Foreign Aid: USAID Has Increased Funding to Partner-Country Organizations but Could Better Track Progress
Published: 2014-04-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since 2010, USAID has undertaken a series of reforms, collectively called USAID Forward. One key reform, the Local Solutions initiative, aims to shift program implementation from U.S.- based and international organizations to partner-country organizations, including governments and for-profit and nonprofit organizations. The three overarching goals of the initiative are to strengthen the capacity of partner countries, to enhance and promote country ownership, and to increase the sustainability of development efforts. GAO was asked to review the implementation of this initiative. GAO assessed the extent to which USAID (1) has demonstrated progress toward achieving its fiscal year 2015 target for the principal Local Solutions indicator, and (2) is tracking progress in achieving the initiative's goals related to local partners' capacity, country ownership, and program sustainability. To address these objectives, GAO reviewed funding data and documents and interviewed USAID officials.
section_title: What GAO Found
paragraphs: The U.S. Agency for International Development's (USAID) reporting on its principal Local Solutions indicator—the percentage of mission program funds obligated to local organizations in partner countries—lacks clarity, complicating the assessment of the agency's progress toward its fiscal year 2015 target of 30 percent. The March 2013 USAID Forward progress report states that these obligations increased from about 10 percent of mission program funds in fiscal year 2010 to about 14 percent in fiscal year 2012—a $465 million increase. However, the agency also has reported progress on the principal Local Solutions indicator in three other ways, depending on whether two key types of funding—cash transfers and certain qualifying trust funds—are included (see figure). These reporting differences make it difficult to compare the indicator from year to year and to quantify the progress needed to achieve the 30 percent target by fiscal year 2015. Moreover, USAID's approach to tracking the Local Solutions indicator has evolved since the launch of the initiative. For example, USAID included funds in Afghanistan and Pakistan, missions the agency previously had planned to exclude. If these missions are excluded, the percentage of mission program funds obligated to local organizations in fiscal year 2012, including qualifying trust funds and cash transfers, decreases by 10 percentage points.
USAID's principal Local Solutions indicator does not fully reflect activities the agency has undertaken to implement the initiative, and USAID does not have a means to track relevant mission-led evaluations of programs implemented by partner-country organizations. USAID relied primarily on its principal Local Solutions indicator to demonstrate progress. While this principal indicator reflects, to some degree, the steps missions are required to take before obligating funds to local organizations, it provides no information about the status of activities both prior to and following obligation of funds, such as assessing risk and monitoring programs. Furthermore, although USAID has laid some groundwork for evaluating the Local Solutions initiative, the agency does not currently have the means to determine the extent to which missions are conducting performance evaluations to assess the effectiveness of programs implemented through local organizations. Such evaluations can provide evidence needed to demonstrate progress toward the initiative's goals related to local partners' capacity, country ownership, and program sustainability.
section_title: What GAO Recommends
paragraphs: USAID should (1) clarify in future reporting the types of funding included in the percentage of USAID funds obligated to partner-country local organizations, (2) identify additional indicators to better capture progress toward the initiative's goals, and (3) provide a means to identify evaluations of programs that used the initiative's approach. USAID neither agreed nor disagreed with the recommendations but identified actions it has ongoing to address these issues, and just prior to publication of this report released fiscal year 2013 data on its website that includes some clarifying information.

section_title: Letter
paragraphs: Since 2010, the U.S. Agency for International Development (USAID) has  undertaken a series of reforms, collectively called USAID Forward. A key  element of this reform agenda is an important shift in how the agency  administers its assistance—from implementing programs through U.S.- based and international organizations to increasing emphasis on  providing funding directly to local organizations, which USAID defines as  partner-country government entities and local for-profit and nonprofit  organizations. Initially called Implementation and Procurement Reform  and now referred to as Local Solutions, this initiative reflects international  consensus and U.S. policy regarding aid effectiveness and aims to  achieve the following three goals: enhance and promote country ownership, and  increase sustainability.
