At a glance
The United States (US) is the largest donor country, with official development assistance (ODA) at US$34.2 billion in 2018. Relative to economic size, however, ODA is low at 0.16% of gross national income (GNI). This ranks the US 23rd out of the 30 members of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC).
Congress passed the fiscal year (FY) 2020 budget bill in December 2019, rejecting the significant foreign assistance budget cuts proposed by President Donald Trump and funding international assistance at US$56.6 billion, a 1% increase over FY2019 levels.
The president’s FY2021 budget once again proposes steep cuts to foreign assistance but given that Congressional support for development assistance remains strong, it is unlikely that big cuts will be enacted.
- The Trump administration strongly links development assistance to US national security concerns and economic growth. Economic development, particularly for women, and increasing US development finance capabilities are top priorities. Meanwhile, funding for global health faces significant cuts in President Trump’s budget proposal.
- United States Agency for International Development (USAID) continues to operationalize support to countries to transition from development assistance to self-reliance. The agency is also working on reforms to improve food and water security.
- USAID is reorienting the way it works with partner countries under the ‘Journey to Self-Reliance’, a strategy to “end the need for” foreign assistance in partner countries. It is also transforming its organizational structure to promote more effective development assistance by merging several key offices and functions, including budget and policy.
- In early 2020, the United States International Development Finance Corporation (DFC), the US’ new development finance institution (DFI), was launched. The DFC focuses on national security and women’s economic empowerment.
- ODA trends
The US is by far the largest donor, providing almost one-fourth of global ODA
The US is the largest donor country among members of the OECD Development Assistance Committee (DAC): it provided a mammoth US$34.2 billion in ODA in 2018 (current prices). This represents around one-fourth (22%) of the ODA provided by all DAC countries.
Relative to the size of its economy, however, US ODA is low: In 2018, the US spent 0.16% of its GNI on ODA, ranking twenty-third among DAC donors, and landing far below the United Nations (UN)-set ODA/GNI target of 0.7%.
US ODA-eligible funding dropped by 5% (from US$36.3 billion to US$34.2 billion) between 2017 and 2018 after two years of near equilibrium. However, foreign assistance spending (which includes funding for both diplomacy and development through the International Affairs Budget; see ‘Budget structure’ for more details on the US’ development spending) has remained largely unchanged under the Trump administration due to strong Congressional support. Congress largely rejected the deep cuts to US foreign assistance included in the Trump administration's FY2020 budget request (also known as the president's budget request), setting US funding for development and diplomacy at US$56.6 billion, including base and Overseas Contingency Operations (OCO) funding. This represents a small increase of US$469 million (+1%) compared to FY2019 levels. However, for the first time in recent history, the final funding level for the International Affairs Budget falls short of the levels approved by the House and Senate.
US foreign assistance:
The US does not have a dedicated ODA budget. Rather, the federal budget is divided into budget ‘functions’ that include all spending on an issue, sourced from various appropriations bills. Most development-related spending is within Budget Function 150, commonly referred to as the International Affairs Budget, which includes ODA-accountable funding and non-ODA money, such as operating embassies, military assistance, and promotion of US exports.
The president’s FY2021 budget request, released in February 2020, once again proposes to slash foreign assistance spending. It provides the International Affairs Budget with just US$43.9 billion in base funding, a cut of 22% compared to the FY2020 enacted level for the State Department (State), United States Agency for International Development (USAID), and other international programs. In particular, it takes aim at Global Health Programs, proposing a cut of 34% (US$3.1 billion). It also eliminates Overseas Contingencies Operations (OCO) funding, despite a bipartisan budget deal reached in summer 2019 by Congress and the Administration that provided US$8 billion in OCO for FY2021, equal to the FY2019 and FY2020 enacted levels. OCO is discretionary spending that supports international affairs activities for State and USAID (see ‘Budget structure’).
Given that Congressional support for international assistance remains strong, it is unlikely that big cuts to the budget will be enacted.
The budget does, however, boost resources for two of the Trump Administration’s top development initiatives: empowering women economically and expanding American’s development finance capacity (see ‘Policy priorities’). The budget marks a four-year trend of the Trump administration targeting State, USAID, and other development agencies for remarkable cuts despite bipartisan opposition in Congress. Given that Congressional support for international assistance remains strong, it is unlikely that big cuts to the budget will be enacted.
