The Nonprofit Significance of U.S. Foreign Assistance in the USAID FY2014 Budget

In their focus on the charitable deduction, the nonprofit sector has let a number of important nonprofit-identified elements of the federal budget slide. Left to fend for itself is the USAID foreign aid budget. Some of the most laudable elements of U.S. foreign policy, such as it is, are the programs delivered by NGOs to help developing countries deal with health and food issues and assist transitional countries in making progress toward democracy.

Other countries put their foreign aid budgets and priorities—think DFID, the USAID counterpart in the U.K.—front and center in their nonprofit advocacy agendas. That display of commitment to foreign aid says something about those nations’ core national values. In the United States, nonprofit sector discussions of foreign aid tend to be more low-key and are not typically in the foreground for national nonprofit leadership organizations. Somehow, the generally superb performance of international aid NGOs in the U.S. Gulf Coast, applying their overseas skills to mobilize faster and smarter after Hurricane Katrina than many domestic nonprofits dispatched to the region, doesn’t register. It should. U.S. foreign assistance should be a top-priority item for nonprofit sector advocates as they delve into the morass of the FY 2014 budget. Here’s why.

The twelve accounts that comprise the humanitarian and development assistance budget of USAID will be $20.4 billion if the President’s FY2014 budget is approved as-is. Out of a $3.77 trillion dollar budget, foreign assistance of this sort would be slightly more than 0.5 percent of the total budget of the federal government. Together, the Department of State and USAID would get a total of $47.8 billion, down from $51.1 billion in the FY2013 Continuing Resolution, again a piddling share of the total budget, roughly 1.3 percent.

To the President’s credit, there are some areas of increased funding in foreign aid and some notable areas of cuts:

• ·A small increase in global health funding to $8.3 billion, up from $8.1 billion in FY2012, with significant attention to malaria ($670 million for the President’s Malaria Initiative)
• ·A mix of commitments for work through international organizations—an increase in the U.S. payment for the United Nations budget to $617 million, up from $568 million in FY2012; an increase in funding for the Inter-American Development Bank from $75 million to $102 million; but a cut from $30 million to $24 million for the African Development Foundation
• ·Nearly a doubling for international disaster assistance to $2.04 billion
• ·A decline in economic development assistance, from $6.14 billion in FY2012 to $5.45 billion in FY2014
• ·A cut in economic assistance to the troubled Palestinian areas of Gaza and the West Bank from $395 million to $370 million, and a cut of $43 million in aid to sub-Saharan Africa
• ·A new commitment of $580 million for a new Middle East and North Africa Incentive Fund to “support…political reform, free and fair elections, democratic institutions, transparent and accountable government, transitional justice, open markets, and inclusive growth”

The Millennium Challenge Corporation is slated to get $898.2 million if President Obama’s budget is approved. Within that number, $676.2 million is slated for MCC compacts with Liberia, Morocco, Niger, Sierra Leone, and Tanzania, but the MCC staff acknowledge that total isn’t enough to fund all five in addition to Benin, El Salvador, Ghana and Georgia, all in the midst of developing their compacts, and at least three of them slated to suffer cuts from sequestration, notwithstanding whatever gets approved in the FY2014 budget.

Consider offers of assistance to the world’s poorest countries, which face challenges with food, economic development, malaria, HIV/AIDS, and democracy. How is it that U.S. foreign aid gets such a negative reaction from the American public? Voters typically rank humanitarian and development aid near the top as candidates for budget cuts, and they assume that it takes up a vastly greater proportion of the federal budget than it does.

Despite its diverse population, many Americans unfortunately tend toward xenophobia and a certain lack of compassion for the problems of poor people in other lands. It is evident in the hostility of many toward immigrants, despite our roots as a nation of immigrants.  The lack of compassion toward the poor in other countries is in a way  not dissimilar from the less-than-overwhelming support of many Americans for the poor in their own country. How else can one explain the inability of major political candidates to utter the word “poverty” during the campaigns and, even now, the continuing reluctance to address issues that don’t easily fit the notion of “middle class.” This xenophobia showed its face in recent Congressional hearings on the USAID budget, with Congressman Dana Rohrabacher (R-CA) suggesting that aid should only go to nations without hostility toward the U.S., a hard criterion for any nation to meet, and Congressman Ted Poe (R-TX) questioning federal witnesses as to why taxpayers should support building a school in Pakistan rather than finance educational improvements in the U.S.

In an interdependent world, it is shocking that lawmakers can’t see that foreign aid wins the U.S. support in nations that otherwise might have plenty of reasons to be less friendly. Nonetheless, there are more specific issues challenging public and nonprofit support for international aid.