USAID’s principal indicator for the Local Solutions initiative is the  percentage of mission program funds implemented through local  organizations, which the agency tracks at the time of obligation. The  agency established an agency-wide target of obligating 30 percent of  mission program funds to local organizations by fiscal year 2015 (referred  to hereafter as the agency’s “30 percent target”).
You asked us to review USAID’s Local Solutions initiative. For this report,  which is the first of two reports responding to your request, we assessed  the extent to which USAID (1) has demonstrated progress toward  achieving its 30 percent target, and (2) is tracking progress in achieving  the Local Solutions goals of strengthening partner-country capacity to  implement programs, enhancing and promoting country ownership, and  increasing sustainability. To address these objectives, we reviewed  USAID policies and guidance as well as Local Solutions reports, data,  and documents provided by USAID, and interviewed USAID officials in  Washington, D.C. We also consulted our prior work on performance  indicators, targets, and evaluations. See appendix I for further details  about our scope and methodology.
We conducted this performance audit from June 2013 to April 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Since announcing the USAID Forward initiative in 2010, USAID has  updated policies and procedures to guide the initiative, notably the  following:  In 2011, USAID established procedures for determining the suitability  of using partner-country government systems to implement USAID- funded programs.
In 2011 and 2012, USAID also updated its guidance and procedures  for program planning and design, monitoring and evaluation plans,  and evaluation standards for all new programs, including those  implemented through local organizations.
In March 2013, USAID issued a progress report on USAID Forward that  provided information on the status of the Local Solutions initiative, among  other things. The report included agency-wide percentages of funding  obligated to local organizations for fiscal years 2010 through 2012, as  well as disaggregated 2012 figures by region, with a break-out for  Afghanistan and Pakistan together, and by sector—for example, health,  agriculture, and democracy and governance. Subsequently, in October  2013, USAID released fiscal year 2012 funding data used to report on the  principal indicator for tracking and reporting on implementation of the  Local Solutions initiative. Just prior to publication of this report, USAID  published fiscal year 2013 data for this indicator on its website. USAID  also provides updated information on the status of the Local Solutions  initiative through its annual performance plans and reports issued jointly  with the Department of State, as well as through quarterly and annual  reporting to the Office of Management and Budget on agency priority  goals.
In 2013, USAID filled the newly created position of Local Solutions  Coordinator in the agency’s Counselors office. According to USAID, the  Local Solutions Coordinator is responsible for coordinating the activities— such as policy, program, legal, financial, and procurement—of the various  headquarters offices and missions involved in carrying out the Local  Solutions initiative.
section_title: USAID Increased Local Funding, but Extent of Progress toward Its 30 Percent Target Is Not Clear
paragraphs: USAID has reported the funds tracked toward its 30 percent target in  different ways, and this inconsistent reporting complicates the  assessment of the degree to which USAID is making progress. On the  basis of information provided in its 2013 progress report and other data  provided by USAID, agency funds obligated to local organizations  increased from about 10 to 14 percent of mission program funds in fiscal  years 2010 through 2012—a $465 million increase. However, depending  on which funds are counted toward the principal Local Solutions indicator,  USAID’s progress toward its 30 percent target ranged from the 14 percent  reported in its 2013 progress report to as high as 24 percent of mission  program funds obligated to local organizations, as noted in data published  on the agency’s website. In addition, in fiscal year 2012, including all cash  transfers and trust funds, 5 missions, including those in Afghanistan and  Pakistan, obligated about 79 percent of all USAID funding to local  organizations, while 72 missions obligated the remaining 21 percent.