In mid-2019, the White House Office of Management and Budget abandoned a plan to rescind US$4.0 billion in already-approved, unobligated foreign assistance funding due to broad pushback for the second year in a row. The plan, despite not being enacted, resulted in lower-than-usual spending levels on foreign assistance in the last quarter of 2019.
Unless otherwise indicated, all data in this section is based on the grant-equivalent measurement system. For more information, see our Donor Tracker Codebook.
- Policy priorities
Trump administration links development assistance more strongly to US national security and economic interests; development finance and women’s economic empowerment are key focus areas in FY2020
Overarching priorities for US development policy are set by the White House. Under President Donald Trump, priorities have become more strongly linked to national interests than with previous administrations. The US National Security Strategy, published in December 2017, and the president’s FY2020 budget request both reinforce the shift towards advancing national security and economic competitiveness and promoting economic growth. The US National Security Council, the principal forum used by the president for consideration of foreign policy matters, is currently conducting a foreign assistance review. Its release date is currently unclear. If released, the review could further alter priorities and means of implementation.
Further development priorities are outlined in the Joint Strategic Plan for FY2018-2022 for the US Department of State (State Department) and the United States Agency for International Development (USAID). These priorities include: 1) protect America’s security at home and abroad, 2) renew America’s competitive advantage for sustained economic growth and job creation, 3) promote American leadership through balanced engagement, and 4) ensure effectiveness and accountability to the American taxpayer. Within these goals, health, economic growth, US economic security, private-sector partnership, and humanitarian relief are emphasized.
United States Department of State and USAID, Strategic Plan 2018-2022 – Strategic goals and objectives:
1) Protect America’s Security at Home and Abroad: Counter instability, transitional crime, violence and terrorism that threaten US interests
2) Renew America’s Competitive Advantage for Sustained Economic Growth and Job Creation: Promote American prosperity through bilateral relationships, international institutions, and educated and productive populations in partner countries
3) Promote the transition to a low-emission, climate‑resilient world while expanding global access to sustainable energy: Transition nations from assistance recipients to partners, engage in international fora and partnerships with the private sector and civil society to further foreign policy goals
4) Protect core US interests by advancing democracy and human rights and strengthening civil society: Strengthen effectiveness of diplomacy and development investments
Source: Adapted from US Department of State and USAID Joint Strategic Plan 2018-2022
The US is a robust supporter of global health security work through its Global Health Security (GHS) Agenda, an interagency initiative by the US’ Centers for Disease Control and Prevention (CDC) and USAID, which drives progress on preventing, detecting, and responding to infectious disease threats.
In response to coronavirus (COVID-19) pandemic, on March 6, 2020 the US passed a bill committing US$1.3 billion to the outbreak response in China, in other impacted countries (both bilaterally and through multilateral organizations), and to the World Health Organization (WHO); see ‘Health’ for more information on how funding is channeled. On March 27, 2020, the US announced a US$2 trillion stimulus package which provided additional international development funding beyond the original US$1.3 billion) notably US$3.0 billion for the World Bank's International Development Association, US$514 million for the African Development Bank, and US$500 million to the Centers for Disease Control and Prevention (CDC; see 'Health' and 'Key actors').
In recent years, the US government has announced two new whole-of-government approaches to priority development issues. The first, the Global Fragility Act, promotes a whole-of-government approach to treat the causes of violence, including the creation of a ten-year strategy to “contribute to the stabilization of conflict-affected areas, address global fragility, and strengthen the capacity of the United States to be an effective leader of international efforts to prevent extremism and violent conflict”. Passed in December 2019, the bill also includes US$200 million for a Prevention and Stabilization Fund as well as US$30 million for a Complex Crisis Fund over the next five years.
The second, passed in December 2018, is the Women's Economic Empowerment Act (WEEA). The initiative, supported by White House advisor Ivanka Trump, aims to align US government efforts with the global mission of supporting women's development. The Act is supported by the 'Women's Global Development and Prosperity Initiative' (W-GDP), launched in February 2019 to assist 50 million women in ODA recipient countries by 2025. The President’s FY2021 budget provided US$200 million for the fund, double the amount proposed in FY2020.
The US’ new development finance institution (DFI), the United States Development Finance Corporation (DFC), launched in January 2020. The DFC combines the functions of the Overseas Private Investment Corporation (OPIC) and the US Agency for International Development's Development Credit Authority with the addition of new tools and increased resources. It boasts an increased investment cap of US$60 billion, more than doubling OPIC’s previous US$29 billion limit, as well as enhanced capabilities, including the ability to make equity investments. The DFC will prioritize investments in low-income and lower-middle-income countries and will seek investments that are important to US foreign policy, national security, and women’s economic empowerment. Investments include OPIC’s '2X Women’s Initiative', which aims to catalyze US$1 billion to provide women around the world with access to economic opportunities. It will also continue to invest in 'Connect Africa' — a project largely focused on telecommunications and infrastructure — as well as in priority regions including the Indo-Pacific and Latin America.
