Introduction to Foreign Assistance Reform

1. Introduction to Foreign Assistance Reform Fall 2007

2. Introduction to Foreign Assistance Reform • Learning Objectives • Understand origin and purpose of USG foreign assistance • Know objectives of the reforms • Relate Operational Plan and Performance Report to the reforms • Understand the planning and reporting timeline 1a – INTRODUCTION TO FA REFORM

3. U.S. Foreign Assistance Origins • Marshall Plan aligned aid with foreign policy objectives and American values • 1961 Foreign Assistance Act • Serves as authorizing legislation for foreign assistance • Consolidated existing agencies/programs • Separated military from non-military aid • 1998 Foreign Affairs Reform & Restructuring Act • Created USAID as a permanent executive agency • 2002 National Security Strategy – The “3 D’s” • Identified development, diplomacy and defense as instruments to advance U.S. national security interests 1a – INTRODUCTION TO FA REFORM

4. Foreign Ops Accounts (FY2008 Request) • Approximately 35 different funding accounts within the “150 Account” (Section 150 of 1961 F.A. Act) • Appropriated through regional (e.g., FSA, SEED) and functional/global accounts (e.g., Child Survival and Health, Peace-Keeping Operations) • Approximately $25.5 billion total – less than 1% of total annual U.S. appropriations 1a – INTRODUCTION TO FA REFORM

5. Examples within FY2008 Request • Child Survival & Health (CSH) - $1.56b • Development Assistance (DA) - $1.04b • Economic Support Funds (ESF) - $3.32b • Foreign Military Financing (FMF) - $4.54b • Global HIV/AIDS Initiative (GHAI) - $4.15b • International Narcotics Control & Law Enforcement (INCLE) - $634m • Migration & Refugee Asst. (MRA) - $773m 1a – INTRODUCTION TO FA REFORM

6. Facts and Figures • Of 190 Operating Units (field and HQ offices that receive FA funds) the top 10 receive 65% of the budget (excluding GHAI) • Of the 154 countries receiving FA funds, the top 10 receive 73% of the FA budget (excluding GHAI) • 1/3 of budget went to Stabilization Operations and Security Sector Reform • 1/3 went to Humanitarian Assistance, Health, and Counter Narcotics • 1/3 went to 20 Program Areas including Democracy and Economic Growth 1a – INTRODUCTION TO FA REFORM

7. PUBLIC FLOWS 18% U.S. Government Official Development Assistance 10% Iraq and Afghanistan 8% Foundations 2% Corporate Foundations 1% Private Capital Flows (FDI and Net Cap Markets) 44% NGO Grants 3% PRIVATE FLOWS 82% Religious Organizations 5% Universities and Colleges 1% Remittances 26% US Total Resource Flows to the Developing World in 2005: $158 BN 1a – INTRODUCTION TO FA REFORM

8. Weaknesses of Previous System • Strategically Impaired • Limited mechanisms to apply overall prioritization; outside of EUR/ACE, MEPI, OGAC, Afghan Coordinator, no central coordinating bodies • Dispersed Authority over Budgets • Numerous accounts, created ad hoc in response to a series of “emergencies,” led to stove-piping and poor coordination • Disparate Performance Measurement Systems • No shared metrics to measure impact of USG-funded programs • Inadequate Imperatives to “Graduate” Countries • Except for FSA, SEED and MCA, no defined threshold 1a – INTRODUCTION TO FA REFORM

9. Objectives of Foreign Assistance Reform • Foreign Assistance Reform builds on best practices across the USG to improve: • Strategic Direction • Performance Accountability • Transparency in the use of funds • Information Systems • Integrate State/USAID planning, budgeting and reporting on foreign assistance 1a – INTRODUCTION TO FA REFORM

10. Why Coordinate Foreign Assistance? • Unify efforts to achieve results and advance U.S. interests • Improve information-sharing, planning and implementation across USG agencies that program FA Funds • Increase ability to aggregate information and report results 1a – INTRODUCTION TO FA REFORM

11. Office of the Director of U.S. Foreign Assistance (F) Created in 2006 to: • Ensure effective foreign assistance programs that meet broad foreign policy objectives • More fully align foreign assistance activities carried out by State and USAID • Convey through common language and definitions foreign assistance activities, budgets and performance • Demonstrate responsible stewardship of taxpayer dollars 1a – INTRODUCTION TO FA REFORM

12. Office of the Director of U.S. Foreign Assistance (F) • Has authority over State and USAID foreign assistance funding and programs • Directs consolidated policy, planning, budget and implementation mechanisms • Provides guidance on foreign assistance delivered through other USG entities, such as Millennium Challenge Corporation (MCC) and the Office of the U.S. Global AIDS Coordinator (OGAC) 1a – INTRODUCTION TO FA REFORM

13. Strategy and Tactics • Foreign Assistance Framework sets overall goal and priority objectives • Washington takes lead in developing strategic priorities; field input is vital. • Field determines best implementation tactics based on in-country presence and knowledge. • Washington and field work closely together to: build the annual budget request, write country and regional assistance strategies; review implementation plans. 1a – INTRODUCTION TO FA REFORM

14. Transformational Diplomacy • Foreign assistance is an essential tool to achieve the transformational diplomacy goal: “Helping to build and sustain democratic, well-governed states that will respond to the needs of their people, reduce widespread poverty, and conduct themselves responsibly in the international system.” 1a – INTRODUCTION TO FA REFORM

15. 1a – INTRODUCTION TO FA REFORM

16. Strategic Direction: New Foreign Assistance Standardized Program Structure 1a – INTRODUCTION TO FA REFORM

17. The Role of the Operational Plan • Captures Tactical Implementation of New Strategic Direction • Detailed proposal for activities and partners to be funded and results to be achieved • Instrument for collecting standardized data about foreign assistance programs 1a – INTRODUCTION TO FA REFORM

18. Operational Plan: How it will be used • To more fully align State and USAID foreign assistance activities • To convey foreign assistance activities, budgets and performance through common language and definitions • To collect standardized data -- both budgetary and performance -- on planned activities The Operation Plan is NOT a financial management tool, accounting system, MIS, Strategy Document, etc. 1a – INTRODUCTION TO FA REFORM

19. Operational Plan – Who prepares it? • FY 2007: Pilot Year • 67 “fast-track” countries • All of USAID • 128 total Operational Plans • FY 2008: Full Implementation • All Operating Units that implement FA programs with funds from the 150 account • 192 Operating Units – 156 countries, 12 regional platforms, 24 State and USAID headquarters bureaus/offices 1a – INTRODUCTION TO FA REFORM

20. Performance Accountability • Headquarters level • Annual reporting to Congress and the public • Country level • Country performance • USG program performance • F reviews annually to adjust country budgets • Partner level • Planned funding linked to specific targets • Operating Units review performance annually • Partners submit regular progress reports to Project Managers • Project Managers visit field to assess progress & verify reports • Findings feed into annual review of partner performance 1a – INTRODUCTION TO FA REFORM

21. Information Systems • Foreign Assistance Coordination & Tracking System (FACTS) • Technology allows centralized data analysis and management within decentralized agencies • Data are collected centrally and provide more detail than in the past • USG can respond quickly to questions from stakeholders 1a – INTRODUCTION TO FA REFORM

22. Questions? • For information on Foreign Assistance Reform and Operational Plans and Performance Reports, please visit: • www.state.gov/f (public website): available to non-USG partners • http://f.state.gov (State Intranet) or http://inside.usaid.gov/A/F (USAID Intranet): contains USG-only materials and Operational Plan and Performance Report Guidance • www.foreignassistance.net – learning resource site 1a – INTRODUCTION TO FA REFORM