education is a lower priority for such families until the more pressing 

nourishment needs are met. But, too often, they have a textbook in hand and just want to 

teach, thinking it is someone else’s task to provide food. Or they conclude that the recipients 

have so many pressing needs that they might as well get on with the task of educating the 

children. 

As with other aspects of leading complex change, once the advocates, agents and sponsors 

of the change have developed an appreciation for its dynamics, they will design programs so 

they do not conflict with the recognizable hierarchy of motivations. In the example just 

given, that might mean finding a way to make education an immediate opportunity for 

reward as opposed to an anticipated opportunity. Alternatively, the program might be 

designed to reduce the probability the family would face either an immediate or anticipated 

crisis (less food) as the result of the child spending time in an educational environment, by 

providing supplemental food or even compensation. 

Societies, organizations or individuals respond differently in each of those four motivational 

scenarios. With a better understanding of the basic principle about the hierarchy of 

motivators, our representatives would develop better ways of understanding why a family 

that is hungry or insecure is not going to invest a great deal in education. One of the reasons 

so many early HIV/AIDS programs failed was that they did not recognize that the solution 

they were advocating was being viewed by the participants as itself dangerous or 

unwarranted, as well as an immediate solution to what was perceived as an anticipated 

danger. Calling for an immediate change to common sexual practices will almost always be 

resisted very strongly, even in the face of a potential health crisis danger. But over time, as 

the disease became less remote and more immediate, participants came to understand why 

they needed to change their practices. In other words, the time horizon perception of the 
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challenge/opportunity must coincide with the solution’s implementation prescription, or 

failure is reasonably guaranteed. 

Change only occurs when the leadership and the targets of the project realize that the issue is 

both important and urgent, in one fashion or another. 

The point of all this is to say that there are proven methodologies for managing change. 

They have been refined and applied by the private sector over the past 30 years, and it is 

critical that they be applied in the field of foreign development if we are to increase our 

project success ratio. If they are not, we should not expect to see new successes, no matter 

how much more we spend. There are specific roles that will be played by advocates, 

sponsors, agents and targets of change. If those relationships are understood, the challenge 

for the U.S. Government’s representatives becomes much clearer and the probability of 

success much greater. If they are ignored the probability of a 70% failure rate ,13 even if the 

policy is right, is high. 

All employees of our foreign assistance agencies should master knowledge about the nature 

and process of change that is basic to their mission’s success. And those in the field must go 

farther and excel in its application. We believe that a ceiling should be placed on 

advancement within the U.S. Government’s foreign development organizations limiting 

promotion until a person has mastered the principles of managing change. In the short-run, 

this might be accomplished by the Government providing such training through outside 

contractors or consultants. Some of the better ones have programs for certification as well as 

programs for exporting their training methodologies. In the longer run, the relevant agencies 

should establish their own internal training systems, so long as they are as rigorous as those 

applied in the private-sector. Over time, the same skill criteria should be required of grant 

recipients and contractors. Finally, recipient sponsors and agents should begin the 

implementation of projects by undergoing basic training in the leadership of change. 

For top-level leaders of a partnering country, this training might be one or two initial halfday sessions where they are exposed to the basic nature and process of change. Later, they 

will want additional mentoring sessions on how to maintain their own commitment to the 

project and, more importantly, on how to communicate the need for change to their agents, 

their personnel charged with actually implementing the change, and the actual beneficiaries. 

Agents charged with actual implementation of the project, who must report directly to the 

top-level leader of the change, should receive multi-day training on implementing change. 

Not only should they be introduced to the nature and process of change, but they should 

learn about the critical distinctions between various players (sponsors, advocates, agents and 

targets) in the process. They should learn ways to bring resistance out into the open where it 

can be dealt with, as opposed to letting it simmer below the surface. They should learn how 

to reframe opposition so higher values that can be found in the change are recognized and 

therefore outweigh the weaker arguments of resistance. 

Lastly, agents charged with implementing projects should be instructed in the ways they 

must work with their supervisors. Public leaders are notorious for launching efforts and then 

 

13 Daryl Conner, methodologies developed by ODR, Inc and Conner Partners, Atlanta, GA 
161 

mentally moving to the next challenge. But only the top leader of a particular change project 

can truly guide a major change to successful implementation. While that does not mean dayto-day hands-on activity, it does mean they have to be available to periodically restate their 

dedication to the objectives. Finally, it means that they, not their agents, must be willing to 

reward those who are helping bring about the change and/or sanction negatively those who 

are still resisting after accommodation and reframing efforts have been attempted. 

Until our personnel and the personnel of our implementing agents develop an appreciation 

of what has been proven about the leadership of change, many experts would argue there is 

little reason to increase funding for foreign assistance projects. Simply throwing more money 

at failed systems is not likely to produce better results. A fundamental shift in this critical 

field of knowledge by U.S. Government employees and our agents is necessary before we 

can expect to see improved results. 
162 
163 

Appendix 11: Additional Views by Commissioners 

Additional Views, in each case, have been submitted by the named Commissioners 

only, who wish to set forth their distinct personal views and recommendations on

matters covered in the report. 

Additional Views represent only the views of the authors. 

Revamping U.S. Foreign Assistance by HELP Commission

Vice Chairman Leo Hindery, Jr. and HELP Commissioners

Jeffrey D. Sachs and Gayle E. Smith

It was always our hope and intention to sign the final HELP Commission Report without expressing 

differences. However, while we agree with certain of that Report’s comments and recommendations, we feel 

compelled to submit as well our personal views and recommendations in a separate report. 

These additional views, therefore, reflect our overriding, primary conclusions 

regarding U.S. development assistance. 

We submit this report on “Revamping U.S. Foreign Assistance” because we believe that the opportunities for 

bolder U.S. assistance to eliminate dire poverty and improve U.S. national and global security are much 

greater — and more urgent — than the full Commission’s Report conveys. We also believe, notably, that the 

best way forward to seize these opportunities is through a new Cabinet-level Department for International 

Development. 

While the HELP Commission was created by Congress to reflect on how best to deploy the tools of 

development assistance, we believe that the full Commission’s Report does not sufficiently address this 

mandate. Nor does it, we feel, adequately make the case for foreign assistance, recommend sufficient funding 

for it, or sufficiently establish its stature and position within the United States Government. 

Accordingly, in our additional views we make nine recommendations related to the structure of U.S. 

development assistance, to its financing and modernization, and to its role as a core pillar of national security 

and American moral values. 

********************************************* 

Summary of Conclusions 

1) The U.S. should promote development assistance as a core pillar of national security 

and American moral values. 

2) The U.S. should follow through on its oft-repeated commitments to the Millennium 

Development Goals. 
164 

3) U.S. Foreign Assistance should harmonize U.S. foreign policy commitments in 

development (such as support for the MDGs and goals adopted at G8 Summits) 

with the actual budgets and programs of U.S. development assistance. 

4) U.S. political leaders should explain to the American people the international 

development objectives and commitments that have been made by the United States. 

5) U.S. political leaders should explain to the American people the modest levels of U.S. 

development aid in comparison with spending on other pillars of U.S. security 

(notably Defense), with U.S. commitments, and with the spending of partner 

countries. 

6) The U.S., in line with its own commitments and the actions of its development 

partners, should make concrete efforts to the target of 0.7 percent of GNP, and 

should aim to achieve that target by 2015. 

7) The U.S. should support multilateral objectives and funding mechanisms in health, 

agriculture, infrastructure, education, and community development, balancing aid 

roughly half and half in bilateral and multilateral initiatives. 

8) The U.S. should establish a new separate Cabinet-level Department of International 

Sustainable Development. 

9) The U.S. should use the full range of development instruments, including 

development assistance, trade opening (such as AGOA and a successful Doha 

Round), aid for trade, and partnerships with civil society. 

********************************************* 

Foreign Assistance and U.S. Security 

The 2006 National Security Strategy of the United States explains the rationale of 

development assistance. “America’s national interests and moral values drive us in the same 

direction: to assist the world’s poorest citizens and least developed nations and help integrate 

them into the global economy . . . Development reinforces diplomacy and defense, reducing 

long-term threats to our national security by helping to build stable, prosperous, and 

peaceful societies.”14 In the context of national security, we should view development as one 

of the three main pillars, along side diplomacy and defense. 

This rationale has been recognized in U.S. foreign policy doctrine for sixty years. The 

Marshall Plan effort to rebuild Europe after World War II defined development assistance as 

a critical tool to support the building of stable, prosperous, and peaceful societies. As 

General George Marshall explained in 1947, in launching the Marshall Plan: 

 

14 The United States National Security Strategy 2006. pp. 32-33. Available online at: 

http://www.whitehouse.gov/nsc/nss/2006/index.html. 
165 

It is logical that the United States should do whatever it is able to do to assist in the 

return of normal economic health in the world, without which there can be no 

political stability and no assured peace. Our policy is directed not against any country 

or doctrine but against hunger, poverty, desperation and chaos. Its purpose should 

be the revival of a working economy in the world so as to permit the emergence of 

political and social conditions in which free institutions can exist. Such assistance, I 

am convinced, must not be on a piecemeal basis as various crises develop. Any 

assistance that this Government may render in the future should provide a cure 

rather than a mere palliative.15 

President John F. Kennedy made a similar pledge in his Inaugural Address in 1961: 

To those peoples in the huts and villages across the globe struggling to break the 

bonds of mass misery, we pledge our best efforts to help them help themselves, for 

whatever period is required—not because the Communists may be doing it, not 

because we seek their votes, but because it is right. If a free society cannot help the 

many who are poor, it cannot save the few who are rich.16

Similarly, in launching the new Millennium Challenge Account initiative on March 14, 2002, 

President George Bush said the following: 

This growing divide between wealth and poverty, between opportunity and misery, is 

both a challenge to our compassion and a source of instability. We must confront it. 

We must include every African, every Asian, every Latin American, every Muslim, in 

an expanding circle of development. The advance of development is a central 

commitment of American foreign policy. As a nation founded on the dignity and 

value of every life, America's heart breaks because of the suffering and senseless 

death we see in our world. We work for prosperity and opportunity because they're 

right. It's the right thing to do. We also work for prosperity and opportunity because 

they help defeat terror. Poverty doesn't cause terrorism. Being poor doesn't make 

you a murderer. Most of the plotters of September the 11th were raised in comfort. 

Yet persistent poverty and oppression can lead to hopelessness and despair. And 

when governments fail to meet the most basic needs of their people, these failed 

states can become havens for terror.17 

These observations, stretching over six decades, find ample support in the scientific 

literature and historical data. Poverty is a key factor in global instability. Poor countries are 

vastly more likely to fall into civil violence, state failure, and international conflict, than are 

richer states. This finding is thoroughly documented, among other places in the reports of 

the CIA Task Force on State Failure. And as President Bush rightly noted, the link of 

poverty and terror rests not with the individual terrorist, but with the fact that failed states 

become havens for terror, as has occurred in Afghanistan, Somalia, and many other 

countries. 

 

15 General George Marshall, Speech at Harvard University, June 5, 1947 16 John F. Kennedy, Inaugural Address, January 20, 1961. 17 George W. Bush, Remarks on Global Development, Inter-American Development Bank, March 14, 2002. 
166 

The data have recently been summarized in a highly commendable collection of essays, Too 

Poor for Peace?, published by the Brookings Institution (2007). The editors of that volume, 

Dr. Lael Brainerd and Dr. Derek Chollet, summarize the findings as follows: 

In a world where boundaries and borders have blurred, and where seemingly distant 

threats can metastasize into immediate problems, the fight against global poverty has 

become a fight of necessity — not simply because personal morality demands it, but 

because global security does as well. Extreme poverty exhausts governing institutions, 

depletes resources, weakens leaders, and crushes hopes — fueling a volatile mix of 

desperation and instability. Poor, fragile states can explode into violence or implode 

into collapse, imperiling their citizens, regional neighbors, and the wider world as 

livelihoods are crushed, investors flee, and ungoverned territories become a spawning 

ground for global threats like terrorism, trafficking, environmental devastation, and 

disease.18 

One of the scientific teams in the volume, led by Prof. Ted Miguel of the University of 

California, reached the following conclusion: “The most obvious reading of these findings is 

that economic factors [poverty and low economic growth] trump all others in causing 

African civil conflicts, and that institutional and political characteristics have much less of an 

impact.”19 

Recently, Dean Kenneth E. Warner of the University of Michigan School of Public Health 

eloquently pointed to another dimension linking development aid and security: 

We live in an era in which our country employs military might in a thus-far strikingly 

unsuccessful effort to encourage the emergence of democracies around the world. 