The President’s FY2021 budget request proposed to increase the DFC’s program funding nearly four-fold, from $180 million in FY2020 to $700 million in FY2021. While these initiatives have strong support from bipartisan members of Congress and development stakeholders, concerns have been raised that these increases could come at the expense of other critical development programs.
Priorities of USAID include operationalizing the ‘Journey to Self-Reliance’, a strategy released in 2019 which aims to “end the need for” foreign assistance in partner countries. To facilitate this shift, USAID is re-orienting its cooperation according to how self-reliant each of its partner countries is. Partners are scored using ‘Country Roadmaps’, which rank countries on 17 publicly-available, third-party metrics. Part of the strategy involves shifting the agency’s spending, currently concentrated on a “relatively small circle of large organizations”, towards more local and/or locally established partners.
USAID is implementing an international reorganization effort which realigns humanitarian, crisis, and conflict work under one new associate administrator, and merges development, democracy, and innovation into one bureau. The reorganization aims to make USAID more field-focused, to ensure that private-sector, gender, faith-based, and community approaches are integrated across programs.
Finally, the US is scaling up its efforts to work with faith-based institutions. In mid-2019, USAID announced a 'new partnership initiative' to facilitate work with faith-based organizations. It is expected that the strategy will increase the number of religious organizations collaborating with USAID.
- ODA breakdown
Bilateral programs receive the vast majority of US ODA; US among largest contributors to multilateral organizations
The US provides development assistance mainly in the form of bilateral support to partner countries. According to OECD data, the US channels US$30.1 billion of its ODA bilaterally, accounting for 89% of its total ODA in 2018. This is far above the OECD Development Assistance Committee (DAC) average of 59%, reflective of the US’ long-standing emphasis on bilateral cooperation. In the final FY2020 budget passed by Congress in February 2019, funding for bilateral economic assistance was US$25.0 billion, equal to FY2019 funding.
Bilateral spending focuses on health and is channeled entirely as grants
According to OECD data, the largest share of US bilateral ODA went to global health (US$8.6 billion, or 28% of bilateral ODA in 2018). This aligns with the US’ long-standing prioritization of global health.
The President’s Emergency Plan for AIDS Relief (PEPFAR), one of the US’ largest development programs, channels a significant share of these bilateral funds. PEPFAR’s bilateral funding stood at US$5.7 billion in FY2020, up by US$5 million from FY2019. Of this US$5.7 billion, US$5.4 billion was for HIV, while US$310 million was for tuberculosis. The remainder of PEPFAR’s US$7.2 billion FY2020 budget was spent on the Global Fund (US$1.5 billion; see ‘Multilateral spending’ below).
Other bilateral funding priorities (see figure) included humanitarian assistance (US$7.1 billion, 23% of bilateral ODA), government and civil society (up by 12% from US$3.0 billion to US$3.3% billion, 11% of bilateral ODA), donor administration costs (US$2.6 billion, 8.5% of bilateral ODA), and education (US$1.6 billion, 5%). This is broadly in line with the US’ policy priorities.
US bilateral ODA is provided entirely in the form of grants. The US relies on the public sector (35% of total ODA, far below the DAC average 48%) and on NGOs and civil society (22%, above the DAC average of 18%) to channel bilateral ODA.
Both the Obama and Trump administrations pledged to work with more local development partners; the Trump administration has focused on faith-based organizations. PEPFAR has also set an ambitious goal for local partnership, pledging to channel 70% of funding to local implementers by the end of 2020. In 2018, local partners received 34% of total PEPFAR funding. It is not clear what share they reached in 2019.
ODA focuses on world’s poorest countries, particularly in sub-Saharan Africa
The US focuses its ODA on the world’s poorest countries: 29% of bilateral ODA went to low-income countries in 2018, a share that has remained stable for the past five years. Regionally, the US concentrates its bilateral ODA on sub-Saharan Africa (SSA). In 2018, the US provided US$10.7 billion (35% of its bilateral ODA) to the region per year, followed by the Middle East and North Africa (MENA; US$3.9 billion, 11%) and Asia (US$3.4 billion, 11%). Funding to the MENA region was up by 18% over US$3.3 billion in 2017, driven by large increases in funding to Jordan, Yemen, Iraq. A third (32%) of the US’ bilateral ODA was not allocated to a specific region, similar to the DAC average of 34%.
