In January 2006, to better align foreign assistance programs with U.S. foreign policy goals, the Secretary of State appointed a Director of Foreign Assistance with authority over all State and USAID foreign assistance funding and programs. In working to reform foreign assistance, the Director’s office, State/F, has taken a number of steps to integrate State and USAID foreign assistance processes. These steps have included, among others, integrating State and USAID foreign assistance budget formulation, planning and reporting processes. As part of the reform, State/F, with input from State and USAID subject matter experts, developed the Foreign Assistance Framework, with its five strategic objectives, as a tool for targeting U.S. foreign assistance resources; instituted common program definitions to collect, track, and report on data related to foreign assistance program funding and results; and created a set of standard output-oriented indicators for assessing foreign assistance programs. State/F also instituted annual operational planning and reporting processes for all State and USAID operating units. Moreover, State/F initiated a pilot program for developing 5-year country assistance strategies intended to ensure that foreign assistance provided by all U.S. agencies is aligned with top foreign policy objectives in a given country. These integrated processes are supported by two data information systems, known as the Foreign Assistance Coordination and Tracking System (FACTS) and FACTS Info. In July 2009, the Secretary of State announced plans to conduct a Quadrennial Diplomacy and Development Review, intended in part to maximize collaboration between State and USAID. According to State, this review will identify overarching foreign policy and development objectives, specific policy priorities, and expected results. In addition, the review will make recommendations on strategy, organizational and management reforms, tools and resources, and performance measures to assess outcomes and—where feasible—impacts of U.S. foreign assistance. The review will be managed by a senior leadership team under the direction of the Secretary of State and led by the Deputy Secretary for Management and Resources, with the Administrator of USAID and the Director of the Policy Planning serving as co-chairs and with senior representation from State and USAID. Although State has not announced a formal time frame for producing a final report of the review’s results, a senior State official indicated that the process would likely produce initial results in early 2010. Under the Foreign Assistance Framework developed by State/F in 2006, the strategic objective GJD has four program areas—”Rule of Law and Human Rights,” “Good Governance,” “Political Competition and Consensus-Building,” and “Civil Society”—each with a number of program elements and subelements. State/F’s information systems, FACTS and FACTS Info, track funding allocated for assistance in support of GJD and these four program areas. Table 1 shows the four program areas and associated program elements. In fiscal years 2006 through 2008, funds allocated for the GJD strategic objective were provided for democracy assistance programs in 90 countries around the world. Almost half of all democracy funding over this period was spent in Iraq and Afghanistan; the next highest funded countries, Sudan, Egypt, Mexico, Colombia, and Russia, accounted for more than 25 percent of the remaining GJD funding allocated to individual countries other than Iraq and Afghanistan. Of the 20 countries with the largest GJD allocations, 8 have been rated by Freedom House, an independent nongovernmental organization, as not free; 8 have been rated as partly free; and 4 have been rated as free. Figure 1 illustrates the worldwide distribution of GJD funding, and table 2 shows funding levels and Freedom House ratings for the 20 countries with the largest with the largest allocations. allocations. USAID, State DRL, and NED fund democracy assistance programs in countries throughout the world. USAID’s and State DRL’s foreign assistance programs are funded under the Foreign Operations appropriation and tracked by State as part of GJD funding, while NED’s core budget is funded under the State Operations appropriation and is not tracked as part of GJD foreign assistance funding. U.S. Agency for International Development. In fiscal years 2006 through 2008, USAID democracy programs operated in 88 countries worldwide. USAID’s Office of Democracy and Governance, based in Washington, D.C., supports USAID’s democracy programs worldwide, but these programs are primarily designed and managed by USAID missions in the field. USAID democracy programs cover a large variety of issues including media, labor, judicial reforms, local governance, legislative strengthening, and elections. USAID programs are managed by technical officers, typically based in missions in the field, who develop strategies and assessments, design programs, and monitor the performance of projects by collecting and reviewing performance reports from implementing partners and conducting site visits, typically at least monthly. Bureau