LegiStorm

Summary:

Congress provided $66.1 billion in foreign assistance appropriations in FY2023. In allocating foreign assistance and overseeing agencies’ execution of those funds, some Members of Congress have focused on the countries, international organizations, and sectors (global health, counter-narcotics, basic education, etc.) receiving aid. Congressional oversight has shed less light on the implementing partners through whom funding turns into programs, and the partnerships that activate that programming. This report provides an overview of the major methods of foreign assistance delivery, focusing on nonmilitary aid programmed through the U.S. Agency for International Development (USAID). It uses information from government databases, policies and strategies, and program descriptions to explain how aid dollars go from appropriation by Congress to expenditure by implementing partners. Most U.S. foreign aid is provided as a “project,” assistance designed and implemented to achieve discrete and defined development objectives. Projects deliver commodities, technical assistance (as either short-term consultants or long-term advisors and staff), equipment, infrastructure, events, and grants, among other things. A smaller share of assistance is provided to fund the general operating budgets of foreign governments (known as “budget support”) or U.S. contributions to public international organizations (known as “core contributions”). Administrative costs consume a portion of aid funds as well, which Congress has long monitored. Finally, agencies sometimes provide foreign assistance loans or loan guarantees, though this is now a much smaller share of assistance than in USAID’s early years. USAID spends aid dollars mostly through “implementing partners”: third parties that include private contractors, nonprofit organizations, foreign governments, international organizations, and other U.S. government agencies. Implementing partners may be U.S., foreign, or international organizations. Projects are typically executed through either an “acquisition” contract, typically with a for-profit implementing partner, or an “assistance” grant or cooperative agreement, typically with a nonprofit organization, foreign government, or public international organization. Since FY2019, USAID funding has incrementally shifted from acquisition to assistance. When evaluating U.S. foreign assistance policy and providing oversight of agency implementation of foreign assistance funds, Congress may weigh a series of trade-offs related to implementing partners and mechanisms, such as the following: • What are the risks and benefits of using U.S. firms and nonprofits, versus local partners, to implement U.S. foreign assistance? • Which types of expenditures constitute the “cost of doing business,” and how would Congress balance such costs against program funds? • What information should Congress seek on contractor indirect costs, and what is the proper way to evaluate the shape and size of those expenses? • What are the benefits and drawbacks of implementing aid through multilateral mechanisms, such as public international organizations? • Should USAID consider its nongovernmental implementing partners primarily as a tool to implement U.S. foreign assistance, or as an independent community of development workers that may be indifferent toward U.S. assistance priorities? This report is intended to describe the implementation vehicles used to deliver foreign assistance, not the appropriations, program planning, and award processes from which they result. For more details on the funding process, see CRS In Focus IF11515, U.S. Foreign Assistance: Budget Development and Execution, by Nick M. Brown. For a broad overview of U.S. foreign assistance, see CRS Report R40213, Foreign Assistance: An Introduction to U.S. Programs and Policy, by Emily M. McCabe and Nick M. Brown.