Might we not win far more hearts and minds, and promote democracy far more 

effectively, by demonstrating that the richest nation is also the most compassionate 

and generous, that we care about the welfare of our neighbors?20 

 

Overall progress in economic development 

In the broadest terms, the efforts to promote economic development around the world 

during the past fifty years have been highly successful, with the notable exception of large 

parts of sub-Saharan Africa which remain trapped in extreme poverty. The biggest 

development successes have come in Asia, a vast region with more than half of the world’s 

population. Economic growth in China, India, Korea, and many other countries, and public 

investments in health, education, and infrastructure, have powered the most rapid 

improvement in living standards in world history. Aid has played an enormous role in those 

gains. The fact that Asia can feed itself is due in no small part to the Green Revolution 

which began in the 1960s, heavily supported by the U.S. public and philanthropic sectors. 

 

18 Lael Brainard, and Derek Chollet, eds. Too Poor for Peace? Global Poverty, Conflict, and Security in the 21st Century. 

Washington, D.C.: Brookings Institution Press, 2007, p. 1. 19 Edward Miguel, “Poverty and Violence,” in Lael Brainrard and Derek Chollet, eds., Too Poor for Peace? 

Global Poverty, Conflict and Security in the 21st Century . Washington, D.C.: Brookings Institute Press, 2007, 

p. 55. 

20 Kenneth E. Warner, Findings, University of Michigan School of Public Health, Fall/Winter 2006. 
167 

The fact that disease burdens have come down sharply is due in important part to global aid 

successes such as smallpox eradication, widespread immunization coverage, malaria control 

(outside of Africa), and the uptake of oral re-hydration to fight death from diarrhea. The fact 

that population growth has slowed markedly is a success of aid-supported family planning 

efforts which the U.S. helped to initiate since the 1960s. The fact that countries like Korea, 

Malaysia, and Thailand became manufacturing successes results from U.S. and Japanese aid 

for core infrastructure and technological upgrading. 

These successes, while most dramatic in Asia, are also part of the recent history of Latin 

America, the Middle East and North Africa (MENA). Life expectancy and literacy are on the 

rise. Child mortality rates have declined. Fertility rates, which determine overall population 

growth rates, have declined markedly. Americans can take great pride in their contribution 

to many of these successes. 

The fact is that globalization, supported judiciously by international development assistance, 

is an overall success. There is progress in reducing extreme poverty, mortality rates, and 

hunger, in most of the world. The biggest challenges are now concentrated in a much 

smaller part of the world, with the epicenter of the world’s development challenge in subSaharan Africa and selected parts of Central Asia and Latin America. It is not an accident 

that development is coming last to these remaining regions, since they face the toughest 

problems in the world: high disease burdens, poor infrastructure, landlocked regions far 

from trade, and vulnerability to droughts and other hazards. Fortunately, these problems are 

susceptible of solutions, given the wind in the sails of the global economy and given the 

power of modern technologies to address the challenges of disease, food production, and 

economic isolation. 

 

Development Assistance as a Tool in Promoting Economic Development 

There is now sixty years of experience in deploying development assistance as a tool in 

promoting economic development in low-income settings. Development aid has long been 

a mix of public and private contributions. When aid is from the public sector, it is known as 

Official Development Assistance (ODA). Both ODA and private assistance have played an 

important and successful role in development. Many of the greatest successes in 

development assistance in the past 6 decades have come through Public-Private Partnerships 

(PPPs), which typically link ODA with private-sector and philanthropic leadership of various 

kinds. The Green Revolution in India was spurred by such a partnership. Of course, aid has 

worked in conjunction with market forces, and most importantly international trade and 

investment, which have spread the benefits of advanced technologies to all corners of the 

world. 

The special role for ODA has been extremely well described in the Monterrey Consensus, a 

2002 agreement among the world’s nations which the U.S. strongly supports and repeatedly 

backs. President Bush, indeed, made the following pledge: “Together we will implement the 

Monterrey Consensus, lift all our nations, and show the world that free societies and free 

markets can deliver real benefits to our citizens.”21 

 

21 George W. Bush, Remarks at Inauguration Ceremony of the Special Summit of the Americas, January 12, 

2004. 
168 

The Monterrey Consensus is notable in recognizing the inter-connections among private 

capital flows, international trade, and ODA. All are vital to economic development of the 

poor countries. Rather than pitting trade versus aid, the Monterrey Consensus explains why 

trade and aid are both vital and complementary, and indeed why aid is vital to supporting 

trade competitiveness of the poorest countries. The Monterrey Consensus therefore 

contributed to the new concept of “aid for trade,” in which ODA is used to help poor 

countries to improve their international trade, mainly by building the infrastructure (roads, 

ports, power) needed to support trade. 

Here is how the Monterrey Consensus described the critical role of ODA: 

Official development assistance (ODA) plays an essential role as a complement to 

other sources of financing for development, especially in those countries with the 

least capacity to attract private direct investment. ODA can help a country to reach 

adequate levels of domestic resource mobilization over an appropriate time horizon, 

while human capital, productive and export capacities are enhanced. ODA can be 

critical for improving the environment for private sector activity and can thus pave 

the way for robust growth. ODA is also a crucial instrument for supporting 

education, health, public infrastructure development, agriculture and rural 

development, and to enhance food security. For many countries in Africa, least 

developed countries, small island developing States, and landlocked developing 

countries, ODA is still the largest source of external financing and is critical to the 

achievement of the development goals of the Millennium Declaration and other 

internationally agreed development targets.22 

The Monterrey Consensus also rightly stressed the interconnections of good governance 

within the poor countries and increased official development assistance from the highincome countries. As President Bush described it at the 2005 World Summit, the Monterrey 

Consensus reflects a compact between rich and poor countries, linking good governance and 

official development assistance: 

We have a moral obligation to help others — and a moral duty to make sure that our 

actions are effective. At Monterrey in 2002, we agreed to a new vision for the way 

we fight poverty, and curb corruption, and provide aid in the new millennium. 

Developing countries agreed to take responsibility for their own economic progress 

through good governance and sound policies and the rule of law. Developed 

countries agreed to support those efforts, including increased aid to countries that 

undertake necessary reforms. . . More needs to be done. I call on all the world’s 

nations to implement the Monterrey Consensus.23 

 

22 The Monterrey Consensus of the International Conference on Financing for Development. Available Online 

at: http://www.un.org/esa/sustdev/documents/Monterrey_Consensus.htm. 23 George W. Bush, Addresses United Nations High-Level Plenary Meeting, United Nations Headquarters, 

September 14, 2005. 
169 

U.S. Commitments to Economic Development and Poverty Reduction 

The United States has long recognized that it can not and should not carry the development 

financing burden on its own. Support for economic development in the poorest countries 

must be a shared global effort, based on agreed targets. The United States must contribute 

its share but must be able to rely on other development partners as well. Indeed, the U.S. 

national interest is best served when U.S. funding helps to leverage financing from others in 

pursuit of common goals. Other countries view the situation in the same light. 

For these reasons, the U.S. and partner countries have agreed on shared global goals for 

several decades. Great successes have been achieved in disease control, increased food 

production, the spread of literacy and numeracy, increased school enrolments, improved 

infrastructure, and many other core development objectives. By far the most important of 

these today are the Millennium Development Goals (Table 1), adopted by all nations in the 

Millennium Declaration of the year 2000 and re-confirmed regularly since then, including at 

the G8 Summits. President Bush conveyed the U.S. commitment to the Millennium 

Development Goals directly to more than 100 world leaders on the occasion of the 2005 

World Summit: 

To spread a vision of hope, the United States is determined to help nations that are 

struggling with poverty. We are committed to the Millennium Development Goals. 

This is an ambitious agenda that includes cutting poverty and hunger in half, 

ensuring that every boy and girl in the world has access to primary education, and 

halting the spread of AIDS — all by 2015.24 

The Millennium Development Goals (MDGs) are a very important instrument for effective 

U.S. development assistance for several reasons: 

• The world has agreed to the goals and reconfirmed that support each year since 2000 

• The world has agreed to a trade and financing framework in the Monterrey 

Consensus 

• The MDGs address extreme poverty in all its interconnected dimensions: income, 

hunger, disease, deprivation 

• The MDGs promote long-term economic growth and wealth creation by 

encouraging countries to focus on productive investments to end the poverty trap 

• The MDGs are ambitious and yet achievable 

• The MDGs are quantitative and time bound, therefore offering objective indicators 

of success and accountability 

In addition to the Millennium Development Goals, the U.S. has joined the other G8 nations 

in committing to other bold and achievable development targets, often under the overall 

umbrella of the MDGs. Other development goals reiterated at the G8 2005 Summit in 

Gleneagles, Scotland, and the 2007 Summit in Hieligendamm, Germany include: 

 

24 George W. Bush, Addresses United Nations High-Level Plenary Meeting, United Nations Headquarters, 

September 14, 2005. 
170 

• Universal access to HIV prevention, treatment, and care, including anti-retroviral 

medicines for all who need them, by the year 2010 

• Eradication of polio 

• Strengthening health systems so that health care, especially primary health care, can 

be provided on a sustainable and equitable basis 

• Reduction of malaria mortality by at least 50 percent and at least 85 percent coverage 

of the most vulnerable groups with effective prevention and treatment measures 

• Universal access to free and compulsory primary education of good quality by 2015 

in Africa 

• Universal access of children to basic health care (free wherever countries choose to 

provide this) 

• Global TB control in line with the needs identified by the Stop TB Partnership 

• Aid for trade, including physical, human, and institutional capacity building 

It is occasionally said that objectives such as the MDGs or disease control are distinct from 

objectives to promote wealth creation and economic growth. We emphasize here that this is 

not the case. Achieving the MDGs and achieving long-term economic growth require the 

same policy focus, including increased investments in the core infrastructure (roads, power, 

and connectivity), health and skills of the labor force, and improvements in the business 

environment (transparency, macroeconomic stability, ease of doing business, and a vibrant 

financial sector). The fight against extreme poverty and the challenge of long-term 

economic growth and wealth creation go hand in hand. 

Current Levels of U.S. Official Development Assistance 

Though development, defense, and diplomacy are the three pillars of U.S. national security, 

the current investments in national security are almost entirely in the direction of defense 

spending. Today’s under-investment in development is palpable and dangerous. The need 

for increased development aid has been acknowledged repeatedly by the U.S. Government 

in recent years, though not yet acted upon satisfactorily by the Administration and Congress. 

While there a many ways to calculate the precise budgetary outlays in regard to defense, 

diplomacy, and development, a straightforward approach is as follows. Defense spending 

embraces military outlays (Department of Defense), homeland security outlays (Department 

of Homeland Security), and selected outlays of the State Department (military outlays). 

Diplomacy includes outlays for diplomacy of the Department of State other than those 

classified as Official Development Assistance and military support. Development outlays 

include all spending that is classified as ODA by the agreed standards of the Development 

Assistance Committee (DAC) of the Organization for Economic Cooperation and 

Development (OECD). 

Figure 1 shows the lop-sided nature of U.S. security policy. One pillar of the three, defense, 

receives 95 percent of the total outlays in FY07. Diplomacy is funded at 1.5 percent of total 

outlays and development is funded at just 3.5 percent of total outlays. In dollar terms, the 

defense spending was $611 billion in 2007 (comprised of $549 billion by the DOD and $50 
171 

billion by DHS, plus other small amounts). Diplomacy may be estimated at around $9 

billion. Development assistance may be estimated at $22.7 billion. 

The relatively low level of development spending is an enormous surprise to most 

Americans. Repeated survey data have shown that Americans overestimate the level of 

official development assistance by a factor of roughly 30 to 50 times. On average, Americans 

estimate in surveys that the United States Government spends one quarter of the budget on 

foreign aid and roughly 5 percent of U.S. national income. The actual fact is that official 

development assistance constituted 0.8% of the Federal Budget in FY 2006, and just 0.17% 

of national income. 

