- The United States (US) is by far the largest donor country: net official development assistance was US$33.6 billion ( 2016 prices) in 2016. Relative to economic size, ODA is low; at 0.18% of gross national income (GNI), the US ranks 22nd among OECD donor countries.
- The Trump administration requested US$40.5 billion for the overall FY2018 International Affairs Budget, which includes ODA (FY2017: US$59.1 billion). Bipartisan reaction in Congress has been strongly opposed: The House of Representatives and Senate Appropriations Committees proposed US$48.9 billion and US$53 billion, respectively.
- Congress is supposed to conclude its FY2018 appropriations process by September 30, 2017. However, this deadline will not be met. An emergency temporary measure was enacted on September 8 to keep government agencies funded, essentially at FY2017 levels. Congress has until December 8 to reach a final agreement on the FY2018 budget.
- Former President Barack Obama set ending extreme poverty as an overarching framework for US foreign assistance. The Trump administration has not yet fully outlined its strategic priorities, though the president’s FY2018 budget request gives early indications: Stronger links with counterterrorism, and cuts to UN agencies and programs related to climate change and family planning.
- USAID's new leadership has extensive experience with development cooperation. Administrator Mark Green has highlighted as priorities: Supporting countries in transitioning from development assistance, continued focus on democracy and human rights, and humanitarian leadership. It is unclear how these will be taken up in the overall US strategy development process.
- The possible restructuring or folding of USAID into the Department of State would impact the delivery, roles, and priorities of US foreign assistance. Government reviews, led by the Secretary of State and USAID’s administrator, are underway. CSOs and think tanks have proposed ways to reform the US foreign assistance architecture and Congress has mandated its involvement in the process, providing key opportunities to shape the direction of US development programming.
- As Congress continues to negotiate the FY2018 appropriations bills, there should be several votes on foreign assistance and development-related funding that present opportunities to engage with Congress and other key stakeholders.
the big six
- How much ODA does the US provide?
The US is by far the largest donor, providing almost a fourth of global ODA
The United States (US) is the largest donor country among members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD). Its net official development assistance (ODA) was US$33.6 billion in 2016 ( 2016 prices, US$33.2 billion in 2015 prices). This represents 23% of total ODA provided by all DAC donor countries. However, relative to the size of the US economy, the ODA volume is low. In 2016, the US spent 0.18% of its gross national income (GNI) on ODA, ranking the US 22nd among DAC donors. ODA as a share of GNI has hovered at the same level in recent years.
For further details on methodology, see our Donor Tracker Codebook. Total refers to gross ODA, which is the amount actually disbursed by a donor in a given year. Net ODA takes into account repayments of ODA loans, which are subtracted from gross ODA.
Future ODA levels are currently unclear. The Trump administration requested US$40.5 billion for the overall fiscal year(FY) 2018 International Affairs Budget, which includes ODA. This is a decrease from US$59.1 billion in FY2017. The House of Representatives (House) Appropriations Committee proposed US$48.9 billion, while the Senate’s proposed US$53 billion in total. Most of the US’s International Affairs Budget - and its foreign assistance - is funded through the State-Foreign Operations appropriations (SFOPs) bill (see Key Question: How is the US’s ODA budget structured?; see box below). The SFOPs is primarily managed by the US Department of State (State Department), responsible for foreign policy, and the US Agency for International Development (USAID), the US’s lead agency for development assistance. The president’s budget request for FY2018 (October 2017 to September 2018), released in May 2017, proposes a 28% cut to the SFOPs. It foresees significant reductions to global health programs, humanitarian assistance, contributions to international organizations (especially the UN system), and programs related to food security and climate change.
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.
However, this proposal has faced considerable pushback from Congress. The House SFOPs bill, approved in July 2017, suggests fewer cuts: Overall, it requests US$47.4 billion, which is US$10 billion below the level enacted in FY2017. The bill restored many of the proposed cuts to global health, but it confirms the shift away from family planning (FP), climate change, and multilateral organizations. The House bill seeks to codify the ‘Mexico City Policy’ on reproductive health and rights and FP, and prohibits funding to the United Nations Population Fund (UNFPA). This policy blocks federal funding to non-government organizations (NGOs) that provide abortion information, referral, or services, or advocate for such services. It is also known as the ‘Global Gag Rule’ due to its intention to prevent the use of US money for talking about abortion at any level.
