Development and humanitarian assistance is one of five parts of the International Affairs (function 150) budget that support U.S. government foreign assistance efforts. Development and humanitarian assistance includes State and USAID assistance activities, the Millennium Challenge Corporation, the Peace Corps, Treasury contributions, and, from fiscal year 2003 through 2006, spending for the relief and reconstruction of Iraq. In fiscal year 2006, development and humanitarian assistance made up $44 billion, or just over one-half of the total $84 billion of International Affairs (function 150) budget funds available to support foreign assistance (see fig. 1). The four other types of funding in the International Affairs (function 150) budget that support foreign assistance activities include the following: International security assistance, to finance and train foreign militaries, promote nonproliferation activities, and support international peacekeeping operations; The conduct of foreign affairs, which fund the salaries, information technology, housing, and security for State staff, including those with responsibilities to administer and monitor foreign assistance activities; Foreign information and exchange activities, which include fiscal accounts supporting education, cultural exchange activities, and U.S. broadcasts overseas; and International financial programs, which primarily support the International Monetary Fund and the Export-Import Bank of the United States. (See app. II for a break down of budget amounts available from each part of the International Affairs (function 150) budget in recent years.) Of the total $44 billion of development and humanitarian assistance available in fiscal year 2006, State received about $5 billion, or 11 percent. Other agencies received more of these funds, including USAID, which received about $15 billion, or 34 percent, and the Department of Treasury, which received about $13 billion, or about 30 percent. In January 2006, the Secretary of State established F Bureau to serve as an umbrella leadership structure for coordinating all foreign assistance policy, planning, and oversight. The purpose of this reorganization was to ensure that foreign assistance is used as effectively as possible to meet broad foreign policy objectives, more fully align the foreign assistance activities carried out by the Department of State and USAID, and demonstrate responsible stewardship of taxpayer dollars. In announcing these changes, the Secretary noted that “the current structure of America’s foreign assistance risks incoherent policies and ineffective programs and perhaps even wasted resources.” The director of U.S. Foreign Assistance serves concurrently as the USAID Administrator, and has authority over all State and USAID foreign assistance funding and programs. According to State, the F Bureau provides coordination and guidance to all foreign assistance delivered through other agencies and entities of the U.S. government. Specifically, the director was given authority over program planning, implementation, and oversight of the various bureaus and offices within State and USAID, to develop a coordinated U.S. government foreign assistance strategy, including developing 5-year country specific assistance strategies and annual country-specific assistance operational plans; create and direct consolidated policy, planning, budget and implementation mechanisms and staff functions required to provide umbrella leadership to foreign assistance; provide guidance to foreign assistance delivered through other agencies and government entities, including the Millennium Challenge Corporation and the Office of the Global AIDS Coordinator; and direct the required transformation of the government’s approach to foreign assistance in order to achieve the President’s Transformational Development Goals. State’s funding available for international development and humanitarian assistance, such as democracy promotion, drug interdiction, and refugee assistance, nearly doubled between fiscal years 2000 and 2006. State uses certain fiscal budget accounts to fund its development and humanitarian assistance programs, with accounts related to refugees and international narcotics control providing the most funding. State’s funding for international development and humanitarian assistance nearly doubled from $2.4 billion in fiscal year 2000 to $4.7 billion in fiscal year 2006. This increase in the funds available each year for obligation meant more management responsibilities for State. This funding consisted primarily of annual congressional appropriations and unused portions from previous fiscal years, but it excluded money that State allocated to other agencies to obligate. After decreasing slightly in fiscal year 2001, the available funding increased steadily through fiscal year 2006, with the sharpest increases coming after fiscal year 2003 (see fig 2). These increased amounts varied by assistance areas (see table 1). About a quarter of the overall increase in funding available to State was from (1) fiscal accounts annually appropriated to the President, such as the economic support fund account, and (2) the assistance for Eastern Europe and the Baltic States account—which fund assistance in areas such as economic support, democracy promotion, and efforts to combat human trafficking. However, most of the increase was from migration and refugee assistance, Global HIV/AIDS assistance, INCLE, and drug interdiction accounts that are annually appropriated to State. The amounts appropriated by Congress to particular areas do not always match the amounts available to State each year because appropriated funds may be available for obligation for more