In 2018, Jordan was the largest recipient of US bilateral spending, receiving US$1.1 billion (a 24% increase over 2017). The second largest was Afghanistan, which received US$922 million (a 26% drop over 2017, when it was the largest recipient), closely followed by Nigeria (US$846 million) and Kenya (US$835 million). This links closely to the US’ overarching focus on core US interests by advancing democracy and human rights and strengthening civil society.
In March 2019, President Trump froze assistance to the Northern Triangle of Central America (El Salvador, Guatemala, and Honduras). In December 2019, the US Department of State (State Department) sent a letter to Capitol Hill setting forth what must be done in order the countries to once again be eligible for US foreign assistance: improve border security; combat migrant smuggling; receive returned citizens; and implement public messaging campaigns to dissuade illegal immigration. These stipulations again closely align with the US’ emphasis on national security. Although previous public statements by the State Department indicated that funding would be resumed after a full review, the letter gives no timetable for when or if US assistance to the region might restart.
Multilateral spending centers around health, with strong support for the Global Fund
As a result of its focus on promoting national interests and strengthening bilateral relationships, the US channels a lower share (11%) of its total ODA to multilaterals than other OECD DAC donors (DAC average: 41%). Core funding to multilateral organizations stood at US$3.9 billion in 2018, down from US$4.8 billion in 2017 and US$6.1 billion in 2016. Funding for the largest single recipient, the World Bank, has declined by US$379 million since 2016.
However, in absolute terms, the US is the fourth-largest provider of core contributions to multilateral organizations, behind the UK, Germany, and France. In addition to core contributions, the US provided US$6.4 billion in earmarked funding to multilaterals for specific projects or regions (this is reported as bilateral ODA), bringing the total amount of ODA in 2018 channeled to or through multilateral organizations to US$10.2 billion.
Key recipients in 2018 were the World Bank (US$1.1 billion, 28%), UN agencies (US$940 million, 24%), and regional development banks (US$256 million, 7%, down from US$387 million in 2017). Of UN agencies, the US spends the most (US$138 million) on the UN Children’s Fund (UNICEF), followed by the Food and Agriculture Organization (FAO; US$96 million), and the World Health Organization (WHO; US$84 million). 40% of multilateral ODA (US$1.6 billion) went to other multilateral institutions, including the Global Fund.
The US channels a lower share of its total ODA to multilaterals than other OECD DAC donors.
The US has traditionally been a strong supporter of the Global Fund. The US made the largest pledge (US$4.7 billion) at the Global Fund’s sixth replenishment conference in October 2019. Yearly contributions were US$1.4 billion in FY2018 and FY2019, climbing to US$1.6 billion in FY2019. By law, the US cannot contribute more than 33% of total Global Fund financing. Historically, the US’ contributions have hovered near this ceiling: from 2001 to 2018, US funding accounted for 32% of all Global Fund contributions, far surpassing the second-largest donor, France (12%). The Trump Administration’s FY2021 budget request provides the Global Fund with just US$608 million (a cut of 58%), although this request is likely to be once again rejected by Congress.
Since its inception, the US has also been a strong supporter of Gavi, the Vaccine Alliance. The Trump Administration’s FY2021 budget request provides US$290 million for Gavi, as part of an anticipated (FY2020-FY2023) US$1.2 billion pledge This would represent the largest multi-year US pledge to Gavi to date. For 2015-2019, the US pledged US$1 billion to Gavi over four years, with its FY2018 and FY2019 contributions at US$290 million.
Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.
- Main actors
White House sets high-level direction; Congress, the State Department, and USAID define priorities; USAID leads on administering assistance
The president, Donald Trump (Republican), sets overarching policy orientations for US foreign assistance, including for development. The president is assisted by several White House offices. The most important for development issues are the Office of Management and Budget (OMB) and the National Security Council (NSC). In consultation with executive agencies, OMB produces the president’s budget request, which outlines policy and funding priorities. The NSC is the principal forum for the president to consider matters of national security and foreign policy.