The allocation of official development assistance is equally important. U.S. aid is divided 

between “bilateral” aid, given by the U.S. Government directly to other countries, and 

multilateral aid, given from the U.S. Government to international organizations such as the 

World Bank, the African Development Bank, and the Global Fund to Fight AIDS, TB, and 

Malaria. Most of the bilateral aid falls within the USAID budget, which came to $9.2 billion 

in the FY06 budget. Roughly 82 percent of U.S. aid goes through bilateral channels, while 

the balance of 18 percent goes through multilateral institutions. 

The bilateral aid may be categorized by function or by region. USAID makes a five-way 

classification of bilateral aid,25 with the approximate budget shares shown for each category 

shown:26

Strategic States 33% 

Humanitarian Assistance 19% 

Reduce Fragility 8% 

Global Issue 18% 

Transformational Development 24% 

Support for “strategic states” is mainly support for U.S. allies in the “global war on terror” 

and/or countries in the Middle East. The Economic Support Fund (ESF) is the largest 

source of outlays for the strategic states. As described by USAID, “[t]he Economic Support 

Fund (ESF) supports U. S. foreign policy objectives by providing economic assistance to 

allies and countries in transition to democracy, supporting Middle East Peace negotiations, 

and financing economic stabilization programs.”27 The lion’s share of these funds ($3.2 

billion in FY07) goes to the Middle East ($1.6 billion), Pakistan ($350 million), and 

Afghanistan ($610 million). Emergency appropriations for Iraq and Afghanistan (as part of 

the Emergency Funding for the Global War on Terror) were an additional $5.6 billion. 

Humanitarian assistance is for immediate needs in the wake of natural disasters, conflicts, 

and violence. Global issues include HIV/AIDS. The support for HIV/AIDS comes mainly 

in the Emergency Plan for AIDS Relief (PEPFAR), which totaled around $2.6 billion in 

 

25 United States Agency for International Development (USAID), Policy Framework for Bilateral Foreign Aid, 

January 2006. 

26 Summing to more than 100% due to rounding error 

27 United States Agency for International Development (USAID), Budget Justification to Congress, 2007. 

Available online at: http://www.usaid.gov/policy/budget/cbj2007/ . 
172 

FY07. Aid for “fragile states” is support for stabilization, security, and reform in countries 

with weak governance and instability. 

“Transformational development” is the assistance category directed at long-term poverty 

reduction and some aspects of disease control. Distressingly, it amounts to only around 

one-quarter of the overall bilateral aid, meaning that the vast bulk of aid is for emergencies 

and U.S. political aims, rather than for the objectives that are most effectively served by 

official development assistance: long-term economic development. Transformational 

development includes: Child Survival and Health ($1.5 billion), Development Assistance 

($1.5 billion), the Millennium Challenge Corporation ($1.1 billion), and the Peace Corp ($300 

million). The sum of these long-term development programs was $4.4 billion in FY07. 

Since sub-Saharan Africa is the epicenter of the world’s economic development challenge, 

and faces the biggest challenge of all regions to meet the Millennium Development Goals, it 

is important to understand the U.S. budgetary outlays for long-term development in subSaharan Africa. Official Development Assistance for Africa in FY06 came to around $3 

billion, with the categories shown in Table 2. Let us put this $3 billion in perspective: There 

are approximately 800 million people in sub-Saharan Africa, and therefore U.S. bilateral aid to 

Africa totals approximately $4 per African per year. 

A historical perspective on U.S. ODA 

One of the reasons that Americans grossly overestimate the levels of U.S. ODA is that ODA 

as a share of U.S. national income has declined markedly over the past half century. At the 

time of the Marshall Plan, U.S. ODA exceeded 1 percent of U.S. GNP. By the early 1960s, 

ODA had declined to around 0.5 percent of GNP. It continued to decline through the 

1990s, reaching a nadir of just 0.1 percent of GNP by the year 1999. It has subsequently 

increased slightly to around 0.17 percent of GNP in 2006, less than one-fifth of one percent 

of national income. (Figure 2) 

Americans also tend to misunderstand how development aid has been allocated across 

different regions of the world. Consider again the level of aid given to Africa over the past 

50 years. It is widely assumed by the public that the U.S. has given vast quantities of 

assistance to Africa for half a century yet with poor results. This has contributed to a 

pervasive skepticism about aid, on the ostensible grounds that aid has failed to deliver 

development results. In fact, aid to all of sub-Saharan Africa during 1961 to 2005 (in 

constant $2005 dollars) has totaled a mere $72.8 billion, about half of what we will spend in 

the Iraq and Afghanistan War this year alone. One third of the total, $24.4 billion, was in the 

form of food aid, which is not long-term development assistance. Total aid minus the cost 

of food aid was $48.4 billion, for a region that averaged 450 million inhabitants during this 

time period. This comes to an average of $2.50 per African per year, as shown in Figure 3. 

By contrast, aid has been large to the Middle East. During 1961-2005, economic assistance 

to the Middle East and North Africa totaled $147 billion. Most of this went to Israel, Egypt, 

Jordan, and Palestine, which received $92 billion in aid (minus food aid), almost twice the 

amount to all of sub-Saharan Africa. The cumulative aid to Israel, net of food aid, equaled 

$48 billion, the very same as aid to all of sub-Saharan Africa. Since Israel’s population is 
173 

around one-hundredth of Africa’s, the per capita aid was roughly one hundred times that of 

Africa, averaging $242 per person per year. 

The regional breakdown of all aid during 1961-2005 is shown in Figure 4. Of the $548 

billion that can be allocated to specific regions (i.e. excluding multilateral aid, administrative 

costs of USAID, and other aid not allocated by region), Asia received the largest total, at 

$172 billion. The Middle East and North Africa was second, at $147 billion. Latin America 

was third, at $96 billion. Africa was fourth, at $72 billion. Europe (East and West) and 

Eurasia (the former Soviet Union), came fifth, at $61 billion. 

Total economic assistance pales in comparison with the spending on the military. Total U.S. 

economic assistance, including food aid, during 1961 to 2005 to all countries totaled $755 

billion (in constant 2005 dollars). During that same period, total spending by the 

Department of Defense came to $17 trillion (in constant 2005 dollars). 

A comparative perspective on U.S. ODA 

The U.S. is the largest aid donor, as shown in Figure 5(a), but this is hardly surprising since 

the U.S. is also by far the most populous donor country, with a 2006 population of 299 

million, compared with 128 million in Japan, 83 million in Germany, 60 in the United 

Kingdom, 63 in France, 9 in Sweden, and 5 in Norway. In per capita terms, Norwegians 

average $629 per person in aid, while Americans average $76 per person. In terms of ODA 

as a share of GNP, the U.S. is second to last, just ahead of Greece, as shown in Figure 5(b). 

For purposes of global burden sharing, ODA is assessed as a share of each donor’s GNP. 

Since 1970, most donor countries have pledged to achieve the target of 0.7 percent of GNP 

as ODA, and reiterated that pledge many times. Only five countries — Denmark, 

Luxembourg, Netherlands, Norway and Sweden — have consistently achieved or exceeded 

that goal. All of the other 17 donors in the Development Assistance Committee of the 

OECD have fallen short despite their adoption of the target. The United States signed up to 

the target in the Monterrey Consensus in 2002, when it joined the rest of the world in the 

following pledge: 

[W]e urge developed countries that have not done so to make concrete efforts 

towards the target of 0.7 percent of Gross National Product (GNP) as official 

development assistance (ODA) to developing countries . . . 28

Following the Monterrey Conference, most donor countries set a specific timetable to 

achieve the 0.7 percent target. Donors in the (pre-enlargement) European Union agreed to 

achieve at least 0.51 percent of GNP as ODA by 2010 and 0.7 percent of GNP as ODA by 

2015. The United States, despite its strong and repeated support for the Monterrey 

Consensus, has not yet made concrete efforts to achieve the target of 0.7 percent of GNP. 

 

28 The Monterrey Consensus of the International Conference on Financing for Development. Available Online 

at: http://www.un.org/esa/sustdev/documents/Monterrey_Consensus.htm. 
174 

Private Development Assistance 

The choice of 0.7 percent as the target for ODA has an explanation which remains very 

relevant today. During the 1960s, the idea took hold in various forums that the rich 

countries should support the poor countries with an annual transfer of 1 percent of national 

income. This in turn was to be divided between ODA, targeted at 0.7 percent, and aid from 

private donors, targeted at 0.3 percent. The 0.7 target was supported by the Pearson 

Commission (led by Nobel Laureate and Canadian Prime Minister Lester Pearson), and 

subsequently adopted by the General Assembly the following year. 

While a few donor governments have achieved the 0.7 target, no donor country’s private 

sector has come close to achieving the 0.3 percent of GNP target for private development 

assistance. Many Americans believe that the low level of U.S. ODA is offset by a uniquely 

high level of U.S. private aid as a share of GNP. This is, alas, not the case. The OECD 

DAC measures the magnitude of development assistance by non-governmental 

organizations (NGOs). While the data are incomplete and imperfect, the overall message is 

unequivocal. As shown in Table 3, for an average of 2004-5, NGO giving is less than 0.1 

percent of GNP in all donor countries. U.S. NGO giving is on the high end, at an estimated 

0.06 percent of GNP ($8.4 billion in 2005). Nonetheless, U.S. total giving as a share of 

GNP, summing the public and private aid, remains near the bottom of the donor rankings, 

with a combined share of around 0.26 percent of GNP in 2004-5 (0.20 official plus 0.06 

private).29 

Other resource flows to developing countries 

Development flows, both official and private, are certainly not the only sources of financial 

capital to developing countries. Private capital flows in search of profits — both portfolio 

investment and foreign direct investment (to achieve a controlling interest abroad) — are 

important for global development, and provide critical benefits both for the United States 

and recipient countries. It is often said that development assistance is passé since private 

flows now swamp official flows. This fact does not make ODA obsolete. The private 

capital flows are heavily concentrated in middle-income countries and in low-income 

countries with high-value natural resources such as hydrocarbons, minerals, or precious 

metals. Private capital flows bypass the world’s poorest countries, since those countries lack 

 

29 The Hudson Institute identifies much larger estimates of private giving in its Index of Global Philanthropy, 

specifically around $30 billion per year, broken down as follows: Private Voluntary Organizations (PVOs), 

$13.4 billion; faith-based groups, $5.4 billion; universities and colleges, $4.6 billion, U.S. foundations, $2.2 

billion, and American corporations, $5.1 billion. However, there is strong reason to believe that these estimates 

do not reflect true development assistance. With regard to the PVO estimate, for example, while it attempts to 

cover international projects, it does not distinguish between development-oriented activities and other 

activities. In turn, the estimate of development aid from faith-based groups is without explanation of the 

development activities covered or of the services delivered by religious groups. The estimate for university 

giving is based on purported values of scholarships to foreign students in the U.S. from developing countries 

regardless of country of origin or personal means – yet notably, only 6 percent of the students are from the 

poorest continent, Africa. Finally, the estimate of corporate giving is dominated by a non-credible estimate of 

$4.2 billion of in-kind donations by U.S. pharmaceutical companies, with no verification that the stated values 

of the donated products are not simply the patent-protected market prices in the U.S., even though, through 

generics producers, they may be available to recipient countries at a small fraction of the patent prices. 
175 

the basic infrastructure of roads, power, ports, clinics, and schools, needed to attract private 

investments in the first place. As the Monterrey Consensus spelled out, ODA is vital for 

those countries, not only to save lives and keep children in school, but also to prepare the 

groundwork for future private capital flows. In this sense, ODA is complementary to 

private flows, and must generally precede private flows into impoverished regions. 

Similar points can be made about trade. An open trading system is essential for economic 

development, including among the poorest countries. Developing countries need to import 

technology from abroad, and must pay for that technology through their own exports. For 

this basic reason, export-led growth has been vital for economic success in recent decades. 

To achieve export-led growth, poor countries need to maintain relatively open trading 

systems (with low to moderate tariffs, and convertible currencies), and rich countries 

including the U.S. have to keep their own borders open the exports of the poor countries. 