than a year or transferred to other agencies. For example, according to State officials, State allocates most of the funding that it is appropriated from the Global HIV/AIDS Initiative account to other agencies, which then obligate the funds. For instance, in fiscal year 2006, State allocated over 90 percent of the nearly $2 billion Global HIV/AIDS Initiative appropriation to USAID, the departments of Health and Human Services and Labor, and others. State also received funding from the supplemental appropriation for Iraq Reconstruction. (See app. III for a breakdown of State’s funding from development and humanitarian assistance fiscal accounts for fiscal years 2000 through 2006). Many State bureaus are responsible for managing at least some types of development and humanitarian assistance funds. Fifteen State functional bureaus and all six regional bureaus have received development and humanitarian assistance funds to some degree since fiscal year 2000. The primary users of this funding among the bureaus include the following: Bureau of Democracy, Human Rights, and Labor (DRL); The Office to Monitor and Combat Trafficking in Persons (G/TIP); Bureau of Population, Refugees, and Migration (PRM); The Office of the U.S. Global HIV/AIDS Coordinator; Bureau of International Narcotics and Law Enforcement Affairs (INL) Bureau of European and Eurasian Affairs; and Bureau of Near Eastern Affairs. These bureaus and offices that manage development and humanitarian assistance rely on funding from particular assistance accounts. DRL and G/TIP primarily receive funds from the economic support fund to manage their respective programs. In addition, G/TIP receives some funds from the INCLE fiscal account. PRM manages money from the migration and refugee assistance and emergency refugee migration assistance accounts, and the Office of the Global AIDS Coordinator manages money from State’s Global HIV/AIDS initiative fiscal account. INL manages most of State’s funding from the INCLE account, and it manages all of State’s funding from the Andean counterdrug initiative account. The Bureau for European and Eurasian Affairs manages assistance for Eastern Europe and Baltic States and the assistance for the independent states of the former Soviet Union accounts. Finally, the Bureau of Near Eastern Affairs uses funds from the economic support fund to manage its Middle East Partnership Initiative (MEPI) democracy promotion programs. State does not always obligate all of its available funds each year. State’s authority to commit unobligated funds for spending can be carried over to the following year or may expire, depending on how long Congress makes the appropriated funding available. State obligates funds on particular foreign assistance activities as it awards grants, enters into contracts, and enters into cooperative agreements. State primarily uses grants and cooperative agreements to fund development and humanitarian assistance activities. State defines a grant as assistance used to support a public purpose, but for which no substantial involvement by government is anticipated. A cooperative agreement is a type of grant that State uses if it anticipates substantial government involvement during the course of the agreement. There are exceptions to State’s reliance on grants and cooperative agreements for delivering foreign assistance. PRM primarily uses voluntary contributions to deliver foreign assistance through international organizations. According to PRM officials, voluntary contributions do not have the same terms or conditions required for grants or cooperative agreements, but PRM contribution letters require international organizations to maintain financial reports and accounting records, provide documentation for payment requests, and submit published program and financial reports to PRM in accordance with each international organizations’ policies and procedures. According to State, INL mainly delivers its assistance through bilateral agreements with foreign governments. State primarily manages its development assistance and humanitarian programs centrally, obligating the majority of the funds and making the assistance awards from State headquarters in Washington, D.C. Grants officers and grants officer representatives have formal oversight responsibilities, though other staff also carry out such functions informally. A mix of headquarters and overseas staff monitor the implementation of program activities, and only a few bureaus have staff overseas specifically assigned to their programs. State generally carries out its program planning, solicitation of proposals, selection of grantees, and approval of the release of funds for overseas programs from its headquarters in Washington, D.C. The major bureaus and offices that are responsible for development and humanitarian assistance made assistance awards and obligated the majority of their funds—about 77 percent of the $2.6 billion in total obligations in 2006— from their headquarters in Washington. Three bureaus and one office— PRM, DRL, the Bureau of South and Central Asian Affairs and the Office of the Global HIV/AIDS Coordinator—obligated all of their funds from headquarters during fiscal year 2006. An exception was the Bureau of East Asian and Pacific Affairs, for which overseas posts obligated 86 percent of the funds. Generally, funds were obligated for assistance awards to U.S.- based nongovernmental organizations with ties to overseas organizations. The bureaus and offices in our scope awarded over 7,000 grants and cooperative agreements totaling about $1.2 billion in fiscal year 2006. Table 2 shows funds obligated in Washington and overseas during fiscal year 2006 for these bureaus and offices.