Foreign Assistance

In response to budget constraints and concerns about effectiveness, major donors, including the United States, are reassessing their foreign aid programs and strategies. The method of delivery is one of the primary areas being reexamined. Although most U.S. foreign aid is still delivered on a government-to-government basis, the current administration had pledged to boost the percentage of U.S. assistance being channeled through nongovernmental organizations during the next five years. Some congressional proposals have recommended that U.S. development aid be channeled through nongovernmental organizations, including private voluntary organizations. Support for a greater private voluntary organization role in delivery assistance seems to stem from general disappointment with the results of more than 40 years of government-to-government assistance and a perception that private groups are better able to identify development needs and deliver help. This report analyzes (1) private voluntary organizations' role in delivery U.S. foreign assistance and potential issues and implications of increasing their role in delivery aid, including accountability issues; (2) 26 private voluntary organization projects and whether they were achieving their objectives; and (3) the extent to which U.S. private voluntary organizations are dependent on U.S. government funding.

GAO found that: (1) the PVO community encompasses organizations of varying sizes, missions, geographic focuses, and capabilities, and they work to address varied development needs; (2) PVOs serve as a complement to traditional government-to-government assistance and can be a mechanism to strengthen indigenous community-level organizations; (3) while PVOs have demonstrated that they are generally effective in carrying out community-based development projects, most have not had wide experience in working with governments and institutions on sectoral and macroeconomic policy reforms necessary to create an environment favorable to development; (4) twenty of the 26 PVO projects GAO reviewed were making progress toward their objectives, and good project design, competent in-country staff, and local participation were factors common to the most successful projects; (5) PVOs are increasingly using local groups to carry out projects, which should increase the local capacity for development; (6) most projects GAO reviewed included local capacity building, which is critical to long-term development and sustainability; (7) accountability for Agency for International Development (AID) assistance funds has been a continuing concern, and over the last decade, AID has encouraged and assisted PVOs to improve their program and financial management systems; (8) providing increased amounts of foreign aid directly through PVOs or through a foundation, as suggested in some reform proposals, would remove a key accountability mechanism from the U.S. foreign assistance programs; (9) although some individual PVO projects may be funded entirely by AID, PVOs, as a group, have become less dependent on U.S. funding; (10) federal funding as a share of total funding for PVOs receiving federal support dropped from 42 percent to 29 percent between 1982 and 1992; and (11) U.S. funding for PVOs has increased, but private resources have increased faster.