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Opinion: Foreign aid industry inherently flawed

Most NGOs are locked in an endless race to win USAID grants, 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.