The Senate Appropriations Committee debated and voted (called: ‘mark-up’) on its SFOPs on September 7, 2017: It stands at US$51.2 billion, about US$1.9 billion below FY2017 levels. It contains limited cuts compared to the House Appropriations Committee’s SFOPs and the president’s request: some reductions to climate change and FP-related programming are restored (see Key question: What are the US’s strategic priorities for development?).Congress is supposed to conclude its annual appropriations process by September 30, including reconciling the differences between the House and Senate bills, before the start of the next fiscal year (October 1). If this does not happen, an emergency short-term measure, called a ‘continuing resolution (CR)’, is needed to keep the government funded. Such resolutions often maintain funding levels from the previous fiscal year, and can last for a period of weeks or months. A CR was enacted on September 8, 2017, allowing the government to operate essentially at FY2017 levels until December 8, 2017. Until then, Congress will need to reach a final agreement on the budget for FY2018. It will attempt to pass individual appropriations bills; any unpassed bills – likely to include the SFOPs – will be combined into an omnibus funding bill (see Key question: What are important decision-making opportunities in the US’s annual budget process?).
- US Senate, Committee on Appropriations, State, Foreign Operations, and related Programs appropriations bill FY2018 (September 2017)
- US House of Representatives, Committee on the Appropriations, State and Foreign Operations appropriations bill FY2018 (July 2017)
- Executive Office of the President of the United States, Office of the Management and Budget, Budget of the US Government, Fiscal Year 2018 (May 2017)
- What are the US's strategic priorities for development?
Trump administration plans to link development programs more strongly to US national security and economic interests
To date, the new US administration has not outlined in detail the priorities of its development policy. However, the president’s budget request for FY2018, released in May 2017, gives early indications: Programs are likely to be tied more strongly to advancing national security and promoting economic growth in countries of strategic importance to the US. As of August 2017, a draft revised mission statement of the US Agency for International Development (USAID), the US’s lead agency for development cooperation, reflects this shifting focus. It places US national security interests and economic prosperity at the forefront of USAID’s work.
Areas that are not immediately linked to these issues face cuts. In the president’s budget request, climate change, family planning, and humanitarian assistance-related programs and the UN system were particularly affected. The House and Senate Appropriations Committees’ budget bills for foreign assistance (the State-Foreign Operations [SFOPs] appropriations bill), however, have not adopted all the president’s proposed cuts. Climate change programs, for example, have been cut by both the House and the Senate Appropriations, though less so by the Senate. The Senate Appropriations Committee’s SFOPs includes US$10 million for the UN Framework Convention on Climate Change, though the Green Climate Fund is not allocated funding by either the House or Senate. The Senate has also more fully funded refugee and disaster relief - including famine funding. In addition, both SFOPs reduce family planning funding; however, the Senate bill restores some of the cuts included in the president’s request and the House SFOPs. For example, it includes language repealing the ‘Mexico City Policy’ reinstated through executive order in January 2017, which prohibits any US funding to any organization involved in the promotion or provision of abortion services. It also restores funding to the UN Population Fund (UNFPA), eliminated in the House Appropriations Committee SFOPs and the president’s FY2018 budget request. These differences will have to be resolved during the ongoing Congressional FY2018 appropriations process. .The Senate SFOPs also includes funding to multilateral assistance, which was significantly cut in the House bill, but does place limits on and reduces funding to the UN.
Overarching priorities for US development policy are set by the White House. In 2010, former President Obama released the first‐ever Presidential Policy Directive on Global Development (PPD-6), which elevated global development to be a core component of US international engagement, along with diplomacy and defense. It outlined thematic priorities for a government-wide approach to development cooperation, including economic growth, democratic governance, global health, food security, climate change, energy, and multilateralism.
The president’s development agenda is often supported by Presidential Initiatives. These are signature initiatives of some legal force that the president can make (beyond the purview of normally-defined executive powers) and which enable him/her to exercise political leadership and shape the legislative agenda on certain topics. Several of these were enhanced or introduced in the PPD-6 to advance its thematic priorities. For example, President Obama extended the President’s Emergency Plan for AIDS Relief (PEPFAR) and the President’s Malaria Initiative (PMI), launched by President George W. Bush. President Obama also launched the ‘Feed the Future’ initiative which aims to improve agricultural productivity and nutrition, and ‘Power Africa’, an initiative that seeks to increase access to energy in sub-Saharan Africa.