subsections: section_title: USAID Funding to Local Organizations Increased in Fiscal Years 2010 through 2012, but Indicator Reporting Lacks Clarity
paragraphs: USAID has reported on its principal Local Solutions indicator with and  without cash transfers and before and after the addition of qualifying trust  funds in two missions. According to USAID, funds included in the  calculation of this indicator include all mission program funds to local  organizations that directly implement programs and include loan  guarantees to local banks, cash transfers, and contributions to trust funds  that are managed by a government department or ministry. USAID’s  reporting of the indicator, however, varied in the inclusion of some of  these funds. In its 2013 progress report, USAID reported an increase in  obligations to local organizations during fiscal years 2010 through 2012— from about 10 to 14 percent of mission program funds. According to data  provided by USAID, this represents a $465 million increase, excluding  cash transfers and additional qualifying trust funds to two missions that  USAID later determined qualify as investments in local organizations.  Including cash transfers, the percentage of mission program funds  obligated to local organizations increased from about 14 percent to 17  percent from fiscal year 2010 to 2012. Subsequently, in October 2013,  USAID published on its website updates showing fiscal year 2012 dollar  amounts and percentages of mission program funds obligated to local  organizations both including and excluding cash transfers. In this  update, USAID noted contributions to certain trust funds that USAID had  determined met the agency’s definition of local funding after the release  of the 2013 progress report. As shown in figure 1, depending on whether  cash transfers and these qualifying trust funds are counted toward the  indicator, USAID achieved fiscal year 2012 levels of funds obligated to  local organizations that are between 14 percent and 24 percent.  However, USAID has not determined which indicator definition it intends  to use. Differences in USAID’s reporting on cash transfers and qualifying  trust funds make it difficult to compare the indicator from year to year and  quantify the progress needed to achieve its 30 percent target.
Cash transfers. In its March 2013 progress report and data released  in October 2013, USAID reported fiscal year 2012 dollar amounts  and percentages of mission program funds obligated to local  organizations, both including and excluding cash transfers. For all 3  fiscal years for which data are available, if cash transfers are included  in the indicator definition, the overall percentage of funds obligated to  local organizations increases. As of fiscal year 2012, according to  USAID data, the agency obligated about 14 percent of mission  program funds, or about $1.4 billion, to local organizations, excluding  cash transfers. With cash transfers included, the agency obligated  more than 17 percent, or about $1.7 billion in fiscal year 2012.
Qualifying trust funds. According to USAID officials, after publication  of the March 2013 progress report, USAID determined that  contributions to certain trust funds made by two missions met the   The addition of these qualifying  agency’s definition of local funding. trust funds increases the agency-wide percentage of local funding for  fiscal year 2012 from about 14 percent to about 21 percent. According  to USAID officials, the agency plans to include these qualifying trust  fund contributions in its future tracking and reporting of local mission  program funding because they meet the agency’s definition of local  funding.
Cash transfers and qualifying trust funds. When both cash  transfers and all qualifying trust funds are included in the indicator  definition, the agency-wide percentage of local funding rises to about  24 percent in fiscal year 2012.
The October 2013 data published by USAID on its website reflect the agency’s  determination that about $29 million and $671 million in trust fund contributions made by  USAID missions in Bangladesh and Afghanistan, respectively, met the definition of local  funding. meet the Local Solutions definition of local funding and determine  whether to include it.
section_title: Other Changes in Local Solutions Initiative Tracking
paragraphs: USAID also uses this indicator to report on the agency’s priority goals related to  procurement reform that it established in response to requirements under the Government  Performance and Results Act Modernization Act of 2010. USAID’s report on its priority  goals related to procurement reform defines the indicator as the percentage of program  funds implemented through local systems. See http://www.performance.gov for additional  information.
Afghanistan and Pakistan because these missions represent key  efforts to implement programs through local organizations. If  Afghanistan and Pakistan are excluded from the agency-wide  indicator, the percentage of mission program funds obligated to local  organizations in fiscal year 2012, including qualifying trust funds and  cash transfers, drops from about 24 percent to about 14 percent.
section_title: USAID’s Local Funding Is Concentrated in a Few Countries
paragraphs: On the basis of our analysis of the fiscal year 2012 data provided by  USAID, we found that funds obligated to local organizations are heavily  concentrated in a small number of countries—including Afghanistan and  Pakistan. With cash transfers and all qualifying trust funds, five USAID  missions—Afghanistan, Pakistan, Jordan, South Africa, and Uganda— accounted for 79 percent of all funding obligated to local organizations in  fiscal year 2012. The remaining 21 percent of all fiscal year 2012  funding obligated to local organizations was attributed to USAID’s other  72 missions (see fig. 2).