Congress is a key decision-maker on both funding and policy for foreign assistance. With the ‘power of the purse’, the two chambers – the House and the Senate – have a final say on federal spending, including foreign assistance. In particular, the House and Senate Appropriations committees and their 12 subcommittees decide on funding to specific spending areas and therefore exercise considerable decision-making and oversight authority over both foreign assistance spending and policy. In addition, two other congressional committees play a role (albeit less powerful) in authorizing and overseeing ODA-related programs.
- House Appropriations Committee: The Committee is currently chaired by Congresswoman Nita Lowey (Democrat). The key subcommittee is the State, Foreign Operations, and Related Programs (SFOPS), which oversees the budget for the State Department and foreign operations.
- Senate Appropriations Committee: The Committee is chaired by Senator Richard Shelby (Republican). Similarly, as in the House, the key subcommittee is called SFOPS.
- House Foreign Affairs Committee (HFAC): HFAC is currently chaired by Representative Eliot Engel (Democrat). An important subcommittee is: Africa, Global Health, Global Human Rights, and International Organizations.
- Senate Foreign Relations Committee (SFRC): Currently the SFRC is chaired by Senator Jim Risch (Republican). Important subcommittees are: Africa and Global Health Policy; Multilateral International Development, Multilateral Institutions; and International, Economic, Energy, and Environmental Policy.
Approximately 25 government institutions contribute to funding or implementing US foreign assistance and development cooperation. Key institutions include:
The US Department of State (State Department), headed by the secretary of state (currently Mike Pompeo), is primarily responsible for foreign policy but is also an important party to development policy-setting. Under direction from the White House, it has sole- or joint-policy authority on issues including peacekeeping, democracy, global health, and food security. The State Department manages or co-manages a wide range of bilateral development programs as well as funding to international organizations. In countries where the US has strong foreign policy and national-security interests, the State Department and its embassies play an active role in informing overall development policy in that country. While different approaches and mechanisms are deployed depending on which governmental agency is implementing, the State Department has Integrated Country Strategies (ICS) that strive to encapsulate the government’s foreign-policy objectives into one high-level strategy.
Several offices oversee the State Department’s development-related activity:
- Deputy Secretary of State, currently Stephen Biegun, is the second-ranking officer at the Department of State.
- Office of US Foreign Assistance Resources is led by the director of US Foreign Assistance Resources, currently Jim Richardson. This office assists the Secretary of State in providing strategic direction to foreign assistance resources and coordinates policy and planning of the State Department and US Agency for International Development (USAID).
- Office of the US Global AIDS Coordinator and Health Diplomacy (OGAC) administers the State Department’s HIV/AIDS funding and coordinates the President’s Emergency Plan for AIDS Relief (PEPFAR). PEPFAR programs are implemented by other US agencies, including USAID, the National Institutes of Health (NIH), and the Centers for Disease Control and Prevention (CDC). OGAC is currently headed by Ambassador Deborah Birx.
- Under-Secretary for Civilian Security, Democracy, and Human Rights, Nathan Sales (Acting), is responsible for US efforts to address threats to civilian security such as extremism, mass atrocities, and weak governance, as well as refugee, migration, and population issues.
- Under-Secretary for Economic Growth, Energy, and the Environment, Keith Krach, leads efforts on policies related to economic growth, energy, environment, science, and technology.
- Bureau of Population, Refugees, and Migration (PRM) leads on the US’ work with refugees, migrants, and victims of conflict. It also engages with multilateral organizations. PRM is currently led by Acting Assistant Secretary Carol Thomson O’Connell.
Other key State Department stakeholders include the US ambassador to the UN, Kelly Knight Craft. To date, many of the political positions remain unfilled at the State Department, limiting political leadership of the department’s work.
US Department of Defense (DOD), currently led by Mark Esper, manages aid-funded military assistance programs, some humanitarian assistance, and programs on disease surveillance and health research and development.
US Department of Health and Human Services (HHS), currently led by Secretary Alex Azar II, implements global health programs, including a portion of PEPFAR. HHS has four independent agencies that are especially active in global health: the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC, further details below), the Food and Drug Administration (FDA), and the Health Services and Resources Administration (HRSA).
US Department of the Treasury (Treasury), currently led by Secretary Steven Mnuchin, leads US efforts to promote economic growth and poverty reduction in developing countries through the Office of Development Policy and Debt. This office manages US contributions to and participation in the World Bank (along with the US executive director to the World Bank) and other multilateral and regional development institutions.
US Department of Agriculture (USDA), currently led by Secretary Sonny Perdue, provides food assistance and finances the ‘Food for Peace Program’, the US’ largest provider of food assistance (see ‘Sector: Agriculture’ and ‘Sector: Nutrition’).