With policy direction from the White House, further priorities are outlined by the State Department, which is responsible for foreign policy, and USAID. The framework for their development assistance is laid out in the 2014-2017 Joint Strategic Plan of the State Department and USAID (see table 1 below), which emphasizes economic growth, global security, climate and energy, and modernizing diplomacy and development. This Plan is currently under review for the 2018-2021 time period.
Since 2010, the State Department and USAID have conducted a joint review every four years. This is called the Quadrennial Diplomacy and Development Review (QDDR). The review is informed by their Joint Strategic Plan and delineates priorities and reform initiatives, and informs budgets and management of the two institutions. The last review was conducted in 2015 and outlines as strategic priorities: 1) preventing and mitigating conflict and violent extremism, 2) promoting resilient, open, democratic societies, 3) advancing inclusive economic growth, and 4) mitigating and adapting to climate change.
ODA funding patterns largely mirror these articulated focus areas: According to OECD data, the largest share of US bilateral ODA goes to global health (US$7.5 billion, or 27% of bilateral ODA in 2015; see figure). Other funding priorities include humanitarian aid (US$6.1 billion, 22%), government and civil society (US$2.7 billion, 10%), and agriculture, including rural development (US$1.4 billion, 5%).
Box: the United States Department of State and USAID, Strategic Plan 2014-2017 – Strategic goals and objectives
Strategic Goal 1: Strengthen America’s economic reach and positive economic impact.
- Expand access to future markets, investment, and trade
- Promote inclusive economic growth, reduce extreme poverty, and improve food security
Strategic Goal 2: Strengthen America’s foreign policy impact on our strategic challenges
- Build a new stability in the Middle East and North Africa
- Rebalance to the Asia-Pacific through enhanced diplomacy, security cooperation, and development
- Prevent and respond to crises and conflict, tackle sources of fragility, and provide humanitarian assistance to those in need
- Overcome global security challenges through diplomatic engagement and development cooperation
- Strengthen America’s efforts to combat global health challenges
Strategic Goal 3: Promote the transition to a low-emission, climate‑resilient world while expanding global access to sustainable energy
- Building on strong domestic action, lead international actions to combat climate change
- Promote energy security, access to clean energy, and the transition to a cleaner global economy
Strategic Goal 4: Protect core US interests by advancing democracy and human rights and strengthening civil society
- Encourage democratic governance as a force for stability, peace, and prosperity
- Promote and protect human rights through constructive bilateral and multilateral engagement and targeted assistance
- Strengthen and protect civil society, recognizing the essential role of local capacity in advancing democratic governance and human rights
Strategic Goal 5: Modernize the way we do diplomacy and development
- Enable diplomats and development professionals to influence and operate more efficiently, effectively, and collaboratively
- State for the Record, Mark Andrew Green, Nominee for USAID Administrator, Before the Senate Foreign Relations Committee (June 2017)
- US Department of State, Enduring Leadership in a Dynamic World: Quadrennial Diplomacy and Development Review (2015)
- US Department of State and US Agency for International Development (USAID), Strategic Plan FY2014-2017 (2014)
- White House, Office of the Press Secretary, Fact Sheet: US Global Development Policy (2010)
- White House, Presidential Policy Directive on Global Development (PPD-6) (2010)
- Who are the main actors in the US's development cooperation?
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). OMB produces the president’s budget request, which outlines policy and funding priorities. The NSC is the principal forum of the president to consider matters of national security and foreign policy; it has influence over foreign assistance and development policy. The NSC is chaired by the president; other members include the vice president, the secretaries of state, defense, energy, and the treasury, as well as the national security advisor. The US Agency for International Development (USAID) administrator is also included at the NSC deputy level and is invited when deemed appropriate.
Approximately 27 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 Secretary of State Rex Tillerson, is primarily responsible for foreign policy. The State Department is also an important party to development policy setting. Under the overall guidance of the White House, the State Department 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.
Several offices oversee the State Department’s development-related activity:
- Office of US Foreign Assistance Resources is led by the director of US Foreign Assistance Resources. 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 USAID.