However, trade reforms can not substitute for official development aid. A recent World 

Bank paper (2006) calculated the potential gains of a successful Doha Round for several 

regions of the world.30 Of an estimated total worldwide gain of $119.3 billion per year in a 

successful (and ambitious) Doha scenario, the regional breakdown of benefits is as follows ($ 

billion): 

High-income countries $96.4 

Developing countries (total) $22.9 

 with East Asia $5.5 

 South Asia $4.2 

 Latin America $9.2 

 Sub-Saharan Africa $1.2 

 Other $1.8 

The gains to the poorest regions, and notably to Africa, are very small. The biggest gains are 

achieved by the biggest traders: the developed countries and the middle-income developing 

countries. The barriers faced by Africa in achieving increased exports lie mainly in the lack of 

their own competitiveness, rather than in the barriers in the rich-country markets. African 

exports are limited to a few commodities (such as hydrocarbons, diamonds, copper, iron ore, 

cotton, coffee, tea, and cocoa) mainly because these countries are not competitive in 

manufactures. The lack of manufacturing competitiveness relates mostly to poor 

infrastructure (especially roads, power, and ports) and the lack of requisite skills, areas that 

can be rectified through ODA. This basic fact justifies the concept of “aid for trade,” in 

which ODA to finance export-promoting infrastructure serves as a springboard for 

improved long-term export competitiveness. 

A final category of financial flows from the U.S. to the developing countries is remittances. 

Remittances are not aid since they represent the hard-won earnings of typically poor 

migrants working in the United States, Europe, and the Middle East. Yet they can boost 

source-country incomes and wellbeing. The largest proportion of remittances from the U.S. 

 

30 Kym Anderson et al., “Doha Merchandise Trade Reform: What’s At Stake for Developing Countries,” 

World Bank Policy Research Working Paper 3848, February 2006. 
176 

goes to the Caribbean and Central America. The African share of remittances is small. 

Worldwide, remittances to Africa are a meager 4 percent of the total, around $6 billion in 

2005, and half of that total is accounted for by South Africa, Lesotho (remittances from 

South Africa), and Nigeria.31 Remittances are no substitute for development assistance to 

the poorest countries. 

Public support — and confusion — regarding development assistance 

The American people are understandably confused about foreign assistance, since they hear 

so little about it from the President and Congress. Americans broadly support effective and 

large-scale development assistance, yet they also grossly overestimate the actual amount of 

aid given by the U.S. overall, and to Africa specifically. Since they overestimate the aid, they 

also assume that much of the (non-existent) aid is being stolen. Americans also fail to realize 

that most of what is now called “aid” is actually support for geopolitical objectives in the 

Middle East rather than aid directed at the poorest countries for development purposes. 

The Program on International Policy Attitudes (PIPA) at the University of Maryland has 

been tracking public opinion on development assistance for many years.32 Americans 

consistently perceive that foreign assistance spending is around 20 percent of the Federal 

Budget, when it is in fact around 1 percent! They would actually like it to be 10 percent of 

the budget. We are thus in the paradoxical situation where the public would like to “cut” aid 

from an imagined 20 percent of the budget to “only” 10 percent, a level that would in fact 

constitute a tenfold increase over the actual level of aid. Interestingly, Americans strongly 

support aid to cut hunger and poverty, and accord that kind of aid much more support than 

aid to “countries important to U.S. Security.” 

What works and what doesn’t work with ODA 

The discussion on aid effectiveness is clouded by confusions, prejudices, and simple 

misunderstandings. Many studies try to find a correlation between overall aid and economic 

growth, and when they find little positive correlation, they declare aid to be a failure. Yet the 

low correlation does not prove that aid is failing, since much of the aid is directed to 

countries in violence, famine, or deep economic crisis. It is not a surprise, therefore, that aid 

is often correlated with “economic failure,” not because aid has caused the failure but rather 

because aid has responded to it. 

We need a much more sophisticated approach than the standard simple correlations to judge 

the effectiveness of aid. We need to assess the goals of specific aid programs and whether 

those goals are fulfilled. Did the food aid stop starvation? Did immunizations save lives or 

eradicate diseases? Did infrastructure spending on roads and ports help to generate new 

employment in new industries? Did aid for schooling raise enrolments, completion rates, 

and literacy? Did farm aid increase the productivity of farms? When examined in detail, a 

 

31 Sanjeev Gupta et al., “Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa,” 

IMF Working Paper WP/07/38, February 2007 

32 PIPA, “Americans on Foreign Aid and World Hunger,” February 2, 2001, and PIPA, “New Poll Shows 

American Public Supports Stronger Engagement with Africa,” January 2003. Both available online at: 

http://www.worldpublicopinion.org/pipa. 
177 

large number of aid programs have been extraordinarily successful, and for reasons that can 

be understood and then replicated. 

Another massive confusion in the public debate is the sense that vast amounts have been 

spent and that no development has resulted. We have seen that this view is doubly 

incorrect. On the one hand, aid has not been vast, at least in comparison with national 

incomes, the population of recipient countries, and spending on other areas of concern (e.g., 

defense). This is especially the case regarding Africa, a region that is regularly maligned for 

alleged mismanagement of aid yet regularly neglected in actual aid flows. On the other hand, 

there has been vast development success internationally, with stunning increases in average 

incomes, life expectancy, child survival, literacy, school completion rates, and other gains, in 

most parts of the world. 

Yet another confusion results from the fact that we regularly overload our development 

assistance to try to accomplish too many things, especially things not well suited for 

development aid. It is notable, for example, that one-third of US development aid is 

currently directed to “strategic nations,” especially in the Middle East, rather than to the 

world’s poorest nations which need help to escape from poverty. We use our aid to buy 

allies, directly or indirectly finance the war on terror (e.g. by freeing-up budgets of allies so 

that they can increase their military outlays), create peace between Israel and Palestine, fight 

drug trafficking in the Andes and Afghanistan, and more. In the 1960s through 1980s, we 

wanted aid to help finance the Cold War, and often gave vast sums to thugs and dictators 

such as Mobutu Sese Seko of Zaire, for this ostensible aim. 

When we look at success stories of official development assistance, however, we find that 

aid is most successful when it is indeed used for development assistance. In other words, 

the tool of official development assistance truly is a development tool. It can help with politics, 

good will towards the U.S., and even democratization in the recipient countries, but only 

indirectly, by enabling poor countries to escape from extreme poverty and therefore to 

escape from the chronic instabilities that accompany extreme poverty. 

Here are several great success stories of development assistance. 

The Asian Green Revolution. During the 1950s and 1960s, the Rockefeller Foundation and 

then other donors spurred the development of high-yield seed varieties and new techniques 

for modernized farming. USAID helped to finance the rapid uptake of these new 

technologies, including the seeds, fertilizer, and irrigation. Dramatic successes were achieved 

in the 1960s in India and Pakistan, and later in China, Southeast Asia, and other parts of the 

developing world. 

Smallpox eradication. In 1967, the World Health Organization (WHO) established the 

Smallpox Eradication Unit, and launched a donor-supported worldwide campaign to 

eradicate the disease. By 1980, WHO declared the world free of smallpox. 

Family Planning. During the 1960s, the U.S. Government and foundations launched a 

global effort to spread access to modern contraception, based on individual voluntary 

choices. The uptake of these contraceptive methods, supported by international and U.S. 

funding, has been widespread (though still largely bypassing sub-Saharan Africa). As a result 
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of these actions, together with declining child mortality rates, spreading literacy, and broader 

economic trends, fertility rates and population growth rates have declined sharply 

throughout most of the developing world. 

Campaign for Child Survival. In 1982, UNICEF launched a campaign for child survival, 

based on the powerful combination known as GOBI: growth monitoring of children, oral 

re-hydration therapy, breastfeeding for nutrition and immunity to infectious diseases, and 

immunizations against childhood killers. Backed by development assistance, the package 

enjoyed a remarkably rapid uptake, enabling many of the poorest countries to reach at least 

80 percent immunization coverage. 

The Global Fund to Fight AIDS, TB, and Malaria. After years of international neglect and 

under-financing, international donors agreed to step up their actions to fight three killer 

pandemic diseases: AIDS, TB, and malaria. At the urging of then-UN Secretary General 

Kofi Annan, they formed a new global fund, to pool their resources and invite countries to 

formulate national strategies that would be backed by development aid. In a short period of 

five years, the Global Fund has successfully financed the access of more than 1 million HIVinfected individuals to antiretroviral medicines; the distribution of more than 30 million bed 

nets, mainly in Africa; and the treatment of more than 2 million individuals for TB. 

There are countless other development success that could be described at length. The 

malaria control programs pioneered in the 1950s and 1960s achieved sustained successes 

outside of Africa. Other infectious diseases, such as African River Blindness 

(onchocerciasis), leprosy, and schistosomiasis, have been brought partially under control. 

Polio is on the verge of eradication, through a public-private partnership of Rotary 

International, the WHO, and many bilateral and multilateral donors. Major improvements in 

nutrition have been achieved throughout the world through iodized salt and vitamin A 

supplementation, both of which have been supported by official development assistance. 

School attendance has soared in recent years as a result of donor programs, with remarkable 

successes for example in East Africa. Economic development has been spurred by the 

construction of industrial zones and supportive infrastructure (roads, ports, power, and rail), 

backed by official development assistance. Japan’s development aid, for example, was highly 

effective in helping countries in Southeast Asia to gain competitiveness in manufacturing 

exports. 

There are six crucial lessons in these development success stories: 

First, the interventions are based on a powerful, low-cost technology. The main underlying 

force of economic development is technological advance. It is not surprising, therefore, that 

successful development assistance typically involves the diffusion of a powerful technology, 

such as high-yield seeds, immunizations, modern contraception, or internet connectivity. 

Second, the interventions are relatively easy to deliver, based on an expert-systems and local 

ownership. Modern technologies are embodied in systems. Vaccinations, for example, are 

delivered on a specific timetable for young children. High-yielding seeds are deployed in 

specific packages of farm inputs (e.g., combinations of seed, fertilizer, irrigation, and 

agricultural extension). The key to success is to deploy the technology in a system that is 
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evidence based, scientifically sound, administratively feasible, and tailored to local 

conditions. 

Third, the interventions are applied at the scale needed to solve the underlying problem. 

The key to success of the earlier examples was not the demonstration of the underlying 

technology, but rather the deployment of the technology at a scale to make a difference. 

Typically, once the technology is known, and once the expert system has been identified, 

rapid scale up is possible, building on global strategies and local adaptation and support. 

Fourth, the interventions are reliably funded. All of the success stories involve budget 

outlays over a period of many years, so that participating countries can be confident of 

sustained financing, and therefore can build institutional systems and provide training and 

capacity building. 

Fifth, the interventions are multilateral, drawing support from many governments and 

international agencies. The greatest development challenges — extreme poverty, hunger, 

disease, lack of infrastructure — are beyond the financing capacity of any single donor 

country. Moreover, a unified effort is more efficient than a congeries of small and disparate 

projects, at least once the technologies and delivery mechanisms have been developed. 

Sixth, the interventions had specific inputs, goals, and strategies, so that success rates could 

be assessed. All of the success stories had clear strategies (e.g., coverage rates of 

immunizations, hectares planted with high-yield seeds, and timely isolation of smallpox 

outbreaks). They did not directly aim for excessively broad and overarching goals — such as 

“economic growth,” or “rule of law,” or “democracy” or “end of terror” — though broad 

goals such as these were among the indirect and long-term objectives that motivated the 

programs in the first place. The programs worked on much more specific objectives, which 

could be measured, audited, evaluated, and re-assessed as needed. 

These six specific points all come down to one overarching point: be practical when 

deploying development aid. Understand the targeted inputs, the outputs, the financing, and 

the objectives. 

Promoting Good Governance through Official Development Assistance 

Official development aid is not an effective instrument to overturn governments, end 

authoritarian regimes, or ensure strategic alliances. The amounts are too small to determine 

the internal politics of other countries, even if that were a desirable objective. Development 

aid is effective for one main purpose: development. For that reason, it is essential to direct 

aid efforts to development needs, with the long-term perspective that development 

assistance requires. Aid can not be ratcheted up and down in line with the latest election if 

aid is to be effective in promoting long-term development. Using aid to “buy friends” on a 

tactical basis has repeatedly proven to be a losing proposition. The aid is squandered while 

the “friends” come and go. Aid should focus on economic development to get the desired 

results. 

