Foreign Assistance

Congress and the executive branch have been deliberating on how to reform the U.S. foreign assistance program given the rapidly changing global environment and recurring management problems. This report provides information on how six other bilateral donors--Canada, Germany, Japan, Sweden, the Netherlands, and the United Kingdom--and the European Union, a multilateral donor, manage their foreign aid programs. GAO discusses (1) the difficulty of planning in an uncertain environment, (2) common structural dilemmas in foreign aid programs, and (3) common management weaknesses.

GAO found that: (1) the worldwide recession, growing deficits, and budget cuts have forced most donors to make choices among aid programs and recipients; (2) some of the seven donors studied have established criteria upon which to base their allocation of development assistance funds decisions, structured budget allocations by region to eliminate the sense of recipient entitlement, and targeted assistance based on the recipient's needs and income level; (3) foreign aid donors believe that the objective of a foreign aid program is ultimately political and should be revisited as conditions change; (4) the effectiveness of strategic planning as an internal management tool can be enhanced if policymakers address the desired balance among multiple objectives through a central, braod-based foreign policy; (5) supporting commercial self-interests continues to be an important objective of donors' foreign aid programs in spite a U.S.-initiated international agreement restricting the use of tied aid; (6) effective intragovernmental coordination systems striving for a coherent foreign policy may be a more critical factor in aid effectiveness than the organizational placement of aid agencies; (7) the growing complexity of aid programs and the proliferation of agencies involved further reinforces the need for central policy-setting and interagency coordination systems; (8) although several of the donor countries believe that the Agency for International Development overseas network offers some operational advantages, all seven studied have targeted their overseas presence based on type of program and recipient, overall foreign policy interests, and the budgetary resources available; and (9) several donor countries have recognized that the changing role of aid agencies from implementers to brokers requires new approaches for accountability, program management, performance measurement, and personnel management.