- The 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 headed by Ambassador Deborah Birx.
- Under-Secretary for Civilian Security, Democracy, and Human Rights (this position is vacant) is responsible for 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 (this position is vacant) leads efforts on policies related to economic growth, energy, environment, science, and technology.
- Bureau of Population, Refugees, and Migration (PRM) leads on the US’s work with refugees, migrants, and victims of conflict. It also engages with multilateral organizations, including the UN's High Commissioner for Refugees (UNHCR), the UN Children’s Fund (UNICEF), the International Organization for Migration (IOM), the International Committee of the Red Cross (ICRC), and the United Nations Population Fund (UNFPA).
Other key State Department stakeholders include the special representative for Global Food Security (Ted Lyng, acting), and the US ambassador to the UN, Nikki Haley, who is leading on a review of the UN system. At the moment, the State Department does not have all its political appointments filled, limiting political leadership of the department’s work. This situation may continue through the end of the various reviews currently underway.
US Department of Defense (DOD), currently led by Secretary James Mattis, 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 Thomas Price, 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 the US’s efforts to promote economic growth and poverty reduction in developing countries through the Office of Development Policy and Debt, which manages the 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’s largest provider of food assistance provider of food assistance (see Deep Dive: Agriculture and Deep Dive: Nutrition).
US Agency for International Development (USAID) is headed by USAID Administrator Mark Green. The agency is technically independent, but operates within the parameters of the foreign policy guidance from the president, the secretary of state, and the NSC. USAID’s administrator is invited to NSC meetings as appropriate. The agency leads the implementation of US global development programs, though it often shares responsibility for strategy and implementation with the State Department. This is the case with HIV/AIDS funding, where the State Department’s OGAC coordinates and USAID, CDC, and NIH implement. 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. In 2016, USAID had 10,235 employees, of which 3,059 were in Washington and 7,176 were overseas. At headquarters, key divisions of USAID include:
- There are six regional bureaus: 1) Africa, 2) Europe and Eurasia, 3) Asia, 4) Afghanistan and Pakistan, 5) Middle East, and 6) Latin America and the Caribbean.
- There are four programmatic bureaus: 1) Food Security, 2) Economic Growth, Education, and Environment, 3) Democracy, Conflict and Humanitarian Assistance, and 4) Global Health.
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.
Millennium Challenge Corporation (MCC) administers the Millennium Challenge Account, 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.
Other institutions 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: Inter-American Foundation, OPIC, Peace Corps, US African Development Foundation, Export Import Bank.
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 on foreign assistance. In particular, the House and Senate Appropriations Committees and their 12 subcommittees decide on funding to specific spending areas (e.g., foreign assistance, defense, agriculture, and public health). The Appropriations Committees and State and Foreign Operations Appropriations Subcommittees in both chambers exercise considerable decision-making and oversight authority over both foreign assistance spending and policy. In addition to these, two other committees play a role (albeit less powerful) in authorizing and overseeing ODA-related programs. These are:
- House Foreign Affairs Committee (HFAC): An important subcommittee is: Africa, Global Health, Global Human Rights, and International Organizations.
- Senate Foreign Relations Committees (SFRC): Important subcommittees are: Africa and Global Health Policy; Multilateral International Development, Multilateral Institutions; and International, Economic, Energy, and Environmental Policy.
Members of Congress often create groups called caucuses, which are formed to pursue common legislative goals on specific topics. These are typically bipartisan in nature. There are several related to development issues, including the Congressional Caucus for Effective Foreign Assistance, the International Basic Education Caucus, the Congressional Global Health Caucus, the Congressional HIV/AIDS Caucus, Tuberculosis Elimination Caucus, and the Congressional Caucus on Malaria and Neglected Tropical Diseases.
- Congressional Research Service, Foreign Aid: An Introduction to US Programs and Policy (2016)
- USAID, Staffing Report to Congress, June, 2016
- US Department of State
- US Agency for International Development
- Center for Global Development, The Foreign Assistance Agency Briefs: Introduction (2017)
- Kaiser Family Foundation, Report: The US Government Engagement in Global Health: A Primer (2017)
- Brookings Institution, Institutional Architecture of US Foreign Aid (2017)
- OECD, OECD Development Cooperation Peer Reviews, United States, 2016
- How is the US's ODA budget structured?