Still, aid can be a very powerful tool for improving governance by applying high 
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performance standards to the use of aid itself. Aid-supported programs should be 

transparent, accountable, and subject to audits, monitoring, and independent evaluation. 

Aid-supported programs should have clear deliverables so that the local population can hold 

their government accountable for delivery. The diversion of aid funds for corrupt purposes 

should not be tolerated. 

In the long term, U.S. official development assistance will strongly promote democracy by 

raising living standards in targeted countries. One of the world’s most powerful patterns is 

that rising literacy, health, and incomes lead to strong demands for democracy from within a 

society. The most powerful and reliable way for outside governments to support the process 

of democratization, therefore, is to support long-term economic development, which lays 

the deep basis for long-term stable democratic rule. 

Modernizing U.S. Development Assistance in the 21st Century 

The U.S. development assistance effort must be updated to the conditions of the early years 

of the 21st century. This means that the development goals must be made clear and 

appropriate, the technologies must be identified, the systems for delivery must be assessed, 

and the multilateral financing must be assured. Our own governmental organization must be 

up to the task, both in assessing needs, working between the Executive and Legislative 

branches to ensure sustained programming, and working with other governments to 

coordinate global efforts. In this section we discuss the goals, technologies, delivery systems, 

financing, and re-organization of U.S. Governmental efforts. 

The Goals. The priorities for U.S. development assistance should be based mainly on the 

development commitments that the U.S. and the rest of the world have made in recent years, 

after considerable diplomatic and scientific discussions and negotiations. At the core of the 

effort should be the MDGs. These goals are already the central organizing tool for most 

development agencies and multilateral development institutions around the world. The 

MDGs have the profound advantage not only of specifying explicit and quantitative targets, 

but also of automatically aligning U.S. efforts with those of partner countries, thereby 

massively leveraging American resources and expertise. 

The focus of the development challenge is in those regions still trapped in extreme poverty, 

or those places suffering extremely high burdens of hunger, disease, or lack of infrastructure. 

This means that U.S. efforts should be mainly directed towards sub-Saharan Africa, Central 

Asia, the Andean region, Haiti, and the remaining pockets of extreme poverty in South Asia. 

Development aid for middle-income countries should be scaled back accordingly, since these 

regions can generally finance their own investment needs. 

The Technologies. For each of the Millennium Development Goals, there are a set of core 

interventions, based on proven low-cost technologies, which can spur rapid advances toward 

the Goals. The UN Millennium Project among other studies has identified the powerful 

tools at our disposal in each of the key areas. While much can be said about each area, the 

following highlights can be noted. 

Income poverty: microfinance, electricity generation (off-grid and on-grid), all-weather 

roads, access to cell phones and internet, improved population health (see below) 
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Hunger: improved food production through the extension of “Green Revolution” 

technologies (high-yield seeds, fertilizer, small-scale irrigation, agricultural extension 

services); micronutrient supplementation for Vitamin A, iodine, zinc, and iron; 

monitoring of low-weight children; school feeding programs, with take-home rations 

for pre-school-aged children 

Universal school completion: construction of schools, training of teachers, wireless 

internet connectivity for (solar-charged) computers at schools, separate hygienic 

facilities for girls and boys, mid-day feeding programs 

Gender equality: time-saving infrastructure for rural women (water, power, mills, and 

clinics, within reach of villages); micro-finance for women’s groups; improved 

inheritance and property rights 

Reduced maternal mortality: emergency obstetrical theatres in all sub-district hospitals; 

training of assistant medical officers (AMOs) to perform emergency procedures; use 

of wireless phone systems to create emergency-response units for ambulance services 

Reduced child mortality: integrated management of childhood illnesses (IMCI), including 

diarrhea, malaria, acute lower respiratory infection (ALRI), vaccine-preventable 

diseases, parasitic infections (worms), micronutrient deficiencies, and expert systems 

for neonatal care; increased use of community health workers, supported by mobile 

phone and internet connectivity 

Control of AIDS, TB, and Malaria: packages of preventative and curative health 

services, e.g., access to medicines and universal protection by insecticide-treated bed 

nets in the case of malaria 

Universal access to family planning and contraceptive services: logistics and supply chain 

management for contraceptive availability; community-worker outreach to ensure the 

access to family planning services and contraception on a voluntary basis 

Safe drinking water and sanitation: application of modern hydrological tools to identify 

sustainable water sources, based on seasonal and annual runoff, rainwater harvesting, 

sustainable use of groundwater, and improved year-round water storage; investments 

in sanitation systems, including septic tanks and recycling of human and animal 

wastes in rural areas, and piped wastewater treatment in urban areas. 

While there is much debate about “development assistance” in the abstract, there is a near 

consensus on the use of aid to expand the access of the poor to vital and proven 

technologies. Aid-skeptic William Easterly, for example, endorses this approach: “Put the 

focus back where it belongs: get the poorest people in the world such obvious goods as the 

vaccines, the antibiotics, the food supplements, the improved seeds, the fertilizer, the roads, 

the boreholes, the water pipes, the textbooks, and the nurses. This is not making the poor 
182 

dependent on handouts; it is giving the poorest people the health, nutrition, education, and 

other inputs that raise the payoff to their own efforts to better their lives.”33 

The Delivery Systems. Much is made of the difficulty of delivering such technologies to the 

poor, with perceived high risks of corruption, mismanagement, and other delivery failures. 

Yet such fears have been shown time and again to be misplaced as long as the aid is 

practical, subject to monitoring, adapted to local circumstances, endorsed by local 

communities, and embedded in a sensible delivery system with audits and evaluation. In 

recent years, enormous successes have been achieved in the mass distribution of anti-malaria 

bed nets, the mass scale-up of new vaccines (through the Global Alliance for Vaccines and 

Immunizations), the mass treatment of children for worm infections, the mass increase in 

primary-school enrolments and completion rates by eliminating school fees, and the mass 

access of farmers to high-yield inputs through voucher systems. In all of these cases, success 

has resulted from transparency, specificity, accountability, and auditing of delivery systems. 

The Financing. The basic principles of financing should be clear. First, donor aid should be 

directed at communities and regions that can not fund their own development efforts. As 

the Monterrey Consensus rightly noted, this means an emphasis on the least developed 

countries, particularly on sub-Saharan Africa as a major focus for financing. Second, aid 

should avoid program designs which aim to have the poorest of the poor pay for vital 

services. Attempts to sell bed nets or health insurance or medicines to the poor have 

inevitably led to the exclusion of large parts of the population (especially rural population) 

from coverage. Third, donor aid should be a mix of bilateral and multilateral initiatives, 

divided roughly half and half. The U.S. will not, and should not, aim to fund the delivery of 

services on its own. The efforts should reflect a pooling of bilateral (that is, governmental) 

donors, international organizations, the private sector, and private philanthropy (including 

foundations and individuals). In some cases, such financing mechanisms already exist, but in 

other cases they need to be created. Here is a quick rundown. 

 Health financing. The Global Fund to Fight AIDS, TB, and Malaria has become the most 

effective instrument for multilateral financing. The U.S. should increase its contributions to 

the GFATM, in conjunction with increases of other donor partners. There are currently 

three “windows” at the Global Fund (for the three diseases). At least two new funding 

windows should be opened: one for “health systems” (funding of nurses, community health 

workers, clinic construction and facilities) and one for other readily controllable “neglected 

tropical diseases” (soil-transmitted helminthes, lymphatic filariasis, trachoma, onchocerciasis, 

and schistosomiasis). 

 Education financing. The Education-for-All (EFA) initiative of the Millennium 

Development Goals is backed by a “Fast Track Initiative” (FTI) largely funded by the 

United Kingdom. The United States should join the U.K. and other donors in ensuring full 

financing for EFA-FTI. 

 Agriculture financing. There is currently no multilateral financing for improving agricultural 

productivity and total production in sub-Saharan Africa and other hunger hotspots. The 

 

33 William Easterly, The White Man’s Burden, New York: Penguin, 2006, p. 368-9
183 

Gates and Rockefeller Foundations have recently established an Alliance for a Green 

Revolution in Africa (AGRA), with initial financing of $500 million. This should become 

the startup funding for a new Global Fund for African Agriculture, which would permit the 

U.S. and other donors to join together in multilateral funding, aimed at the rapid diffusion of 

high-yield technologies. 

 Infrastructure financing. Some infrastructure, notably telecommunication and internet 

connectivity, is being expanded rapidly on the basis of private-sector investments. Other 

infrastructure, notably roads, power, ports, and large-scale urban water and sanitation 

systems, will require very substantial public financing. Currently, infrastructure financing is 

provided in a somewhat haphazard way by a variety of donors, including bilateral donors, 

the concessionary financing window of the World Bank (the International Development 

Association, IDA), the regional development banks, the European Investment Bank, and 

others. There is no overall coordination to ensure that total financing is in line with total 

needs. There is a need, therefore, for a new pooled financing system for critical 

infrastructure, especially for sub-Saharan Africa. The Millennium Challenge Corporation 

(MCC) can become a significant mechanism for channeling infrastructure financing by the 

U.S. Government. 

 

Other Special Challenges 

In addition to improved international cooperation and financing mechanisms to achieve the 

Millennium Development Goals, U.S. development assistance (in conjunction with global 

partners) needs to focus on a set of specific additional challenges of critical concern to U.S. 

national security. These additional challenges are not being met by the global system as 

currently organized, yet will become major problems for the international community and 

U.S. foreign policy in the years ahead. We will briefly mention five such challenges. 

The Crisis of the Dry Lands. The instability that ranges from Northern Mali to the east 

through Niger, Chad, Sudan, Ethiopia (notably the Ogaden Desert), Somalia, Yemen, Iran, 

and Afghanistan, has a basic and important underlying dimension: a dry lands crisis. Most of 

the world’s hot spots today are actually the world’s dry spots as well. They are dry subhumid, semi-arid, or arid environments, burdened by massive population increases, degraded 

environments (such as over-grazing of pasturelands), rising temperatures, and falling 

precipitation. Rather than viewing the crises in these areas through the lens of global terror 

or a “clash of civilizations,” it is vital to view them through the lens of livelihoods and 

survival. Only a developmental approach can resolve basic and urgent challenges in this 

vast region, in order to restore political stability and create the basis for long-term economic 

wellbeing. 

The Challenge of Emerging and Re-Emerging Diseases. The current fear over Avian Flu is 

just one example of the massive increase in zoonotic diseases (that is, diseases passed from 

animal reservoirs to humans). HIV/AIDS is the most lethal and widespread of the zoonotic 

diseases of recent decades, but others include SARS, Ebola, and Hantavirus. The U.S. 

development program will need to support a greatly increased global investment in 

infectious disease control, epidemic surveillance and monitoring, and improved safety in 

handling of livestock and other domesticated animals in the global food chain. 
184 

The Emerging Crises of Climate Adaptation. We now understand that anthropogenic 

climate change is already upon us. We are experiencing significant changes in the 

hydrological cycle, temperatures, seasonality of species, range of species, increased 

vulnerability to droughts and epidemics, acidification of the oceans (from increased carbon 

dioxide uptake), snow melt and glacier melt, and extreme weather events. The world has 

agreed on an Adaptation Fund under the auspices of the UN Framework Convention on 

Climate Change, to enable the poorest countries to undertake adaptation measures in the 

face of the existing and growing climate changes. The U.S. should plan to be a major source 

of funding and scientific leadership in that new global effort. 

The Reinvigoration of Global Population Policies. The rate of population growth in the 

world’s poorest regions remains staggeringly high. Total Fertility Rates often average 6 to 8 

children per mother in impoverished rural areas, and notably in the impoverished dry lands. 

These regions are without reliable access to modern contraception and family planning 

services, despite the pledges of the world community to ensure universal access to sexual 

and reproductive health services by the year 2015. Much research has demonstrated that the 

failure of population control in the poorest countries poses enormous risks for those 

societies and for the rest of the world. Dangers include under-investments per child in 

health, nutrition, and education; insufficient public services to keep up with a fast-growing 

population; falling farm sizes per household; increased environmental degradation under the 

pressures of rising populations; and a “youth bulge,” in which a high proportion of young 

men (aged 15-29) in the population make an outbreak of violence and conflict more likely. 

Global Trade which Works for All. Development aid can play a large role in fostering 

export competitiveness, and hence the importance of increased “aid for trade” which should 

accompany trade liberalization measures under the ongoing Doha trade round. 