US Agency for International Development (USAID) is headed by Acting Administrator John Barsa, a longstanding affiliate of the Trump administration who formerly the assistant administrator for USAID's Bureau for Latin America and the Caribbean. Barsa assumed the position in April 2020 when the previous head, Mark Green, resigned, and is expected to serve until a permanent head is confirmed by the senate, which is unlikely to happen before the November 2020 presidential election.
The agency is technically independent but operates within the parameters of foreign policy guidance from the president, the secretary of state, and the NSC. The agency leads the implementation of US global development programs, though it often shares responsibility for strategy and implementation with the State Department. USAID is organized around programmatic as well as country programs, managed by offices in partner countries (called USAID missions), which are supported by headquarters in Washington, DC. Based on analysis of each partner country, USAID’s overseas missions develop five-year Regional or Country Development Cooperation Strategies (CDCS) in collaboration with Washington headquarters and local stakeholders. At the country level, USAID mission directors exercise discretion on some aspects of strategy and implementation.
USAID is in the implementation stage of an internal reorganization (see ‘Policy priorities’ for more information) to create a more field-oriented and functionally-aligned agency through eight new thematic bureaus and merged policy and budget functions. It is also working towards partner country self-reliance, helping countries to transition from development assistance.
USAID leads the implementation of US global development programs, though it often shares responsibility for strategy and implementation with the State Department.
Centers for Disease Control and Prevention (CDC), part of HHS, is the largest government agency worldwide working in disease control and prevention. It operates both within the US and abroad. The Center for Global Health (CGH) was established in 2007 to drive CDC’s work globally. CGH has four divisions: 1) Division of Global HIV/AIDS, 2) Division of Parasitic Diseases and Malaria, 3) Division of Global Health Protection, and 4) Division for Global Immunization. CDC’s Office of Infectious Diseases (OID), comprising three national centers, also participates in US global health efforts.
National Institutes of Health (NIH) are a collection of 27 research institutes under HHS that comprise one of the world’s top global health research institutions. NIH conducts basic research on diseases and disorders for improved diagnosis, prevention, and treatment.
The US International Development Finance Corporation (DFC) is the US’ recently-launched development bank, combining functions of previous investment and credit authorities with new tools (e.g., equity authority) and increased resources. Led by CEO Adam Boehler, DFC invests in sectors including energy, healthcare, infrastructure, and technology and provides financing for small businesses and women entrepreneurs in emerging markets. The mandate of the DFC is to be strongly development focused and it plans to target low and low- to middle-income countries in its investments.
Millennium Challenge Corporation (MCC) is an initiative to provide development assistance for economic development to low-income countries and lower-middle-income countries that have committed to political, economic, and social reforms. The programs are administered through partner-country compacts, each of which establish a Millennium Challenge Account for implementation. It is legally authorized to enter into five-year commitments known as ‘compacts’ with partner countries.
Other US entities are involved in foreign assistance. They include:
- Other departments: Department of Energy, Department of Homeland Security, Department of the Interior, Department of Justice, Department of Labor, Department of Transportation, and Department of the Treasury.
- Other institutions: Peace Corps, US African Development Foundation, Export Import Bank, US Trade and Development Agency.
- Budget structure
The US federal budget is divided into budget ‘functions’, which include all spending on a particular issue across departments or agencies and can include funding lines from multiple appropriations bills. The US does not have a dedicated ODA budget, but most development-related spending sits in Function 150 (referred to as the International Affairs Budget). The International Affairs budget comprises both ODA-related and non-ODA funding, such as funding for operating embassies, military assistance, and promotion of US exports. In FY2020, the final budget for International Affairs was approved for US$56.6 billion.
The FY2020 budget proposed large cuts to foreign assistance, which are likely to be rejected by Congress.
The vast majority of funding (96%) included under International Affairs comes from the State-Foreign Operations (SFOPs) appropriations bill. The remainder comes primarily from the agricultural appropriations bill for food security and food-assistance funding. In FY2019, the SFOPs was enacted at around US$54.2 billion, while the FY2020 budget increases SFOPs funding to US$54.7 billion. The SFOPs bill is divided into ‘titles’, each covering a different budget envelope (see Table 1). The money in these envelopes is mainly, but not exclusively, managed by the State Department and the US Agency for International Development (USAID). Relevant titles related to global development include:
- Title I: State, Broadcasting & Related Agencies largely funds the management and running of the State Department. It also contributes to the US’ assessed contributions to 44 international organizations, including the UN’s regular budget and its specialized agencies.