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). Function 150 comprises both ODA-related and non-ODA funding, such as funding for operating embassies, military assistance, and promotion of US exports. In FY2017, the final budget for Function 150 was approved for US$59.1 billion.
The vast majority of funding (around 97%) included under Function 150 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 FY2016, the SFOPs was enacted at around US$53 billion, while in FY2017 it was around US$58 billion. The SFOPs bill is divided into ‘titles’, each covering a different budget envelope (see Table 2 below). The money in these envelopes is mainly managed by the State Department and the US Agency for International Development (USAID), but not exclusively. 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’s assessed contributions to 44 international organizations, including the UN’s regular budget and its specialized agencies.
- Title III: Bilateral Economic Assistance covers much of the US’s foreign assistance and development activities, accounting for about half of the entire SFOPs. By far the largest share goes to global health (32% in FY2017). 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’s contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Programs funded under this envelope are jointly managed by the State Department and USAID. Funding under the ‘Development Assistance (DA)’ envelope goes broadly to foster economic progress and social stability in partner countries. It is the most flexible account managed by USAID in terms of applying money at country level. The ‘Economic Support Fund (ESF)’, generally managed by the State Department, has a more specific function: to provide assistance to allies and countries in transition to democracy, support the Middle East peace process, and finance economic stabilization programs. The president’s FY2018 budget request merged the DA into ESF, and significantly reduced funding from the FY2017 combined resources of the two separate accounts. Funding for independent agencies party to US foreign assistance and development like the Millennium Challenge Corporation (MCC) or the Peace Corps also fall under Title III.
- 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 and Overseas Contingency Operations (OCO) (See Table 2 below). OCO funds are set aside for expenses connected to overseas activities, primarily related to Iraq and Afghanistan, humanitarian assistance in the Middle East and North Africa, and embassy security. They are managed by the Department of Defense (DOD) and the State Department. Originally, OCO funds provided emergency funds related to the ‘Global War on Terror’. Recently, however, they have been used for base budget activities of the DOD and the State Department. This includes operations related to the response and prevention of crises, including armed conflict, and man-made and natural disasters. OCO 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 in the SFOPs, OCO funds comprise the primary source of funding. Additionally, some OCO funds can also be allocated outside the regular appropriations period through a supplemental appropriations process, when the need for funds is urgent.
Table 2. State-Foreign Operations Appropriations overview
US$ millions FY2016 FY2017 (enduring) FY2017 (OCO) FY2017 (Total) Title I. State, Broadcasting & Related Agencies
International Organizations 3907 1816 1451 3267 Other 12,551 9,402 5,418 14,820 Title II. Admin of Foreign Assistance (USAID) 1517 1,447 185 1,632 Title III. Bilateral Economic Assistance 24,124 16,139 10,773 26,912 Global Health Programs (GHP), State & USAID 8503 8725 - 8725 GHP (State) 5,670 5,670 - 5,670 GHP (USAID) 2,833 3,055 - 3,055 Development Assistance 2,781 2,995 - 2,995 International Disaster Assistance (IDA) 2,794 498 3,929 4,427 Economic Support Fund 4,302 1,042 3,640 4,682 Democracy Fund 151 211 - 211 Assistance for Europe, Eurasia and Central Asia 985 292 611 902 Migration & Refugee Assistance 3,066 913 2,446 3,359 Emergency Refugee & Migration 50 10 40 50 Independent agencies 1,364 1,368 - 1,368 Department of Treasury 24 30 - 30 Other 104 55 107 162 Title IV. International Security Assistance 8,831 6,422 2,958 9,380 Title V. Multilateral Assistance 2,629 2,110 - 2,110 World Bank: GEF 168 147 - 147 Green Climate Fund - - - - World Bank IDA 1,197 1,197 - 1,197 World Bank IBRD 187 6 - 6 IFAD 32 30 - 30 GAFSP 43 23 - 23 International Organizations & Programs 339 339 - 339 Other 660 368 - 368 Title VI. Export Assistance -696 -590 - -590
Source: Congressional Research Service, State, Foreign Operations and Related Programs: FY2017 Budget and Appropriations (2016) and House of Representatives, 115th Congress, 1st Session, State, Foreign Operations, and Related Programs Appropriations Bill, 2018
President Trump’s SFOPs budget request proposes around a 30% cut below FY2017 levels when including OCO. It reduces, merges, and eliminates several budget lines, especially under Titles III, IV, and V in the SFOPs bill. These moves would be in line with the administration’s increased focus on national security and economic growth, its opposition to climate change- and family planning-related programming, and its criticism of multilateral partnerships, among other things. However, the House Appropriations Committee’s SFOPs, passed on July 19, 2017, rejects many of the changes: It proposes about a 17% reduction when including OCO, from US$57.5 billion (FY2017 enacted) to US$47.5 billion. The Senate Appropriations Commtitee's SFOPs reduces foreign assistance covered in the legislation to US$51.2 billion, split between US$30.4 billion in eduring costs and US$20.8 billion for OCO funding. This is about US$1.9 billion below FY2017 levels, when factoring in famine relief.