The Structure of U.S. Development Assistance 

There is a strong case for moving development assistance to a new separate Cabinet-level 

Department of International Sustainable Development (DfISD). The new Department 

would house the existing USAID, PEPFAR (Emergency Plan to Fight AIDS), the 

President’s Malaria Initiative, the Millennium Challenge Corporation, and emerging 

initiatives in climate change, especially vis-à-vis the developing countries. The case for a 

separate Department rests on the following principles: 

• The need to upgrade U.S. development assistance as a pillar of U.S. national security. 

• The need to improve U.S. Government management and expertise in public health, 

climate change, agronomy, demography, environmental engineering, and economic 

development. 

• The need to work effectively with similar Cabinet-level Departments and ministries 

in partner countries. 
185 

• The need to de-politicize development assistance, so that it can be directed at the 

long-term investments that are critical in the fight against poverty, hunger, disease, 

and deprivation. 

• The need for coherence of U.S. policies which impact international sustainable 

development, including official development assistance, trade relations with lowincome countries, efforts on climate-change adaptation and mitigation, and efforts 

on global public health and disease control. 

The current system in which USAID is a part of the Department of State is failing. U.S. aid 

is excessively politicized by connecting aid with short-term foreign policy exigencies (e.g. the 

war in Iraq or the Israel-Palestine crisis). It would be very useful to insulate development aid 

from short-term diplomatic pressures. Moreover, USAID has been gutted of much key 

talent and staffing, and the US Government is currently unable to attract the best young 

experts in development fields, and will remain unable to do so until the status of sustainable 

development within the government is improved. The shift in the United Kingdom from 

having a mere sub-cabinet development agency (the Overseas Development Administration, 

ODA) to having a cabinet department (the Department for International Development, 

DfID) has dramatically increased the standing, reputation, and expertise of the United 

Kingdom in the area of international development. DfID is far ahead of USAID as a global 

thought-leader in development policy, and DfID’s departmental rank is playing a key role in 

that success. 

The new Department would have several specific tasks in its start-up years in addition to the 

development challenges described in this report. 

Re-focusing aid efforts. DfISD will bring together countless aid programs now strewn in a 

disconnected way across the U.S. Government. It will bolster technical competence (in 

health, agronomy, engineering, climate, hydrology, finance, and other areas related to 

sustainable development). It will fix the procurement and contracting systems, widely 

regarded to be broken. It will promote results-based aid delivery, with monitoring, 

accountability, and audits. 

Promoting effective multilateralism. DfISD will be much better placed than USAID to 

work with counterpart Ministries of International Development, and to coordinate 

multilateral efforts. 

Leveraging civil society and the private sector. DfISD will promote partnerships with civil 

society and the private sector. Businesses especially will be encouraged to utilize their 

technologies (in sectors such as health, agriculture, energy, logistics, finance, and ICT) in 

partnerships with the U.S. Government and multilateral agencies. 

Focusing on fragile states. DfISD will pay special attention to fragile states, including the 

extreme poor, environmentally threatened regions, and post-conflict environments, where 

development aid can make the difference between economic growth and stability on the one 

hand, and state collapse and violence on the other. 
186 

Integration of all development tools. DfISD will be charged with harmonizing the range of 

development instruments, including development assistance, macroeconomic support (such 

as debt cancellation), trade policies (such as the African Growth and Opportunity Act, or 

AGOA), transparency initiatives (such as the Extractive Industries Transparency Initiative), 

and other tools of diplomacy and development. 

The Financing of U.S. Development Assistance 

The current level of worldwide official development assistance, roughly $100 billion per year, 

of which roughly $25 billion is directed to sub-Saharan Africa, is widely acknowledged to be 

inadequate to support the achievement of the Millennium Development Goals. This is a 

very important point for U.S. political leaders and the broad public. The global community, 

including President Bush and the Bush Administration, has repeatedly acknowledged the 

need for much more aid. Yet the Administration and Congress have not yet delivered on 

those promises. 

Let us re-cap what is needed, what has been promised, and what has so far been delivered. 

There is universal acknowledgement by governments that more aid is needed to enable the 

poorest countries to achieve the Millennium Development Goals. This was already 

committed in the Monterrey Consensus: 

We recognize that a substantial increase in ODA and other resources will be required 

if developing countries are to achieve the internationally agreed development goals 

and objectives, including those contained in the Millennium Declaration.34 

It is in that context that the countries agreed to make concrete efforts to the 0.7 percent 

target. The recognition that much more aid is needed has since been reiterated on several 

occasions, including at the G8 Summits and the World Summit in September 2005. At the 

Gleneagles Summit in July 2005, the G8 noted again that: 

A substantial increase in official development assistance, in addition to other 

resources, is required to achieve the internationally agreed development goals and 

objectives, including those contained in the Millennium Declaration (the Millennium 

Goals) by 2015, as we agreed at Monterrey in 2002. Fulfilling this commitment is 

needed in order to consolidate and build on recent progress in Africa, to stimulate 

the growth that will increase other resources and to enable African and other poor 

countries over time to reduce their aid dependency.35 

This observation was followed by the pledge to increase aid to Africa by $25 billion a year by 

2010, “more than doubling aid to Africa compared with 2004.”36 Two months later, at the 

 

34 The Monterrey Consensus of the International Conference on Financing for Development. Available Online 

at: http://www.un.org/esa/sustdev/documents/Monterrey_Consensus.htm. 35 Gleneagles Summit, 8 July 2005, paragraph 26 

36 Ibid, paragraph 27 
187 

World Summit at the United Nations, President Bush repeated the pledge to “increased aid 

to nations that undertake necessary reforms.”37 

The overwhelming problem is that until now, these repeated pledges have not been fulfilled. 

Actual cash flows of ODA have not risen since 2004. While President Bush promised in 

2002 that the Millennium Challenge Account would be funded at the level of $5 billion per 

year by now, in fact the funding has been under $2 billion per year. Poor countries are 

unsure whether the promises will ever be fulfilled and are therefore not able to plan for the 

future, and are certainly not able to rely on pledges to make multi-year investment decisions, 

including investments in capacity and training. 

Many significant studies, including those of the UN Millennium Project and the Africa 

Commission launched by Prime Minister Tony Blair, outlined, bottom-up estimates of the 

costs of achieving the MDGs. The UN Millennium Project found that the OECD–DAC 

donors will need to contribute around 0.54 percent of GNP in ODA as of 2015 in order to 

co-finance the MDGs on a global basis. Since ODA will be needed for other purposes as 

well, such as disaster relief, or post-reconstruction financing, the UN Millennium Project 

recommended that donor countries honor their commitment of 0.7 percent of GNP, in 

order both to enable success in the MDGs and to meet other challenges which will arise. 

 

Current US ODA, alas, remains stuck at 0.17 percent of GNP, the second-lowest of all 

donors. Unlike the EU, which has agreed to achieve 0.7 by 2015, the U.S. has no timetable 

or political consensus to reach that goal, despite the pledge of the U.S. at Monterrey to make 

concrete efforts to do so. By contrast, military spending in the U.S. is around 5 percent of 

GNP, when one combines the Pentagon budget with supplemental appropriations to finance 

the wars in Iraq and Afghanistan. 

The U.S. should now join the European Union in setting a specific timetable for increasing 

aid through the period to 2015. As did the EU, the U.S. should commit to reach 0.5 percent 

of GNP by the year 2010 and 0.7 percent of GNP by the year 2015. Such a trajectory of aid 

would ensure success in achieving the Millennium Development Goals by 2015, and would 

put the world on a trajectory to achieve the end of extreme poverty by the year 2025.38 Of 

the total aid, roughly half should be allocated through multilateral channels (e.g. IDA, the 

Global Fund to Fight AIDS, TB, and Malaria, a new Global Fund for African Agriculture), 

and roughly half should be allocated through U.S. bilateral initiatives, such as PEPFAR, the 

President’s Malaria Initiative, and the Millennium Challenge Corporation. 

Summary of Conclusions 

1) The U.S. should promote development assistance as a core pillar of national security 

and American moral values. 

 

37 George W. Bush, Addresses United Nations High-Level Plenary Meeting, United Nations Headquarters, 

September 14, 2005. 

38 See the calculations in Jeffrey Sachs, The End of Poverty, New York: Penguin 2005, based on the work of the 

UN Millennium Project and WHO Commission on Macroeconomics and Health, and consistent with the 

findings of the 2005 Africa Commission of the U.K. Government. 
188 

2) The U.S. should follow through on its oft-repeated commitments to the Millennium 

Development Goals. 

3) U.S. Foreign Assistance should harmonize U.S. foreign policy commitments in 

development (such as support for the MDGs and goals adopted at G8 Summits) 

with the actual budgets and programs of U.S. development assistance. 

4) U.S. political leaders should explain to the American people the international 

development objectives and commitments that have been made by the United States. 

5) U.S. political leaders should explain to the American people the modest levels of U.S. 

development aid in comparison with spending on other pillars of U.S. security 

(notably Defense), with U.S. commitments, and with the spending of partner 

countries. 

6) The U.S., in line with its own commitments and the actions of its development 

partners, should make concrete efforts to the target of 0.7 percent of GNP, and 

should aim to achieve that target by 2015. 

7) The U.S. should support multilateral objectives and funding mechanisms in health, 

agriculture, infrastructure, education, and community development, balancing aid 

roughly half and half in bilateral and multilateral initiatives. 

8) The U.S. should establish a new separate Cabinet-level Department of International 

Sustainable Development. 

9) The U.S. should use the full range of development instruments, including 

development assistance, trade opening (such as AGOA and a successful Doha 

Round), aid for trade, and partnerships with civil society. 

Figure 1. The Allocation of National Security Outlays 

Total Outlays

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Defense Development Diplomacy

Billions (FY07)

Total Outlays

Source: Whitehouse OMB for “Defense” and “Diplomacy”; OECD/DAC for 

“Development” 
189 

Figure 2. U.S. Official Development Assistance as a percentage of Gross National Income 

U.S. Offical Development Assistance (ODA) as a 

percentage of Gross National Income (GNI)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1960196519701975198019851990199520002005

Year

ODA as a % of GNI

Source: OECD/DAC (2007)

Figure 3. US ODA to Africa ($ per African), 1961-2005 

US ODA per capita, Sub-Saharan Africa

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1961

1966

1971

1976

1981

1986

1991

1996

2001

Year

$ per capita (constant 

$2005)

ODA per capita

Source: Data from OECD/DAC (2007) 
190 

Figure 4. US ODA by Region, 1961-2005 

ODA by region (cumulative 1961-2005)

0

50

100

150

200

Latin

America

SS

Africa

MENA

Asia

Europe

and FSU

Region

$ Billion (constant 

$2005)

ODA by region

Source: OECD/DAC (2007) 

Figure 5(a). Net ODA in 2006 

Net ODA in 2006

0.0

5.0

10.0

15.0

20.0

25.0

New Zealand

Luxembourg

Portugal

Greece

Finland

Ireland

Austria

Switzerland

Belgium

Australia

Denmark

Norway

Italy

Canada

Spain

Sweden

Netherlands

Germany

France

Japan

United Kingdom

United States

$, Billions

Net ODA in 2006

Source: Data from OECD/DAC (2007) 
191 

Figure 5(b). ODA as a share of GNP 

ODA as a share of GNP

-

0.20

0.40

0.60

0.80

1.00

1.20

Sweden

Luxembourg

Norway

Netherlands

Denmark

Ireland

United Kingdom

Belgium

Austria

France

Finland

Switzerland

Germany

Spain

Australia

Canada

New Zealand

Japan

Portugal

Italy

United States

Greece

ODA as a share of GNP

Source: Data from OECD/DAC (2007) 