- Title II: United States Agency for International Development (USAID) provides operational funds for USAID.
- Title III: Bilateral Economic Assistance covers much of the US’ foreign assistance and development activities, accounting for just under half of the entire SFOPs. By far the largest share goes to global health (37% in FY2020). This includes most of US support to combat HIV/AIDS and other infectious diseases, maternal and child health, and health systems strengthening, as well as the US’ contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Programs funded under Title III are jointly managed by the State Department and USAID. Most funding is channeled through the ‘Development Assistance (DA)’ envelope, which goes broadly to foster economic progress and social stability in partner countries, and the ‘Economic Support Fund (ESF)’, which aims to provide assistance to allies and countries in transition to democracy, support the Middle East peace process, and finance economic stabilization programs.
- Title IV: Multilateral Assistance includes money for US voluntary contributions for various multilateral organizations, including to the World Bank and global environmental funds.
Beyond titles, US foreign assistance is divided into two types: enduring funds and Overseas Contingency Operations (OCO; see Table 2). Enduring funds are meant to cover all base functions within US development cooperation, while OCO funds were originally for emergency support to activities related to the ‘Global War on Terror’. They are managed by the Department of Defense (DOD) and the State Department. Recently, however, they have been used for base budget activities of the DOD and the State Department.
Around 14% (US$8 billion) of the International Affairs Budget was funded through OCO in FY2020, including operations related to the response and prevention of crises, including armed conflict, and man-made and natural disasters. OCO funds are not subject to the same procedural limits on discretionary funding in congressional budget resolutions as regular foreign assistance but are appropriated simultaneously with it. For some budget lines, OCO funds are the primary source of funding.
Table 1 features the breakdown between base and OCO funding for the SFOPs for FY2020 as enacted.
Table 1. State-Foreign Operations Appropriations overview
US$ millions FY2019 (Total enacted) FY2020 (Base) FY2020 (OCO) FY2020 (Total) Title I. State, Broadcasting & Related Agencies
International Organizations 2,911 1,915 1,085 3,000 Other 13,232 10,284 3,105 13,389 Title II. Admin of Foreign Assistance (USAID) 1,675 1,663 0 1,663 Title III. Bilateral Economic Assistance 24,493 21,276 3,255 24,531 Global Health Programs (GHP), State & USAID 8,837 9,092 - 9,092 Development Assistance 3,000 3,400 - 3,400 International Disaster Assistance (IDA) 4,385 2,661 1,734 4,389 Economic Support Fund 3,718 3,045 - 3,045 Democracy Fund 227 274 - 274 Assistance for Europe, Eurasia and Central Asia 760 770 - 770 Migration & Refugee Assistance 3,432 1,911 1,521 3,432 Emergency Refugee & Migration 1 0 - 0 Independent agencies 1,368 1,368 - 1,368 Department of Treasury 30 45 - 45 Other 132 122 - 122 Title IV. International Security Assistance 9,153 8,177 837 9,014 Title V. Multilateral Assistance 1,857 2,082 - 2,082 World Bank: Global Environment Facility (GEF) 140 140 - 140 Green Climate Fund - - - - World Bank: International Development Association (IDA) 1,097 1,197 - 1,197 World Bank: International Bank for Reconstruction and Development (IBRD) - 207 - 207 International Fund For Agricultural Development (IFAD) 30 30 - 30 Global Agriculture and Food Security Program (GAFSP) - - - - International Organizations & Programs 339 391 - 391 Other 251 219 - 219 Title VI. Export Assistance -336 -23 - -23 Export-Import Bank of the United States (net) -99 -34 - -34 International Development Finance Corporation - -68 - -68 Overseas Private Investment Corporation (net) -316 - - - Trade and Development Agency (TDA) 80 80 0 80
Rescissions & across-the-board cut & "other"
Source: Congressional Research Service, State, Foreign Operations and Related Programs: FY2020 Budget Analysis
The FY2021 budget, released in February 2020, once again proposed large cuts to foreign assistance, which are likely to be rejected again by Congress in its approval of final appropriation levels. This final approval is theoretically meant to take place by October 1, 2020, although this deadline has been varied in recent years (see ‘Budget Process’).
