Gauging the Impacts on U.S. NGOs of Cuts in U.S. Foreign Aid

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August 24, 2011; Source: Rethinking U.S. Foreign Assistance Blog (Center for Global Development) | Plenty of nonprofits do overseas work in the context of U.S. foreign aid, largely with grant and contract support from the U.S. Agency for International Development (USAID). Get ready for tough times. A blogger for the Center for Global Development (CGD) warns that the debt ceiling deal reached last month between the Obama White House and the Republican-whipsawed Congress “will mean big cuts to foreign aid funding.”

The CGD writer doesn’t think that the cuts would necessarily be all bad, suggesting some positives:

  • The administration would have to do some serious foreign aid prioritizing, particularly between military assistance and humanitarian assistance (hopefully the latter would win).
  • Presumably, reduced foreign aid appropriations would require USAID and its NGO partners to be more innovative in how they deliver aid.
  • Similarly, less money could stimulate more creative, more multilateral aid approaches. 

The blogger writes that the potentially negative impacts of big time cuts in the foreign aid budget include:

  • “Reduced funding could stall or even end current aid programs and projects.” That’s obvious, but she also notes that efforts toward “increased country ownership” of USAID projects would particularly be at risk—for example, the kinds of bilateral compacts currently being negotiated between USAID’s Millennium Challenge Corporation (MCC) and Indonesia, Zambia, Cape Verde, Georgia, and Ghana. 
  • Less money could lead to a further militarization of development, exemplified by the termination of the Pakistan Counterinsurgency Capability Fund, which was supposed to be run by the Department of State and which was replaced by military aid administered by the Pentagon. She astutely observes, “Reduced foreign aid funding could mean the Department of Defense takes over more development duties simply because it has the dollars to do so.”
  • Although exempted from the first part of the budget deal’s spending cuts, development aid for the “front-line” countries of Pakistan, Afghanistan, and Iraq could “take the entire development spotlight” in a sharply reduced foreign aid budget in the second round of spending cuts. Given the increasingly muddy U.S. relationship with Pakistan, the administration’s desire to get out of the muck of Afghanistan, and the recent escalation of problems in Iraq, this scenario is not hard to imagine.

NGOs specializing in delivering foreign aid and humanitarian assistance are going to have to watch the congressional Super Committee very carefully. In contentious budget negotiations, humanitarian and development aid could be one of the casualties.—Rick Cohen