Table 1. The Millennium Development Goals 

Goal 1: Eradicate 

extreme poverty and 

hunger 

Target 1: Halve, between 1990 and 2015, the proportion of people 

whose income is less than $1 per day 

Target 2: Halve, between 1990 and 2015, the proportion of people who 

suffer from hunger 

Goal 2: Achieve 

universal primary 

education 

Target 3: Ensure that by 2015 children everywhere, boys and girls alike, 

will be able to complete a full course of primary schooling 

Goal 3: Promote 

gender equality and 

empower women 

Target 4: Eliminate gender disparity in primary and secondary education, 

preferably by 2005, and in all levels of education no later than 2015 

Goal 4: Reduce child 

mortality 

Target 5: Reduce by two-thirds, between 1990 and 2015, the under-five 

mortality rate 
192 

Goal 5: Improve 

maternal health 

Target 6: Reduce by three quarters, between 1990 and 2015, the maternal 

mortality ratio 

Goal 6: Combat 

HIV/AIDS, malaria, 

and other diseases 

Target 7: Have halted by 2015 and begun to reverse the spread of 

HIV/AIDS 

Target 8: Have halted by 2015 and begun to reverse the incidence of 

malaria and other major diseases 

Goal 7: Ensure 

environmental 

sustainability 

Target 9: Integrate the principles of sustainable development into 

country policies and programs, and reverse the loss of environmental 

resources 

Target 10: Halve by 2015 the proportion of people without sustainable 

access to safe drinking water and basic sanitation 

Target 11: Have achieved by 2020 a significant improvement in the lives 

of at least 100 million slum dwellers 

Goal 8: Develop a 

global partnership for 

development 

Target 12: Develop further an open, rule-based, predictable, nondiscriminatory trading system (includes a commitment to good 

governance, development, and poverty reduction -- both nationally and 

internationally) 

Target 13: Address the special needs of the Least Developed Countries 

(includes tariff- and quota-free access for Least Developed Countries' 

exports, enhanced program of debt relief for heavily indebted poor 

countries [HIPCs] and cancellation of official bilateral debt, and more 

generous official development assistance for countries committed to 

poverty reduction) 

Target 14: Address the special needs of landlocked developing countries 

and small island developing states (through the Program of Action for the 

Sustainable Development of Small Island Developing States and 22nd 

General Assembly provisions) 

Target 15: Deal comprehensively with the debt problems of developing 

countries through national and international measures in order to make 

debt sustainable in the long term 

Target 16: In cooperation with developing countries, develop and 

implement strategies for decent and productive work for youth 

Target 17: In cooperation with pharmaceutical companies, provide 

access to affordable drugs in developing countries 
193 

Target 18: In cooperation with the private sector, make available the 

benefits of new technologies, especially information and communications 

technologies 

Source: United Nations 

Table 2. Bilateral Official Development Assistance to sub-Saharan Africa, FY06 

Emergency Plan for AIDS Relief $675 mm 

Child Survival and Health $391 mm 

Development Assistance $588 mm 

Millennium Challenge Corporation $850 mm (estimated as half of total MCC) 

Economic Support Fund $121 mm 

Food Assistance (PL480) $272 mm 

Peace Corps $120 mm (estimated as half of total PC) 

Total bilateral aid to Africa $3 billion 

Source: United States Agency for International Development, The Greenbook. 

Table 3. Combining Official Development Assistance and Giving by NGOs (average 

for 2004-5)

2004-5 ODA/GNI NGO/GNI Combined 

Australia 0.25 0.10 0.35 

Austria 0.38 0.04 0.42 

Belgium 0.47 0.06 0.53 

Canada 0.30 0.08 0.38 

Denmark 0.83 0.03 0.86 

Finland 0.41 0.01 0.42 

France 0.44 .. 

Germany 0.32 0.05 0.37 

Greece 0.16 0.00 0.17 

Ireland 0.40 0.17 0.57 

Italy 0.22 0.00 0.22 

Japan 0.23 0.01 0.24 

Luxembourg 0.83 0.02 0.85 

Netherlands 0.78 0.07 0.85 

New Zealand 0.25 0.06 0.32 

Norway 0.91 .. 

Portugal 0.42 0.00 0.42 

Spain 0.26 .. 

Sweden 0.86 0.01 0.87 

Switzerland 0.43 0.08 0.51 

United Kingdom 0.42 0.03 0.44 

United States 0.20 0.06 0.26 

TOTAL DAC 0.30 0.04 0.34 

Source: OECD/ DAC (2006) 
194 

List of References

Anderson, Kym et al., “Doha Merchandise Trade Reform: What’s At Stake for Developing 

Countries,” World Bank Policy Research Working Paper 3848, February 2006. 

Bush, George W., Addresses United Nations High-Level Plenary Meeting, United Nations 

Headquarters, September 14, 2005. 

Bush, George W., Remarks at Inauguration Ceremony of the Special Summit of the 

Americas, January 12, 2004. 

Bush, George W., Remarks on Global Development, Inter-American Development Bank, 

March 14 , 2002. 

Brainard, Lael and Derek Chollet, eds., Too Poor for Peace? Global Poverty, Conflict, and Security in 

the 21st Century, Washington D.C.: Brookings Institution Press, 2007. 

Easterly, William, The White Man’s Burden, New York: Penguin, 2006. 

Gupta, Sanjeev et al., “Impact of Remittances on Poverty and Financial Development in 

Sub-Saharan Africa,” IMF Working Paper WP/07/38, February 2007. 

Hudson Institute, Index of Global Philanthropy, Center for Global Prosperity, 2007. 

Kennedy, John F., Inaugural Address, January 20, 1961. 

Marshall, George, Speech at Harvard University, June 5, 1947. 

The Monterrey Consensus of the International Conference on Financing for Development. 

Available Online at: 

http://www.un.org/esa/sustdev/documents/Monterrey_Consensus.htm. 

Organization for Economic Cooperation and Development (OECD). International 

Development Statistics. Paris, 2007. http://www.oecd.org/dac/stats/idsonline

Program on International Policy Attitudes (PIPA) at the University of Maryland, “Americans 

on Foreign Aid and World Hunger,” February 2, 2001, and PIPA, “New Poll Shows 

American Public Supports Stronger Engagement with Africa,” January 2003. Both available 

online at http://www.worldpublicopinion.org/pipa. 

Sachs, Jeffrey, The End of Poverty, New York: Penguin 2005. 

United Nations Millennium Project, Investing in Development: A Practical Plan to Achieve the 

Millennium Development Goals. London: Earthscan, 2005.
195 

United States Agency for International Development (USAID), Budget Justification to 

Congress, 2007. Available online at: http://www.usaid.gov/policy/budget/cbj2007/ . 

United States Agency for International Development (USAID), Policy Framework for 

Bilateral Foreign Aid, January 2006. 

United States Agency for International Development, The Greenbook. 

http://qesdb.usaid.gov/gbk/. 

The United States National Security Strategy 2006. 

http://www.whitehouse.gov/nsc/nss/2006/index.html. 

Warner, Kenneth E., Findings, University of Michigan School of Public Health, Fall/Winter 

2006. 

White House Office of Management and Budget, Budget of Fiscal Year 2008, 2007. 

http://www.whitehouse.gov/omb/budget/fy2008/
196 

Support for an Independent Cabinet-Level Department of 

Development by HELP Commissioner William C. Lane 

The following represents the views of only the author: 

Like most of the other Commissioners, I'm proud of the HELP COMMISSION REPORT. 

Our report is a solid document that strongly endorses the view that like Defense and 

Diplomacy, Development is an essential tool to protect national security, strengthen 

humanitarian values and build economic prosperity. Furthermore, even though the 

Commission was comprised of people representing a broad cross-section of political views 

and diverse experiences, we came together in our belief that substantive changes are needed 

in the way America's development programs are led, coordinated, delivered and financed. 

Most of the Commission recommendations received unanimous or near unanimous support 

from the Commissioners. But on one -- the issue of structure -- there were strong dissenting 

views. As the only Republican on the Commission who supported the creation of a new 

Cabinet-level Department for International Development (DID), I feel compelled to explain 

why. 

As the report makes clear, a majority of the Commissioners believes it is time to do away 

with the State Department and create a new, more expansive Department of International 

Affairs (DIA) that includes all development functions. While I understand Commissioner 

frustration with the status quo, I believe this DIA recommendation goes well beyond the 

Commission's mandate. As a result, I fear that the DIA suggestion could divert attention 

from the many other solid recommendations in the report. 

Another concern is that the notion of a radical reorganization of the State Department 

coupled with a complete merger of all aid functions was presented late in the Commission’s 

deliberation. As a result, most of the experts and officials the Commission interviewed were 

not able to provide guidance regarding the wisdom of the DIA proposal. Simply put, the 

Commission was not able to conduct a comprehensive study on all of what it would take to 

reorganize the State Department. As a result, I do not have an adequate foundation to 

evaluate the DIA recommendation. 

In spite of this, I believe the DIA recommendation represents an intriguing notion that 

should not be totally dismissed. But rather than endorse it, I believe a more prudent path 

would be to further study the DIA proposal -- perhaps as part of a comprehensive review of 

the State Department led by former Secretaries of State. 

 

In contrast, I endorse the DID recommendation because it best reflects my views regarding 

structure. It is not a perfect match, but it's close. I have come to the conclusion that to 

enhance America's development capabilities some aid functions must be consolidated in a 

new Cabinet-level department. Others should be moved to State Department and still 

others should be kept independent. I also believe the U.S. Information Agency should again 

be an independent agency. And to promote better coordination between these 

organizations, the National Security Council should have increased responsibilities. 
197 

On a more personal note, I want to thank Former Speaker Hastert for appointing me to the 

HELP COMMISSION. It has truly been an honor to serve on such an august commission. 

I want to thank our Chairwoman Mary Bush, my HELP COMMISSION colleagues and the 

Commission's staff for working together to produce this report. In many ways the HELP 

COMMISSION REPORT is a blueprint that will not only put Development on a more 

equal footing with Defense and Diplomacy, but will allow the United States to better meet it 

foreign policy objectives. 
198 

Various Views on Foreign Aid: Why Countries Really Grow; 

Misperceptions about US Government Aid for Political 

Purposes; U.S. Public Opinion on Foreign Aid; and Private 

Giving to the Developing World by HELP Commission Vice 

Chairman Carol Adelman and Commissioner Nicholas 

Eberstadt

Foreign Aid and Why Countries Really Grow 

The following represents the views of only the authors: 

As Commissioners who believe that specific performance-related conditions be attached to 

any prospective increases in America’s development aid, we welcome this opportunity to 

more fully explain our views. 

Our assessment was based not just on our many decades of personal experience and 

research, but also on an extensive review conducted for the HELP Commission. The 

Executive Summary of this review, What Works, What Doesn’t in Foreign Aid with Considerations 

for Future Improvements, is an appendix to this report. The full version, a document of more 

than 50 pages and more than 125 footnotes, is available on the HELP Commission website, 

www.helpcommission.gov. 

The review documents the corpus of literature on the efficacy of development assistance, a 

literature that goes back to the 1950s. The great majority of the studies in this literature 

concludes that the overall impact of foreign aid on economic growth in developing countries 

has been negligible, at best. 

Our review underscores the simple and basic historical truth about why countries do grow: 

namely because their polities and policies encourage and support a “climate” that is 

favorable to material progress. Aspects of that “climate” include, but are by no means 

limited to: open economies, free trade, private investment, entrepreneurship, rule of law, 

competitive political parties and elections, investment in human capital, technological 

innovation, and strong and vibrant civil societies. Countries like Ghana, Botswana, Tunisia 

and Vietnam are very different from one another—yet all have made considerable strides in 

growing out of crippling poverty by embracing, or moving toward, the more auspicious 

“climate” to which we refer. 

One thing that became immediately clear once we began to undertake this work was that 

most development aid programs, including USAID projects, have not been carefully 

evaluated at the impact level. While some serious impact evaluations have been done, they 

are remarkably few in relation to the number of projects undertaken, and the volumes of 

money spent, by USAID over the years. Shouldn’t routine and rigorous review of the impact 

of development aid programs be welcomed by all who sincerely wish to help the poor 

improve their lives? 
199 

In general, reports and evaluations confirm that US-sponsored disaster relief and 

humanitarian assistance initiatives have worked well, given their objectives. Relief and 

rehabilitation efforts have helped restore health and homes to millions suffering from natural 

and man-made disasters around the world. Millions of children have been vaccinated, and 

now USAID is helping prevent deadly diseases such as AIDS, TB, and malaria and treating 

thousands of patients suffering from these pandemics. 