- US Senate, Committee on Appropriations, State, Foreign Operations, and related Programs appropriations bill FY2018 (September 2017)
- US House of Representatives, Committee on the Appropriations, State and Foreign Operations appropriations bill FY2018 (July 2017)
- Executive Office of the President of the United States, Office of the Management and Budget, Budget of the US Government, Fiscal Year 2018 (May 2017)
- Congressional Research Service, State, Foreign Operations and Related Programs: FY2017 Budget and Appropriations (2017)
- Congressional Research Service, Foreign Aid: An Introduction to US Programs and Policy (2016)
- What are important decision-making opportunities in the US's annual budget process?
ODA levels and main funding lines can be influenced at various times during budget process
The US’s 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.
Types of spending in US federal budget
Mandatory spending – refers to programs such as Social Security and other entitlements, 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. 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. Funding requests for departments and agencies, including specific budget envelopes, can be shaped before the administration releases its budget request (i.e., from May to January), although the process is largely internal to the executive branch. 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.
OMB works to finalize budget request in late fall and 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, as 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. Following the release of the president’s budget request, engagement with various stakeholders is key to participate in the discussion around the foreign assistance budget. This includes with Congress, government agencies and departments, and the White House, through meetings, letters, and media outreach with analysis and opinions on budget impacts.
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 Key Question 4: How is the US’s ODA budget structured?). During the spring, each of the relevant committees and subcommittees holds a number of hearings on the president’s budget request. Usually, the heads of agencies are called to testify in person; written questions (‘Questions for the Record’ or ‘QFRs’) are submitted by the committee members. Then the committees debate, amend, and rewrite (‘marks-up’) the foreign assistance appropriations bills. Prior this phase, there are a number of advocacy opportunities, including meetings on Capitol Hill, letters to Appropriations Committee chairs, events, and participation in hearings.
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 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 then would require a veto override vote by Congress.
Examples of appropriations bills
Appropriations bill: Legislation that allocates funding to federal departments, agencies, and programs in the US government. Appropriations bills are passed by the House Committee on Appropriations and the Senate Committee on Appropriations. Bills must originate in the House of Representatives and be passed by both chambers of Congress before being signed by the president. The main types are:
- Regular appropriations bills: 12 bills covering funding for the government for one fiscal year (October 1-September 30).
- Omnibus bill: A single appropriations bill that combines any number of individual appropriations bills on diverse subjects into one large bill. Because of their size and scope, omnibus bills limit opportunities for debate and scrutiny. SFOPs is often part of such an omnibus funding measure.
- Continuing resolution (CR): If Congress has not passed a regular appropriations bill in time, it can pass a CR, which generally continues pre-existing funding levels as previous year.
- Supplemental appropriations: These add additional funding beyond what was originally appropriated at the beginning of the year; often used for things like disaster relief.
- How is the US's ODA spent?
Bilateral programs receive the vast majority of US ODA; US still 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$21.7 billion of its ODA bilaterally, representing around 86% in 2015 (OECD donor country average: 61%). This is in part due to large Presidential Initiatives such as the President’s Emergency Plan for AIDS Relief (PEPFAR), which provide significant funds bilaterally. For example, PEPFAR alone had a total budget of US$6.8 billion in 2015 and 2016. Of this, US$5.4 billion was bilaterally programmed for HIV/AIDs and tuberculosis (TB) programs.
