Inter-American Foundation

In 1969, the Congress created the Inter-American Foundation, a government corporation, as an experimental agency to provide grants in support of grassroots development in Latin America and the Caribbean. The development included activities in areas such as agriculture and education. Because of concerns about the Foundation's activities and management practices, Congress reduced Foundation appropriations from an average of $21 million a year during the last four years to $5 million in fiscal year 2000. This report: (1) describes the Foundation's procedures for selecting organizations to receive grants, monitoring grantee organizations' compliance with grant agreements, and auditing grantees' use of funds; (2) analyzes the extent of the Foundation's compliance with these procedures; and (3) discusses the extent to which the Foundation provides grants to organizations that also receive financial support form the U.S. Agency for International Development.

GAO noted that: (1) the Inter-American Foundation has established several key procedures to assure that it awards grants to appropriate organizations and that grantees observe the terms of grant agreements; (2) GAO's analysis showed that the Foundation's compliance with its key procedures has been mixed; (3) the Foundation fully complied with procedures requiring the submission of financial disclosure reports, the performance of internal reviews of new proposals, and the disbursement of funds only after the review of required financial and progress reports; (4) however, GAO found compliance problems in the following areas; (5) for only 10 percent of the grants GAO reviewed did the Foundation's staff meet its requirements to make annual monitoring visits to grantee organizations and document the results; (6) further, it met its requirement to visit embassies and document the results for only 63 percent of the time its staff made country visits; (7) Foundation contractors submitted required monitoring reports for only 50 percent of the grants in GAO's sample; (8) in 25 percent of the grants in GAO's sample were financial audit reports submitted within a reasonable time frame; (9) GAO could not assess the extent of the Foundation's compliance with its requirement to visit potential grantee organizations before the award of a grant because the grants in GAO's sample were approved before the Foundation required staff to document their visits; (10) the underlying cause for the low compliance with some established procedures was the Foundation's lack of management controls and oversight to ensure that procedures were being followed; (11) the Foundation has recently taken some steps to address these issues; (12) although the Foundation and the Agency for International Development generally operate in the same countries in Latin America and the Caribbean, and both agencies fund microenterprise development projects, they do not, with very few exceptions, fund the same organizations; (13) the Foundation typically awards grants to small, grassroots organizations, while the Agency for International Development focuses on supporting larger, well-established international organizations whose resources reach large groups of individuals; and (14) since fiscal year 1998, the Foundation's criterion for grant selection is to award grants to organizations that have not received support from the Agency for International Development.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: