Opinion: Foreign aid industry inherently flawed

WASHINGTON — Pundits on the Potomac love to draw parallels between 21st-century Washington and imperial Rome – pomposity and profligacy often being counted among the shared characteristics.

But when it comes to the pressing question of fixing U.S. foreign aid, the better metaphor is monastic, medieval Europe. For like monks calculating the number of angels able to dance on the head of a pin, the apparatchiks of our international assistance community remain focused on dogma, never questioning the foundations of their credo.

It’s been almost half a century since the Kennedy administration first formally articulated America’s overseas giving goals in the 1961 Foreign Assistance Act. Although amended on several occasions, the law has never been wholly rewritten, despite universal acknowledgement that reform is urgently needed.

The House Foreign Affairs Committee’s own website says the current legislation is “characterized by duplication, lack of flexibility, outdated authorities, and lack of clear purposes and objectives.” Three former heads of USAID penned a joint article in 2008 in which they called it “a Cold War artifact that has become obsolete.”

Others are less kind; the well-respected Center for Global Development bluntly describes the law as “outdated, messy, cumbersome, and increasingly irrelevant … wholly lacking in strategic vision … yielding an inflexible and sluggish system for spending money where and how it will have the most impact on development.”

The good news is that there are two high-powered, presidentially mandated evaluations underway, as well as draft legislation being developed by several congressmen. The bad news is these efforts are badly behind schedule, probably duplicative and, most worryingly, will almost certainly focus on tinkering with an appallingly bad system rather than reforming the very nature of foreign aid.

As Secretary of State Hillary Clinton recent told Congress, her goal is to “enhance the capacity and effectiveness of American foreign assistance, to better coordinate among the various aspects of the American government that provide assistance.” In all likelihood this will mean a few hundred more staff for USAID, some uplifting pledges to avoid duplication of efforts and business as usual.

Sadly, that business has become a grotesque parody of what it was intended to be. USAID, our principal conduit for foreign aid, has lost nearly all sense of intelligent development programming and instead focuses its energies on generating reports, conducting audits and minutely justifying even the most routine expenditures. In other words, the idealistic men and women who once joined the agency to change the world have been reduced to mere bean counters.

Likewise the well-known charities that depend on the largesse of the U.S. government have been forced to adopt the same myopic management systems of their donor. Instead of thinking seriously about issues like nutrition or micro-credit, most staff of these NGOs spend their time locked in an endless race to win ever more USAID grants and contracts, and then try to adhere to impossible standards of compliance.

Those absurd standards, by the way, have been forced upon USAID and its partners by successive Congresses, the same people who for years have been earmarking foreign aid money so that there is almost no flexibility left in the system.

A byproduct of Congressional meddling, and the government’s love affair with process over product, is that it now costs more to administer our aid money than ever before. In my experience, less than 60 cents of every dollar our government obligates actually reaches the intended overseas beneficiary.

Even more onerous, over the past 15 years, an increasing share of U.S. foreign assistance dollars has gone to for-profit contractors, whose concerns are understandably for the bottom line rather than the needs of the impoverished in Africa or Asia.

Thanks to decades of neglect, today we have a ponderous, expensive and underperforming foreign aid machine. Despite Clinton’s best intentions, many within the foreign assistance community privately believe that anything short of radical change will be akin to rearranging deck chairs on the Titanic.

Fortunately there are glimmers of light on the horizon. As the response to the Haiti disaster has shown us, in the realm of foreign assistance Americans remain an exceedingly generous people, despite the relative stinginess of our government, which contributes less on a per capita basis than nearly every other industrialized country.

According to the Hudson Institute, total private philanthropy to overseas causes, including money from foundations, corporations, religious groups and so on, stood at $36.9 billion in 2007, compared to $21.8 billion in official U.S. development assistance that same year. If one adds to the equation $79 billion in annual remittances, the ratio of private to public contributions is about 5.3 to one.

Another reason for optimism is the arrival of “new giving,” epitomized by online organizations that tap into both a suspicion of the traditional charitable models, as well as a strong desire by individuals to feel a personal connection with the recipients of their donations. The most celebrated of these pioneers is Kiva, which in barely four years has grown to be a $100-million dollar organization.

While the formidable potential of the new information technologies is so far best understood by the private sector, the Obama administration is tentatively trying to utilize it as an implement in its “soft power” toolbox, particularly in promoting education, understanding and human rights. Recall that in his 2009 Egypt speech, the president pledged that the United States would “create a new online network, so a teenager in Kansas can communicate instantly with a teenager in Cairo.”

Of course, tackling poverty and injustice requires much more than just banknotes and bandwidth; the most enlightened development programs will fail in environments of corruption, bad governance or official incompetence. But the advent of new forms of private giving, the boundless promise of IT, popular dissatisfaction with the status quo and the pronouncements of the new administration all give me hope. Now let’s see if the rest of our government, and their contractual partners in foreign aid, can catch up.

Chris Hennemeyer is Vice President of Bridging the Divide, an international non-profit based in Washington, D.C. He has worked in the foreign aid field for over 25 years, mainly in Africa.