section_title: USAID Cannot Demonstrate Progress toward Local Solutions Goals Based on Its Principal Indicator Alone and Without Tracking Relevant Evaluations
paragraphs: USAID’s principal Local Solutions indicator does not fully reflect activities  the agency carries out to achieve the initiative’s goals of strengthening  partner-country capacity, enhancing and promoting country ownership,  and increasing program sustainability. Moreover, USAID does not have a  means for determining the extent to which missions are carrying out  evaluations that can provide evidence about the long-term effectiveness  of the initiative.
subsections: section_title: Principal Indicator Does Not Fully Capture Efforts to Implement the Local Solutions Initiative
paragraphs: USAID’s principal indicator of progress under the Local Solutions  initiative—the percentage of mission program funds obligated to local  organizations—does not fully capture the activities the agency undertakes  to achieve the goals of the initiative. For example, to achieve USAID’s  stated goals under the initiative, according to USAID, the agency has put  in place frameworks for all of the following activities, among others: assessing partner-country government and nongovernmental  organizations’ strengths and weaknesses, developing implementing mechanisms to mitigate risks and ensure providing technical assistance, and  carrying out monitoring and evaluation plans.
In its 2013 progress report, the agency provides information related to the  status of some of these various activities, such as numbers of  assessments completed and awards made to partner-country government  and nongovernmental organizations.report and other reports, the agency emphasizes increases in its Local  Solutions funding indicator to demonstrate progress. According to USAID  officials, that indicator is likely to remain the primary indicator used for  reporting progress on the Local Solutions initiative.
However, in the 2013 progress  By tracking obligated funds, the indicator indirectly measures—but to a  limited degree—the success with which USAID missions have proceeded  through required risk assessment and project design steps. First, in the  case of funding to partner-country governments, obligation of funds  occurs at the time of agreement—stage 4 under USAID’s five-stage  process for using country systems to implement programs. However,  according to USAID, because missions move carefully through the project  design phase, some missions have not yet obligated funds to partner  governments. As a result, the Local Solutions indicator does not capture  these missions’ efforts to assess and mitigate risk, including through  selection of implementing mechanism, as well as build capacity prior to  obligation of funds. Second, the indicator does not reflect the status of  reassessment activities in countries where USAID obligated funding to  local organizations prior to 2011, particularly in Afghanistan and  Pakistan.of mission activities occurring after the obligation of funds, including  monitoring and evaluation of program implementation. According to  USAID officials, agency headquarters does not require missions to report  this information.
Finally, the indicator provides no information about the status  Given these limitations, an emphasis on the funding indicator hampers  the ability of USAID program managers and external stakeholders to fully  understand whether and to what extent progress is being made toward  the initiative’s overarching goals. The 2013 progress report states that  USAID will revisit its indicators to ensure that they fully reflect USAID’s  efforts to achieve the goal of sustainable development.USAID officials have characterized the indicator as a proxy for measuring  progress in using the Local Solutions approach to achieve sustainable  development goals; officials further stated that the indicator is just one of  several approaches to measuring progress toward strengthening partner- country systems and promoting sustainable development. For example,  according to USAID, program managers in the field track specific  indicator data against outcomes specified in award agreements; in  addition, evaluation data provide information on progress toward  outcomes. Nevertheless, according to USAID officials, its funding  indicator is likely to remain the primary indicator used for reporting  progress on the Local Solutions initiative.
section_title: Steps Taken by USAID to Evaluate the Local Solutions Initiative Do Not Include the Means to Track Relevant Evaluations
paragraphs: USAID has laid some groundwork for evaluating the Local Solutions  initiative but cannot currently determine the extent to which missions are  planning or conducting evaluations the agency deems appropriate for  understanding the long-term effectiveness of the initiative. USAID has  taken the following steps to be able to evaluate the Local Solutions  initiative:
Assistance to missions. According to USAID, headquarters staff  provide assistance to missions in designing projects and identifying  indicators for measuring capacity development and other outcomes,  among other things. The missions are responsible for designing  projects and carrying out monitoring and evaluation plans.
