Development assistance, which comprises on average less than 1% of the annual federal budget of the United States, serves simultaneously as a component of national security strategy, a tool to promote U.S. commercial interests, and a global expression of American values. As with other aspects of foreign policy, U.S. development assistance programs and policies are implemented in a complex global environment. The United States is one of dozens of countries and multilateral financial institutions providing such aid, together with non-governmental organizations (NGOs) and foundations, and alongside private financial flows to developing countries from investors, international corporations, and diaspora communities. Donors and investors work in overlapping spheres in the developing world, each with their own practices and agenda. Improved coordination of these efforts, many experts argue, would result in greater efficiency and effectiveness in meeting global development objectives. Donor coordination, sometimes called harmonization, is a major theme of international development cooperation agreements of the last decade, including the 2005 Paris Declaration on Aid Effectiveness, to which the United States and most other major donors have committed themselves. It is also a stated goal of U.S. foreign policy. The December 2010 Quadrennial Diplomacy and Development Review (QDDR) report includes specific strategies to improve coordination with other aid donors, public and private. Nevertheless, donors on average, and the United States in particular, have had limited success in meeting the coordination goals they established for themselves. Some experts have begun to question whether donor coordination is an achievable or even appropriate goal. Others assert that coordination of foreign aid is now more important than ever, as official donors face increasing budgetary pressures at home and the number and diversity of development actors increases. The 113 th Congress will have the opportunity to address foreign aid funding and policy issues when considering annual State-Foreign Operations appropriations legislation, and perhaps foreign aid reauthorization or reform legislation. The benefits and drawbacks of greater U.S. coordination with the foreign aid efforts of other countries and institutions may be a consideration in that debate. This report provides a summary of official development assistance (ODA), discusses coordination goals established by donors at international development policy forums, and provides an overview of U.S. policy and efforts to meet these goals. The report concludes by identifying key issues in donor coordination, including the growing role of non-traditional donors, such as China, in development cooperation. Data on official development assistance (ODA) are gathered and reported annually by the Organization for Economic Cooperation and Development's (OECD's) Development Assistance Committee (DAC), currently the preeminent forum for foreign aid donor information sharing. In 2011, the most recent year for which complete data is available, the OECD reports that 45 countries and 22 multilateral organizations disbursed ODA, the most widely recognized category of foreign assistance. For a list of bilateral and multilateral ODA donors, as well as leading private sector aid donors, see the Appendix . While the OECD DAC is the most comprehensive source of information on official development assistance, its data are incomplete. There are only 34 OECD member states. Annual reporting of ODA to the DAC has expanded in recent years to include many non-OECD countries, but the non-OECD reporting is voluntary and irregular. Furthermore, it does not include several increasingly important donors, such as Brazil, China, Russia, India, and South Africa. These nations have been invited to participate in the DAC reporting process but choose not to for political and technical reasons, as discussed in the "Nontraditional Donors" section of this report. ODA data also exclude private aid resources, which are a rapidly growing, though inconsistent, portion of capital flows to developing countries in recent decades. While comprehensive data on private flows are elusive, private philanthropic donations from DAC countries to developing countries have been estimated at about $56 billion for 2010, and total private capital flows to developing countries that year, including remittances and private investment, are estimated at $329 billion. ODA is estimated to have accounted for less than 20% of total OECD economic engagement with developing countries in recent years, prompting many development experts to call for a development coordination strategy that extends beyond official aid to include trade, migration and foreign investment policies. The primary argument for better donor coordination is that aid effectiveness is becoming increasingly undermined by fragmentation. More donors are giving ODA than in decades past, and, until recently, many donors were spreading their assistance across a growing number of recipients. The United States, for example, provided ODA to 81 countries in 1990 and to 134 in 2011. Almost all the top recipients of ODA in 2011 hosted dozens of donors, both bilateral and multilateral. The United States and other donors in recent years have expressed the intent to concentrate their aid in fewer countries and sectors as a means of decreasing fragmentation and improving impact, but significant change is not yet reflected in the OECD data. Coordination advocates argue that the profusion of donor agencies in many developing countries causes problems for donors and recipients