In the FY2018 budget request from the Trump administration, bilateral funding would be reduced and refocused on economic assistance for countries and sectors of greatest strategic importance to the US. However, given the ongoing congressional appropriations process, it is unclear what the outcome for FY2018 and beyond will be.
Core ODA funding to multilateral organizations stood at US$4.3 billion in 2015. This accounts for around 14% of total US ODA, significantly lower than the OECD DAC average of 39%. In absolute terms, the US is still the second-largest provider of core contributions to multilateral organizations after the United Kingdom. Key recipients in 2015 were: the World Bank (34% or US$1.5 billion), UN agencies (21% or US$909 million), and regional development banks (12%). Other key multilaterals receiving US support are the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) (US$1.3 billion) and Gavi, the Vaccine Alliance (Gavi, US$200 million). In addition to core contributions, the US provided US$5.7 billion in earmarked funding to multilaterals for specific projects or regions (this is reported as bilateral ODA), bringing the total amount of ODA in 2015 channeled multilaterally to US$10 billion (32% of overall ODA).
During the Obama administration the role of multilateral institutions was highlighted as essential to meet the needs of and sustain the response to the world’s challenges. Under President Obama, for the first time, the administration announced a multi-year pledge to the Global Fund: US$4 billion over three years (2011-2013). The US subsequently hosted the 2014-2016 replenishment conference, pledging an additional US$4 billion. For 2017 to 2019, the US has committed another US$4.3 billion. Since its inception, the US has also been a strong supporter of Gavi. On climate change, President Obama committed US$3 billion to the UN Green Climate Fund (GCF), of which US$1 billion has been paid.
Among other cuts, the Trump administration’s budget for FY2018 would cease financing to address climate change, including to the GCF and the Global Climate Change Initiative (GCCI), and family planning (FP), including funding to the United Nations Population Fund (UNFPA). The House Appropriations Committee’s State-Foreign Operations (SFOPs) appropriations bill, passed on July 19, 2017, rejected many of these cuts, but confirms a shift away from climate-change and FP programming. A budget line for reproductive health and FP was reduced, and funding to UNFPA eliminated. The bill also seeks to codify the ‘Mexico City Policy’ and explicitly discusses the issue of UN reform, suggesting withholding funding to agencies until transparency and accountability measures are met. (For more information, see Key Question 1: How much ODA does the US provide? and Key Question 2: What are the US’s strategic priorities for development?). The Senate Appropriations Committee's SFOPs, passed on September 7, 2017, confirms these shifts albeit more minimally: It maintains, for example, provisions related to abortion, but restores funding to UNFPA and contains language repealing the Mexico City Policy.
The US government does not utilize loans; all bilateral ODA is distributed through grants
According to OECD data, US bilateral ODA is provided 100% in the form of grants (OECD DAC average: 90%). The US relies on the public sector (US$10 billion, 36%; DAC average: 54%), and NGOs and civil society (US$7 billion; 26%) to channel bilateral ODA. Under the Obama administration, the US shifted its policy to working more with local partners in developing countries. The OECD DAC Peer Review (2016) underlines, however, that, despite this focus on local capacity, the US’s use of these mechanisms is low. As part of a reform in 2010, the US Agency for International Development (USAID) aimed to have 30% of mission programs by 2015 implemented through local actors in partner countries. Though the share of programming implemented locally had nearly doubled by 2015, the 30% target was missed, reaching only 19%. US private contractors, NGOs, and grantees remain the largest implementers.
Who are the US’s ODA recipients?
Strong focus on SSA, LICs, and fragile states
Geographically, the US focuses its bilateral ODA on sub-Saharan Africa (SSA). In 2015, the US provided US$9.5 billion in bilateral ODA to the region (35% of bilateral ODA), followed by Asia (US$4 billion, 16%). Excluding funding unallocated to a specific region, between 2013 and 2015, 48% of US bilateral ODA went to SSA, 22% to Asia, and 15% to the Middle East and North Africa region. Afghanistan was by far the largest recipient country, receiving on average US$1.7 billion in US ODA between 2013 and 2015. However, US foreign assistance to countries is widely dispersed; according to government data 214 countries received support in 2015.
US bilateral ODA focuses on the world’s poorest countries. 36% of bilateral ODA between 2013 and 2015 went to low-income countries, which is significantly higher than the DAC average (26%); 18% was allocated to lower-middle income countries (DAC average: 20%).