1. Outsized portions of the USAID budget go to nations where the U.S. has been involved in wars that may have been misguided. For most of the American public, the Iraq war was fought under false pretenses, leaving a nation in perpetual turmoil and instability. The Afghanistan war is a losing proposition, with the U.S. following in the footsteps of the British and the Russian armies that preceded them. The development aid needs of both are huge and show few signs of receding. Because both nations are also arenas of significant governmental corruption, taxpayers correctly assume that a sizable proportion of the funds going to Iraq and Afghanistan are wasted. The public might not know, but because of security problems in these regions (and other areas of violence and instability), aid to these countries is more expensive due to security costs. The USAID budget actually has a component on top of its regular humanitarian and development aid accounts to pay for some of the additional costs of security for delivering aid.
   Is this a reason to dismiss the importance of USAID funding? Not at all. Whatever one might think of this nation’s military misadventures in Iraq and Afghanistan, one has to admire the courage and caring of the leaders and staff of the NGOs working in these regions. They often face personal danger that makes the trials and tribulations of many domestic nonprofits look trivial indeed. If there is a lesson here, it isn’t to slash the USAID budget, but to resist the military adventurism that seems to overtake the U.S. when oil is involved (as in Iraq and Libya) and not in nations of humanitarian crisis (like Rwanda, or now Syria) where oil isn’t as much a concern.
   Even here, though, the money going to “frontline states” like Afghanistan, Iraq, and Pakistan is taking a hit. (Bilateral aid in the FY2014 budget would drop 9 percent for Afghanistan and 91 percent for Iraq, though it will actually increase 15 percent for Pakistan.) Also losing money in the budget will be bilateral aid to the new state of South Sudan, a fragile entity having separated from Khartoum after a terribly violent war. Though Afghanistan and Pakistan will be the two largest recipients of U.S. development aid, it would appear that the aid budget emerging from this administration is rebalancing away from compensating for the destruction of war toward a focus on partnerships with countries trying to advance in development, democracy, and equity.
2. Democracy is fragile in much of the world and, as noted, corruption has a lot of latitude. Iraq and Afghanistan rank as the most corrupt countries in the world according to Transparency International, with Afghanistan only “bested” by North Korea and Somalia. Undoubtedly, that militates against public support for foreign aid that one imagines will be wasted. To us, this is an argument for American foreign aid to pay attention to building democracy. That doesn’t mean exporting American business models or reducing the willingness of countries to provide governmental social welfare funding, but it does mean supporting and strengthening small-“d” democratic traditions and institutions and supporting institutions that monitor and pursue accountability.
   Congressman Ed Royce (R-CA) laid down a marker that Congress will not tolerate foreign aid on “ineffective and unsustainable programs,” but newly-minted Secretary of State John Kerry pointed out that foreign aid isn’t a question of measuring the value of charity. Foreign aid for such fragile nations as Myanmar or South Sudan or the promotion democracy in the Arab Spring countries should be seen as an investment, not a gift subject to a bunch of narrow financial ratios. Kerry says—correctly—that U.S. foreign aid has historically transformed “yesterday’s enemies and aid recipients into today’s allies and aid donors.” As the wealthiest nation in the world, the U.S. can afford one cent on every dollar of government money to providing assistance to help bridge the economic divide in this world,
3. In their mistaken assumption that a huge part of the federal budget goes overseas in the form of humanitarian and development aid, many Americans assume that the U.S. is carrying the load, with other countries not doing their share. As a proportion of nations’ gross domestic products (GDP), the U.S. doesn’t look like a bastion of official generosity. The following chart, based on statistics from the OECD, shows other countries providing a higher proportion of their GDP for foreign aid than the U.S. provides as a percentage of the federal budget:

It is in some ways shocking that the U.S. lags behind nations in great economic difficulty, such as Spain, Italy, Portugal, Ireland, and even Greece. Other charts of OECD countries put Greece and Italy below the U.S., but the point is clear: As a government, in the public arena where decisions are made jointly through the democratic process, the U.S. is not the most generous nation in the world. People will suggest that the grantmaking of individual charities and private foundations should be added to the U.S. total foreign aid as demonstration of a societal commitment to humanitarian and development assistance, and there is no question that that is valuable. However, those decisions regarding international giving are not the equivalent of development and humanitarian aid decided in the public arena and delivered on the part of our nation, not simply the motivations of individual donors and philanthropists.

Where is the nonprofit sector on the U.S. humanitarian and development aid portion of the U.S. budget? There’s no question that the President’s budget is going to be subject to Congressional assaults from legislators who can’t see the value of this realm of government activity or who wish to demagogue to their constituents. But there is huge value in the U.S. development budget, much of which is carried out through NGOs. In an interconnected, interdependent world, the U.S. cannot isolate itself and imagine that the rest of the world can simply sink or swim without us. In their advocacy for the nonprofit-y aspects of the federal budget, nonprofit sector leaders should be standing up for humanitarian and development aid domestically and overseas.