Events Leading to the Establishment of the National Endowment for Democracy

In response to a congressional request, GAO: (1) reviewed the events leading to the establishment of the National Endowment for Democracy; (2) determined whether grant funds for the feasibility study were spent for the intended purposes; (3) evaluated the research which served as the basis for a recommendation that the Endowment be established; (4) attempted to clarify the types of activities which the Endowment will sponsor; and (5) determined the status of the Endowment's operations and those of four private sector institutes which will implement activities for the Endowment.

In 1982, President Reagan expressed his support for a study to determine how the United States could more effectively contribute to the development of democratic values and institutions abroad. A feasibility study resulted which was financed through grants that were administered by the Agency for International Development. Based on preliminary findings, Congress appropriated $18 million for the establishment of the Endowment. GAO reviewed the research conducted under the feasibility study and found that the grant funds were spent as specified in the grants' financial plans, and the research conducted was germane to grant purposes and useful to future operations of the Endowment; however, private financing anticipated for the study did not materialize, the research staff could have had a broader composition, the decision to recommend the Endowment was reached before most of the research was completed, some specified tasks were not completed, substantive issues were not addressed, and much of the staff attention was devoted to legislative activity. GAO found that $11 million of the appropriated funds will be spent on the activities of a labor union organization, $4.7 on the activities of three new nonprofit organizations, and $2.3 million for administrative expenses. However, GAO found that uncertainties over the Endowment's relationship to federal agencies, private sector programs, and political parties remain to be resolved. Finally, GAO found that interested parties have expressed varying opinions on whether the endowment can effectively promote democracy abroad.