Evaluations and studies. USAID compiled evaluations of completed  capacity-building projects and commissioned studies and background  papers. For example, one study commissioned by USAID noted that  emphasis on using country systems stems from an experience-based  consensus that project-centered approaches have undermined efforts  to support partner-government capacity. Furthermore, the study  concluded that increasing funding to local organizations is associated  with improved capacity of partner governments in some countries, but  the study also noted that evidence demonstrating impacts relative to  other approaches is limited.
Stakeholder meeting. In November 2012, USAID organized a  meeting of international development stakeholders to gather lessons  learned from past USAID and other donors’ efforts to build partner- country capacity and ensure sustainability.
Draft framework. The studies and the stakeholder meeting led to  publication, in October 2013, of USAID’s draft framework for  supporting sustainability; the agency solicited feedback on this draft  and plans to issue a final version in the spring of 2014.
According to USAID, the agency has determined that impact  evaluations of the Local Solutions initiative are not feasible because of  (1) the lack of a valid counterfactual, or control group for the purposes of  comparison, and (2) the need for flexibility and adaptability in  implementing multiyear programs in complex environments. Senior  USAID officials also cited the level of difficulty involved and challenges  associated with involving partner-country governments in program and  project planning cycles, among other things, as reasons why impact  evaluations are not appropriate. Furthermore, these officials told us that  performance evaluations of programs or projects using a Local Solutions  approach—those involving local organizations as implementers—are both  feasible and appropriate. However, headquarters officials were not able  to determine the extent to which missions have undertaken performance  evaluations of programs or projects using a Local Solutions approach  since the launch of the initiative.
USAID’s Evaluation Policy requires missions to provide information about  planned and completed evaluations on USAID’s public website. example of evaluations that are relevant for the Local Solutions initiative,  USAID officials stated that headquarters will undertake at least one  multicountry evaluation of long-term effects of basic education programs  in fiscal year 2014, and some of those programs may have used local  partners for implementation. As of April 2014, the agency’s website  allows users to search for evaluations by document type (e.g., evaluation  summary or program evaluation guide), by sector (e.g., health, education,  democracy and governance), and by year, among other things. However,  the online registry of evaluations does not provide users with a means to  search for evaluations of programs or projects implemented by local  organizations. Without a means to track evaluations of programs or  projects that use a Local Solutions approach, USAID headquarters  officials and stakeholders are not able to easily obtain evidence needed  to demonstrate Local Solutions’ progress in achieving USAID’s Local  Solutions goals related to country capacity, country ownership, and  program sustainability.
According to USAID, the agency’s 2013 progress report constitutes a Local Solutions  evaluation plan; however, the report does not include plans for evaluating programs or  projects implemented through local organizations.
section_title: Conclusions
paragraphs: With its Local Solutions initiative, USAID has undertaken an ambitious  change in how it administers development assistance, a fundamental shift  that is consistent with an international consensus on how best to improve  global development effectiveness and accountability. By issuing a  progress report on its reform efforts, publishing data on Local Solutions  funding, and presenting research on best practices, among other things,  USAID has demonstrated a commitment to transparency and public  dialogue regarding the initiative. Nevertheless, as USAID expands the  Local Solutions initiative, it relies on a single funding indicator to measure  progress. The agency has had difficulty deciding how best to define this  indicator and report on it consistently; as a consequence, comparing  annual results for this indicator and accurately measuring progress is  unnecessarily complex. In addition, in relying on this funding indicator to  such an extent, USAID does not capture important progress taking place  as the agency adopts the Local Solutions funding approach, such as  missions’ efforts to assess and mitigate risk and carry out monitoring and  evaluation plans, among other things. Finally, though USAID policy states  that evaluation is a crucial tool for informing its development efforts,  USAID lacks a means to identify evaluations of Local Solutions efforts  from among the evaluations that USAID collects and makes available on  its website. Without such evaluations, agency officials and stakeholders  are prevented from bringing to bear rigorous evidence of the initiative’s  long-term effects on local capacity, country ownership, and program  sustainability.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the USAID Administrator take the following three  actions to improve the agency’s tracking and reporting on progress of its  Local Solutions initiative:
Clarify in future reporting the types of funding included in the  percentage of USAID funds obligated to partner-country local  organizations.