On the other hand, given their objectives, US-sponsored economic development aid 

programs have generally been much more disappointing, especially in recent decades. From 

the limited number of well evaluated and successful projects, we identified some shared 

characteristics: these included local ownership, co-investment by the local partner, private 

sector involvement, peer-to-peer relationships, and flexibility in design. 

We concluded that, by and large, foreign aid for development purposes requires a new 

business model altogether if it is to have a chance at succeeding. Our conclusion was starkly 

reinforced by results from an additional study conducted for the Commission in June 2006, 

Anticipating the Aid Environment in 2020, available on the HELP website as well. 

We called this latter study the “skating paper” after Wayne Gretsky’s famous answer to why 

he was such a great hockey player. “I always skate to where the puck will be,” he replied, 

“not to where it’s been.” Analagously, to know what types of assistance the developing 

world would need in the next decade or two, we need to consider the likely future 

environment in developing countries with respect to levels of poverty and income, infant 

mortality and life expectancy. 

Using World Bank, IMF and UN Population Division data, this analysis examined economic 

and demographic projections for developing countries through 2020. This assessment 

tracked closely with conclusions from Paul Collier’s, The Bottom Billion (New York: Oxford 

University Press, 2007) The “skating paper” indicated that the populations of the great 

majority of developing countries - the globe’s middle 4 billion - are indeed developing and 

are on a path to prosperity and better health. Yet there is also stark and disturbing evidence 

that the least developed countries, primarily in Africa, are being left behind today—and may 

well lag even further behind a decade or two hence. 

These ongoing and prospective trends only further emphasize the need for a new approach 

to development assistance. In most of the developing world, these trends will make for 

increases in trained manpower, local resources, and technological possibilities—and also for 

new problems, such as aging and chronic diseases: transformations that highlight the 

importance of aid programs that work closely with local partners and have the flexibility to 

do new programs. While the very poorest countries will likely still require more “traditional” 

types of foreign assistance, the new business model of delivering aid through partnerships 

with private individuals and groups contributing time and resources is nonetheless a 

development model that can be used in the least developed countries as well. 

Simply stated, a business model requires business standards—yes, even for the business of 

development assistance. We argue that USAID (or any successor institution) must show that 

it can implement (and evaluate) a new business model for development projects before more 

money is poured into what is now a broken delivery system. Proper project evaluation 
200 

(including baseline data and control or comparison groups) and continuous monitoring that 

feeds back into project management are 20th century innovations that must finally reach 

America’s 21st century foreign aid programs. 

Unlike some of our fellow Commissioners, we cannot support increases of official 

development assistance until we have seen results. Nor do we support the view that per 

capita foreign aid targets as mentioned in the report are meaningful to a country’s 

development. Sub-Saharan Africa’s lack of development is not related to the GNI of donor 

countries and per capita amounts of aid it has received. 

We wish, furthermore, to counsel explicitly against the statist, dirigiste,”aid-centric” 

viewpoint on economic development and material advance. Let us not mince words: it is a 

fantasy to imagine that aid donors can centrally plan the developing world out of poverty. 

The notion that donors can come up with detailed plans and budgets for every sector and 

then coordinate so that we fix each sector failed in aid bureaucracies. Successful projects do 

not come from acronyms and buzz words like CDEs, PRSPs, MPPs and “coherent 

strategies.” 

These very fallacies, unfortunately, seem to color the Report’s discussion of the Millenium 

Development Goals (MDGs), which critique the Administration for supporting the MDGs 

but not being prepared to “fund these goals.” This posture, we submit, betrays a profound 

misunderstanding of the real development process. 

Everyone can be in favor of the MDGs, as they are indeed laudable objectives (eradicating 

extreme poverty, achieving universal primary school enrollment, reducing child mortality, 

etc.). But it does not automatically follow that everyone in favor of those goals will favor 

“funding those goals” if that is defined to mean a mega- billion dollar plans initiated in UN 

task forces through which Western donors are expected to pour money into the operating 

budgets of real existing African (or Asian, or Latin American) states. The UN’s checkered 

development record is replete with goals and targets rarely met — from Health for All by the 

Year 2000 to the WHO’s 3x5 AIDS program, to name just a few. Of course country budgets 

need to be established, but only after targets of opportunity have been identified. And these 

budgets may vary by year, if projects fail or if needs change. Only such an approach will 

afford the flexibility that government aid efforts so desperately need to work. 

In sum, we believe that any increases in development aid should be performance-based. In 

the case of U.S. national security needs, disaster relief and humanitarian assistance, we would 

support increases on an as-needed basis. 

Misperceptions about US Government Aid for Political Purposes 

The following represents the views of only the authors: 

A concept that the HELP Commission report endorses is that a significant amount of our 

government foreign aid has been spent for political reasons and has gone to countries that 

are least committed to reform and development. This is, however, a misunderstanding of 
201 

how the “political” pot of aid money, called “Economic Support Funds” (ESF), works. First, 

these funds are not the majority of our Official Development Assistance (ODA). In 2006, 

ESF funding was less than 30 percent of ODA (including Iraq which has a different account 

than ESF.). Overall, ESF funding has not been the majority of ODA expenditures and has 

generally averaged less than one-third of ODA. Sending cash to countries was less than 4 

percent of our entire ODA in 2006 and has also not been a majority of ODA over the years. 

Also, the funds in the ESF account are programmed just like the development and disaster 

assistance accounts. The vast majority of ESF funds — over 96 percent in 2006 — go for 

the very same projects in health, agriculture and the environment done by the very same 

contractors working in all other developing countries. 

While the Report asserts that development aid should not be harmed by State Department 

short term political goals, the fact is that the State Department merely sets the total level of 

funding in those countries deemed essential to our national security. It then hands the 

project design and implementation of these monies over to USAID. To say that ESF funds 

go to countries less committed to reform and development is equally fallacious. When ESF 

countries are compared to non-ESF countries by the Economic Freedom Index and the 

Freedom House Index, there is basically no difference on corruption and poor governance 

indicators. When countries that receive ESF are compared to African countries that don’t, 

the ESF countries actually rank better on the World Bank’s “Doing Business” report which 

compares developing countries on how favorable their business and investment climate is. 

The notion that the State Department has only short term political goals versus USAID’s 

long term development goals is another misperception in the Report. In fact, the State 

Department is responsible for responding to U.S. national security interests in both the short 

and the long term, and it is as equally interested as USAID in countries achieving long term 

growth and prosperity since this is vital to their well being and our national security. 

U.S. Public Opinion on Foreign Aid: Well-Informed Already 

The following represents the views of only the authors: 

Two overarching trends in U.S. public opinion on foreign aid have been evident ever since 

the Kennedy Administration: 1) the public is overwhelmingly skeptical of taxpayer-funded 

foreign aid, and is overwhelmingly in favor of lower allocations for such programs; and 2) 

the elites favor foreign aid more than the taxpaying public at large. These are dramatic and 

largely unchanging long-term trends in US public opinion--remarkably constant markers in 

an otherwise often shifting terrain of U.S, public opinion over the past four and a half 

decades. 

Over the past decade, proponents of increased foreign aid have attempted to impugn the 

U.S. public's longstanding lack of enthusiasm about foreign aid by insinuating that the man 

(or woman) in the street doesn't really know what he/she is talking about with regard to 

America's foreign assistance efforts. This is the not-so-hidden purpose of the spate of 

polling data, typically funded by pro-foreign-aid advocacy groups, about how much of our 

tax dollar goes to foreign countries. 
202 

To be sure: these data affirm that the typical American *is* off by a factor of about 20 on 

the magnitude of our aid programs' expenditures. But what should we conclude from this? 

That Americans would devote huge additional sums for ODA if they knew they were "only" 

spending 1% of their tax money on overseas programs? Hardly. 

The same surveys that frame the "special pleading" questions for foreign aid [and note, by 

the way, that exactly the same techniques could be used to elicit seemingly more favorable 

responses for such losers as the sugar subsidy, the telephone tax, etc] also show that the 

typical respondent/taxpayer wants aid levels to be about half as high as he/she believes 

them currently to be. 

This is because the typical respondent believes that money spent on foreign aid today is 

money poorly spent--not because the goals are bad [the public supports the objectives!] but 

because they believe *the approach* is ineffective and wasteful. The public doesn't have to 

become expert on budgetary intricacies or allocation levels if they believe they already know 

enough to determine whether we should be giving foreign aid programs more money--or 

instead less. 

Some appreciation of the U.S. public's deep and abiding skepticism about taxpayer-funded 

aid efforts is essential if one is to evaluate the Report's call to "Engage The American People 

In Development Partnerships" without illusions. The language of this portion of the report 

is somewhat ambiguous, and demands clarification. 

If the intention of the call is to encourage further additional genuinely private efforts by 

American citizens in low-income countries, the tocsin is well-sounded, and can be expected 

to resound positively on Main Street. 

After all: U.S. public opinion polls for decades have also consistently shown that eliminating 

hunger and distress abroad is a high priority in international policy for ordinary Americans. 

Moreover, ordinary Americans do not just mouth such goals. As reaffirmed in the "What 

Works What Doesn't" [WWWD] paper, available on the HELP Commission website, the 

American public and its organizations spend much more on charitable giving overseas, both 

relatively and absolutely, than any other developed country--and America's private giving to 

low-income regions looks to exceed America's official development assistance by a hefty 

margin. 

Given the ambiguity of the language in Chapter 5.2-4, unfortunately, the relevant passages 

[e.g., " To the extent that Americans are aware of opportunities to be involved in 

development activities, we can magnify the potential for partnership"] may also be read as 

encouraging the use of public funds to "make Americans aware of...the potential for 

partnership"--i.e., propagandize taxpayers to acquiesce in still greater taxpayer subventions 

for foreign aid. 

If such an interpretation seems altogether too Orwellian, let the record show that just such a 

tactic has been embraced before by advocates of dramatic increases in publicly-funded 

foreign aid. Indeed: in 1980, the now largely discredited "Brandt Report" advocated just 

such a taxpayer-funded public "education" campaign in donor countries to alter the climate 

of opinion regarding official development assistance. That same report also suggested that 
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donor country transfers should be made as long term permanent commitments, so that the 

voting public in the donor countries in question would not be able to rescind the promises 

made by previous governments (be they retired or voted out of office). 

For the purposes of this Report, we wish to make it crystal clear that we welcome and 

applaud truly private American development initiatives--but that we are equally and 

adamantly opposed to the possibility of turning public monies to the dubious and perverse 

purpose of deliberately altering American public opinion on foreign aid. 

Private Giving to the Developing World 

The following represents the views of only the authors: 

This addresses the Hudson Institute’s Index of Global Philanthropy private giving numbers to 

the developing world. The Index was developed in order to provide more accurate private 

giving numbers because the U.S. Government recognizes that the numbers it sends into the 

Development Assistance Committee (DAC) of the OECD are incomplete since they exclude 

corporate and religious private giving, and are based on a voluntary survey which private 

organizations are not required to complete. Hudson works in partnership with various 

preeminent research centers and professional associations which collect the numbers and 

rigorously review them so they meet their statistical and scientific standards. These partners 

include the Urban Institute’s Center on Nonprofits and Philanthropy (CNP), the Foundation 

Center, the International Institute of Education (IIE), the Committee Encouraging 

Corporate Philanthropy (CECP), and Pharmaceutical Quality Medical Donations (PQMD). 

All the data collected by the research partners reflects true development aid, disaster relief 

and humanitarian assistance similar to U.S. Government aid counted as Official 

Development Assistance (ODA). The numbers are collected only for developing countries 

as classified by the DAC. The religious giving number, while vastly underestimating this 

giving, is based on surveys and account ledgers of churches that collect this information and 

consists of donations for development and humanitarian projects. The number for 

scholarships for foreign students consists of actual university and college records of these 

dollar amounts for students studying in the U.S. who are from DAC-classified developing 

countries. Finally, the value of in-kind pharmaceutical donations is based on wholesale 

prices, not retail. All of these data, including detailed methodologies are available in the Index

at www.global-prosperity.org and a complementary paper, Private Giving to the Developing 

World: The State of the Numbers, is also available on the HELP Commission website as well. 
The Help Com mission

www.helpcommission.gov

In furtherance of U.S. national security and foreign policy goals and objectives, 

the HELP Commission’s vision is of a world without extreme poverty where people 

live in peace and realize human dignity, liberty, justice and economic opportunity.