alike. They focus on the following types of problems, both observed and potential, which may undermine aid efficiency and effectiveness. Not all foreign aid professionals are concerned about the growing number of donors in many developing countries. Some contend that the wide variety of independent donors is valuable in demonstrating pluralism in action and reflecting the decentralization of authority that many development plans promote. Others argue that having a range of active donors leads to more ideas, competition, and innovation, as well as a more consistent flow of funding. Some development professionals believe donor coordination is the responsibility of recipient governments, not donors, and that while it may be frustrating to donors when host government officials do not act in concert, failure to coordinate often reflects political and policy differences that must be worked out by the host officials through internal political processes. Others see potential benefits of coordination, but question whether they warrant the time consuming task of donor coordination, particularly in countries for which aid is not a major component of the national budget. In the context of recent international development forums, however, donor and recipient countries alike have expressed widespread agreement on the desirability in principle of greater donor coordination and consolidation of foreign assistance activities to address fragmentation concerns. The first formal coordination of official development assistance dates to the establishment of the OECD DAC in 1960, a forum created for the major bilateral aid donors, including the United States, to discuss issues and develop guidance related to aid and development. With respect to multilateral aid, the United Nations Development Program (UNDP) was established in 1965 through a merger of existing U.N. aid offices to avoid duplication of effort within the multilateral U.N. development programs. For the most part, early coordination efforts involved tracking how much aid was provided, and to which countries. Over the last decade, however, attention has focused on coordinating the efforts of bilateral and multilateral aid donors for the purpose of improving aid efficiency and effectiveness. The DAC created a Working Party on Aid Effectiveness (WPAE), in 2003, to establish an international development cooperation framework. Since its creation, the WPAE has sponsored four international high-level forums on aid effectiveness, which established common goals, principles and commitments related to development assistance. The United States has played a leading role in this process. Donor coordination was a key issue at these gatherings and the products of these forums reflect broadly accepted goals and best practices in donor coordination. The OECD-sponsored High Level Forum on Harmonization (HLF), held in Rome in 2003, focused on ways to accelerate progress on the United Nation's Millennium Development Goals (MDGs) by improving the management and overall efficiency of official aid. The result was a Declaration on Harmonization that set out broad goals, such as ensuring that donor assistance is aligned with host country priorities, expanding country-led efforts to streamline donor procedures and practices, and implementing good practices, principles, and standards as the foundation of coordination. While this forum inspired action by many donors toward better coordination, including the United States, it did not establish formal goals or standards by which to evaluate progress in this regard. As a follow-up to the Rome forum, a HLF on Aid Effectiveness was held in Paris in 2005. The product of this meeting, the Paris Declaration on Aid Effectiveness, gave concrete structure to the global development agenda that was discussed in Rome. The Declaration also expanded on the Rome model by including recipient countries as equal partners with shared responsibilities. More than 100 countries and aid agencies, including the United States, endorsed the Declaration's five partnership principles: country ownership, harmonization, alignment, results, and mutual accountability. The United States, through a multi-agency delegation led by then-USAID Administrator Andrew Natsios, was active in crafting the Declaration, and advocated for a results-oriented approach focused on mutual accountability. Unlike the Rome Declaration, the Paris Declaration included specific goals and a strong monitoring component. Indicators of progress by which to evaluate aid effectiveness, and target results for 2010, were established for each principle. OECD's WPAE, within which USAID represented the United States, established a Joint Venture on Monitoring the Paris Declaration tasked with periodic monitoring of donor and recipient country progress toward meeting indicator targets. The progress indicators relating to donor coordination—or harmonization, as it was referred to in the Declaration—were (1) the use of Common Arrangements or Procedures (the percentage of aid that flows to development programs managed by host governments and supported by multiple donors rather than to donor-managed projects), and (2) Shared Analysis (the percentage of field missions and country analytic works that are carried out by at least two donors working jointly, or one as the agent of another). Several other indicators, such as alignment with host country priorities, joint technical assistance, use of country financial and procurement systems, and avoiding parallel implementation structures, relate to donor coordination as well. A follow-up forum to the Paris HLF was held in Accra, Ghana, in September 2008.