Identify additional indicators to better capture Local Solutions  progress toward the initiative’s goals.
Provide a means to identify evaluations of programs that are  implemented by partner-country local organizations.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USAID for review and comment.  USAID provided technical comments on the draft, which we incorporated  as appropriate. USAID also provided written comments, which are  reprinted in appendix III. In its written comments, USAID did not explicitly  agree or disagree with our recommendations but described efforts  underway to consistently report on the Local Solutions initiative, improve  project-level monitoring, and track relevant evaluations.
With regard to our first recommendation to clarify the types of funding  included in the percentage of USAID funds obligated to partner-country  organizations, USAID stated that it has always been its intention to  include, in calculating the indicator, every award that meets the definition  of “local.” It noted that over time USAID has learned from its experience  and has broadened the types of implementing mechanisms that qualify in  meeting the definition of “local” used in the indicator. USAID’s explanation  is consistent with our finding. While we understand USAID’s position on  the circumstances that led to its reporting on the primary Local Solutions  indicator in different ways, we believe that further actions are needed. In  this context, we note that the fiscal year 2013 dataset USAID published  on its website just prior to publication of this report represents a step  toward the clarity we recommended the agency provide in its reporting on  its primary Local Solutions indicator.
With regard to our second recommendation that USAID identify additional  indicators to better capture Local Solutions progress, USAID stated that it  does not plan to develop additional agency-wide indicators for Local  Solutions. USAID noted that each project involving local development  partners varies greatly depending on project objectives, country context,  and local partner strengths and challenges; hence, indicators in one  country, region, or sector could be irrelevant in another. USAID stated  that while it is not pursuing development of common indicators beyond  the current agency-wide Local Solutions indicator, it has efforts under way  to train USAID staff in effective project design and performance  monitoring, including the identification of meaningful and useful indicators  to measure project objectives. In addition, it cited a USAID Forward  reform that mandates that each mission thoughtfully consider indicators to  measure progress toward mission objectives and noted that it is working  on providing more guidance to USAID staff on Local Solutions-focused  performance monitoring approaches (including indicators) and evaluation  questions. We continue to believe that further steps to implement our  recommendation are needed. For example, the procedures USAID  missions are required to follow to implement programs using a Local  Solutions approach—such as those noted in USAID’s response, among  others—are examples of concrete activities that could be tracked to  reflect agency-wide progress. We maintain that even a relatively modest  expansion beyond the one principal Local Solutions indicator would  supplement USAID’s reporting on progress in achieving the initiative’s  goals.
With regard to our third recommendation that USAID provide a means to  identify evaluations of programs implemented by partner-country local  organizations, USAID stated that it is introducing a tag in its evaluation  registry to track the evaluation of projects that are directly implemented  through local partners. In its response to this recommendation, USAID  also described plans to start conducting, in the current fiscal year, priority  evaluations addressing questions of local systems change, and to  commission a multicountry program evaluation in fiscal year 2016 on the  effectiveness and efficiency of Local Solutions interventions that use  direct funding. We believe that these actions, when implemented, will  address the intent of our recommendation.
We are sending copies of this report to appropriate congressional  committees and the USAID Administrator. In addition, the report will be  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-3149 or gootnickd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The U.S. Agency for International Development’s (USAID) principal  indicator for its Local Solutions initiative is the percentage of mission  program funds implemented through local organizations, which the  agency tracks at the time of obligation. USAID established an agency- wide target of obligating 30 percent of mission program funds to local  organizations by fiscal year 2015 (referred to hereafter as the agency’s  “30 percent target”). The objectives of this report were to assess the  extent to which USAID (1) has demonstrated progress toward achieving  its 30 percent target, and (2) is tracking progress in achieving the Local  Solutions goals of strengthening partner-country capacity to implement  programs, enhancing and promoting country ownership, and increasing  sustainability.