- Budget process
ODA levels and main funding lines can be influenced at various times during budget process
The US fiscal year runs from October 1 to September 30. The budget process begins 12 to 14 months (or more) prior to the start of the fiscal year. The majority of federal spending consists of ‘mandatory spending’ and ‘discretionary spending’ (see box); foreign assistance falls under discretionary spending. The budget process for discretionary spending can be categorized into three separate phases: 1) development of the president’s budget request, 2) congressional budgeting, and 3) congressional appropriations.
It is worth noting that this timeline has become increasingly variable in recent years due to political deadlocks and could be particularly unpredictable in 2020 given that it is a presidential election year.
Types of spending in US federal budget
Mandatory spending – refers to programs such as Social Security and other social programs for which legislation defines criteria for participation and the government allocates funds for all who are eligible regardless of annual costs to the Treasury.
Discretionary spending – refers to the share of the budget that Congress decides annually in an appropriations process. This is further divided into defense and non-defense discretionary spending (including foreign and development assistance).
Phase 1: Development of the president’s budget request (May - February)
Government departments and agencies begin developing budgets in May and submit funding requests in September/October: From May to September, departments and agencies develop their budgets and set broad parameters for spending on specific programs. The US Agency for International Development (USAID) and the State Department, for example, negotiate major funding levels and policy decisions for each budget line and then share the proposal with the White House’s Office of Management and Budget (OMB). From September to November, OMB negotiates funding levels with the heads of government departments and agencies. Engagement with OMB from August to September is important. At this time, it can receive external input to inform its engagement and negotiation with departments and agencies.
Under normal circumstances, negotiations can take between two and four weeks before the OMB officially passes back the budget request for agency review. In recent years, this stage has taken months rather than weeks, delaying the release of the budget request.
OMB works to finalize budget request in late fall and the President submits it in February: In November/December, the OMB finalizes the budget request before the President signs off in late December/early January. Traditionally, the President submits his budget request to Congress the first Monday in February. This date is often delayed, particularly when a new administration takes office.
Phase 2: Congressional budgeting (February - April)
Congress sets spending limits for main budget areas: Once the president’s budget request is submitted to Congress, the Congressional Budget Office (CBO) evaluates the request. Then, the House and Senate each develop, debate, and (in theory) pass a joint congressional budget resolution before April 15. The resolution sets the overall level of discretionary funding for the next fiscal year. This ceiling (called a “budget cap”) is sent to the House and Senate Appropriations Committees. Unlike the president’s budget request, which is a detailed proposal, the budget resolution is a short, high‑level document. It is not a bill that is signed into law, but instead provides the binding budget cap that appropriators use in allocating discretionary spending. The president’s budget request is a key opportunity for advocates to engage in discussion on the foreign affairs budget with key stakeholders including with Congress, government agencies and departments, and the White House, through meetings, letters, and media outreach.
Phase 3: Congressional appropriations (April - September)
Congress considers appropriations bills that allocate funding to government functions, including foreign assistance, from April 15 to September: After the final budget resolution is agreed to, or after April 15 (whichever comes first), Congress must draft, debate, and pass 12 different appropriations bills, which correspond to different government functions. This includes the appropriations bill for State-Foreign Operations (SFOPs), which funds most development programs (see ‘Budget Structure’). During the spring, each of the relevant committees and subcommittees holds several hearings on the president’s budget request to debate, amend, and rewrite (‘mark-up’) the appropriations bills. Prior to this phase, there are a number of advocacy opportunities, including meetings on Capitol Hill, letters to Appropriations Committee chairs, events, and participation in hearings.
State-Foreign Operations Bill
The State-Foreign Operations (SFOPs) appropriations bill is legislation that allocates funding foreign assistance. It is either passed as a regular appropriations bill or as an omnibus bill, which combines individual appropriations bills on diverse subjects into one large bill. Because of their size and scope, omnibus bills limit opportunities for debate and scrutiny.
House and Senate negotiate final budget; president signs: Once an appropriations bill has passed the House and Senate, a conference committee is formed with representatives from the Appropriations Committees to negotiate the differences between the House‐ and Senate-passed bills. If the House and Senate cannot find an agreement by the end of September, Congress needs to enact an emergency short-term measure — usually a ‘continuing resolution’ — to provide temporary funding to ensure the government continues to operate while the appropriations bills are finalized. Any spending bills are then sent to the president for approval or for veto; vetoes are rare and require an override from two-thirds of both chambers of Congress.
USAID and the State Department negotiate major funding levels and policy decisions for each budget line, and then share the proposal with the White House’s Office of Management and Budget.