How is bilateral funding programmed?
No overarching country-based approach; different mechanisms used depending on implementing entity and topic area
The US does not have a government-wide approach to implementing bilateral programming. USAID’s overseas missions develop five-year Regional or Country Development Cooperation Strategies (CDCS) in cooperation with Washington headquarters and local stakeholders. These outline sectoral and geographic focus areas, development objectives and results frameworks, as well as strategic objectives and implementation approaches. While CDCS cover five years, funding allocations and decisions at the local level must also take into account directives from USAID headquarters in Washington and the annual appropriations process, which makes multi-year commitments a challenge.
The Millennium Challenge Corporation (MCC), conversely, can make multi-year commitments as it is legally authorized to enter into five year commitments known as ‘compacts’ with partner countries. 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 foreign policy objectives into one strategy. The ICS are informed by the priorities outlined in USAID CDCS development objectives and those of other agencies active in the country.
Some Presidential Initiatives promote a more coordinated, longer-term approach to cooperation with partner countries. US funding for HIV/AIDS, for example, is provided through PEPFAR, which is supervised by the Office of the Global AIDS Coordinator (OGAC) at the State Department. Bilateral PEPFAR cooperation is implemented by several departments and agencies at the field and headquarters level, mainly USAID and the Department of Health and Human Services (HHS) through the Centers for Disease Control (CDC) and the National Institutes of Health (NIH).
Within the framework of PEPFAR, partner countries can request bilateral funding through two parallel processes. First, in a process led by field offices, relevant implementing agencies jointly (through a PEPFAR coordinator) elaborate biannual Country Operational Plans (COPs) which outline investments and priority areas. Host country governments and other local partners are to be consulted during the elaboration of COPs, which are approved by OGAC after several rounds of review. Second, recipient countries can also request centrally-funded assistance from headquarters. Five-year Partnership Frameworks between the US and the host government, introduced in 2009, establish strategic goals and areas of intervention. These enable longer-term planning. For countries with such a framework, COPs are the annual work plans for US efforts to achieve framework results. Development of the Partnership Frameworks is cross-institutional, with OGAC supervising the process led by the US Ambassador in the country with support from the interagency PEPFAR country team.
How will the US's ODA develop?
- Forecasting the future budget for United States (US) foreign assistance is difficult. The drastic cuts proposed by President Trump are not supported by Congress. However, barring a government-wide budget agreement that lifts discretionary spending caps, foreign assistance will remain vulnerable to cuts. A continuing resolution was enacted on September 8, 2017. This essentially maintains FY2017 foreign assistance levels until December 8, 2017 at which point Congress will need to reach a final agreement on the budget for FY2018. Until then, Congress will attempt to pass individual appropriations bills; any unpassed bills – likely to include the SFOPs – will be combined into an omnibus funding bill.
What will the US's ODA focus on?
- President Trump has proposed refocusing ODA to more strongly take into account US national security and economic interests. USAID’s administrator has highlighted supporting countries in transitioning from development assistance, a continued focus on democracy and human rights, humanitarian leadership, and innovative financing.
- Delivery of ODA will be impacted by the various reviews of US foreign assistance and aid architecture currently underway. These, including one exploring the possibility of folding USAID into the State Department, could redefine both the size and scope of US foreign assistance and its agencies.
- Changes in sectoral areas of focus are still uncertain. While the House and Senate have restored most of the president’s proposed cuts, some areas, such as family planning and climate change, remain at risk of decreased funding.
What are key opportunities for shaping the US's development policy?
- It is important to monitor the ongoing FY2018 appropriations process even during the current period of the continuing resolution (September to December). Engagement with Congress will be key to protect FY2018 foreign assistance and development-related funding from significant reductions. Meetings, letters, briefings, and testimony before key committees, subcommittees and caucuses, complemented with communications outreach, including blogs, op-eds, twitter and other social media, will be useful.
- Engagement in the discussion around the possible merging of USAID and the US Department of State, and other issues with respect to the redesign, are also important. Any change would impact the delivery and priorities of US foreign assistance. Advocacy with the White House, relevant departments and agencies, Congress, and partnership with civil society on this issue over the coming months present opportunities to shape the direction of US development assistance.