To address these objectives, we reviewed USAID Local Solutions  initiative documents, including the March 2013 USAID Forward progress  report and agency documents published at the launch of the initiative that  explain the rationale, baseline figures, and targets for the initiative. We  also analyzed fiscal years 2010, 2011, and 2012 data on USAID mission  program funds obligated to local organizations, which agency officials had  extracted from USAID’s financial system. On the basis of our review of  the data and interviews with agency officials, we determined that the data  were sufficiently reliable for our reporting purposes. In this report, we note  that USAID has reported on the Local Solutions indicator with and without  the inclusion of cash transfers and additional qualifying trust funds USAID  identified after the release of the 2013 progress report. We chose to  present our analyses of the USAID data with the inclusion of cash  transfers and qualifying trust funds in our calculations—representing the  maximum amounts USAID obligated to local organizations. We note,  where appropriate, how these figures change when we exclude these  funds—representing the minimum amounts. At the time of our review,  fiscal year 2013 data had not yet been completely validated and thus  were not available for our analysis. We interviewed USAID officials in  Washington, D.C., about the Local Solutions initiative and the supporting  data, and in some cases, received written responses to our questions. In  assessing the Local Solutions indicator to identify relative strengths and  weaknesses, we reviewed a prior GAO report that identified nine  attributes of performance goals and measures based on previously  established GAO criteria.
In addition, we reviewed aid effectiveness literature on providing  assistance directly through local organizations, including studies and  other publications collected, commissioned, or conducted by USAID. We  reviewed international donor commitments, such as the Paris Declaration  and Accra Agenda for Action, which were intended, in part, to promote  donor consensus on principles related to recipient country ownership. We  reviewed USAID policy and guidance, including the agency’s evaluation  policy and relevant sections of the Automated Directives System. We sent  USAID officials in Washington, D.C., several sets of questions and either  interviewed them in person or received written responses.
We conducted this performance audit from June 2013 to April 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: GAO Analysis of USAID Local Solutions Data for Fiscal Years 2010 through 2012
paragraphs: In fiscal year 2012, USAID obligated about $2.4 billion, including cash  transfers and all qualifying trust funds, to local organizations. Of this $2.4  billion, USAID obligated $10 million or less through 56 missions, $10 to  $20 million through 10 missions, and over $50 million through 5 missions.  See figure 3 for the complete distribution of the funding amounts USAID  missions obligated to local organizations in fiscal year 2012.
Of the funds that USAID missions obligated to local organizations in fiscal  year 2012, the majority—about 71 percent—were obligated to partner- country governments. The remaining funds were obligated to various  local organizations as follows: 20 percent to local nonprofit organizations,  6 percent to local for-profit organizations, and 2 percent to local  educational institutions. See figure 4 for a breakdown of USAID funds  obligated to local organizations by organization category. For each  category, we also list the amount of funds obligated by the five missions  obligating the greatest amounts of funds in each local organization  category.
In fiscal year 2010, USAID missions obligated 71 percent of local mission  program funds to partner-country governments and 29 percent to local  nonprofit and for-profit organizations and educational institutions. In fiscal  year 2011, USAID mission obligations to these organizations were 63  percent and 37 percent, respectively (see fig. 5). USAID has not fully  validated their fiscal year 2010 and 2011 data for accuracy regarding the  breakdown of the mission program funds obligated to local nonprofit and  for-profit organizations and educational institutions; hence, we did not  calculate further breakdowns for these years.
section_title: Appendix III: Comments from the U.S. Agency for International Development
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: David Gootnick, (202) 512-3149 or gootnickd@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jim Michels (Assistant Director),  Todd M. Anderson, David Dayton, Martin De Alteriis, Etana Finkler, Grace  Lui, Shirley Min, Kathleen Monahan, and John O’Trakoun made key  contributions to this report. In addition, Heather Latta provided technical  assistance and other support.