of Democracy, Human Rights and Labor. State DRL implements the Human Rights Democracy Fund, established in fiscal year 1998, providing grants primarily to U.S. nonprofit organizations to strengthen democratic institutions, promote human rights, and build civil society mainly in fragile democracies and authoritarian states. In 2006 through 2008, State DRL’s programs operated in 66 countries worldwide. According to State, State DRL strives to fund innovative programs focused on providing immediate short term assistance in response to emerging events. In addition, State DRL can also fill gaps in USAID democracy funding (see app. II). Unlike USAID, State DRL manages its democracy grant program centrally. State DRL’s Washington-based staff monitor these grants by collecting and reviewing quarterly reports from grantees and conducting site visits, typically through annual visits to participating countries. National Endowment for Democracy. In 1983, Congress authorized initial funding for NED, a private, nonprofit, nongovernmental organization. NED’s core budget is funded primarily through an annual congressional appropriation and NED receives additional funding from State to support congressionally directed or discretionary programs. The legislation recognizing the creation of NED and authorizing its funding, known as the NED Act, requires NED to report annually to Congress on its operations, activities, and accomplishments as well as on the results of an independent financial audit. The act does not require NED to report to State on the use of its core appropriation; however, State requires NED to provide quarterly financial reporting and annual programmatic reporting on the use of the congressionally directed and discretionary grants it receives from State. NED funds indigenous partners with grants that typically last for about a year. NED monitors program activities through quarterly program and financial reports from grantees and site visits, performed on average about once per year, to verify program and budgetary information. About half of NED’s total annual core grant funding is awarded to four affiliated organizations, known as core institutes. The remaining funds are used to provide hundreds of grants to NGOs in more than 90 countries to promote human rights, independent media, rule of law, civic education, and the development of civil society in general. State/F information systems show allocations of approximately $2.25 billion in GJD funding to operating units in fiscal year 2008, with about 85 percent of this amount allocated for State and USAID field-based operating units, primarily country missions. The estimated average annualized funding for democracy assistance projects active in our 10 sample countries as of January 2009 was $18 million for USAID, $3 million for State DRL, and $2 million for NED. In fiscal year 2008, more than half of State DRL funding for democracy assistance went to Iraq, followed by China, Cuba, Iran, and North Korea, and most NED funding for democracy programs went to China, Iraq, Russia, Burma, and Pakistan. Data from State/ F information systems, which report GJD allocations by operating unit, indicate that most GJD funding allocated in fiscal year 2008 went to country programs. The State/F systems show that, of more than $2.25 billion allocated for GJD in fiscal year 2008, approximately $306 million, or almost 15 percent, went to operating units in Washington, D.C., including USAID and State regional and functional bureaus and offices such as State DRL. More than $1.95 billion, or about 85 percent of the total allocation, was allocated to field-based operating units, primarily country missions. (See fig. 2 for the allocation of GJD funding by type of operating unit, for fiscal year 2008. See app. IV for a list of Washington, D.C.-based and field-based operating units that received GJD funds in fiscal years 2006-2008.) Figure 3 shows the distribution of democracy assistance funding for the four GJD program areas. Although State/F information systems enable reporting of democracy assistance allocations to operating units and by program area, these systems do not include funding information by implementing entity for the years we reviewed—fiscal years 2006 through 2008. Consequently, State/F data on GJD funding allocations to implementing entities— including the portion of allocations to field-based operating units that is programmed by each implementing entity—are not centrally located. However, in response to our request for information on USAID democracy assistance funding, State/F and USAID compiled data provided by USAID missions on GJD funding allocated to USAID for most country-based operating units for fiscal years 2006 through 2008. According to these data, USAID implements the majority of the democracy funding provided in most countries. In addition, State/F data show that the largest portion of GJD funding in fiscal year 2008 was allocated for the Good Governance program area (see fig. 3). (App. II shows amounts of USAID, State DRL, and NED funding distributed to all countries in fiscal years 2006-2008 as well as each country’s Freedom House rating.)