US

Summary

ODA Spending

ODA in Context

The US is the largest donor country, with ODA at US$47.8 billion in 2021.

Relative to economic size, the US’ ODA is low, at 0.2% of GNI, placing the US in 22^nd among OECD DAC members.

2022 preliminary figures show that while the US' absolute ranking stayed at the top spot, its relative ranking fell to 25^th among OECD DAC members.

ODA Trends

US ODA has jumped considerably since US President Joe Biden took office in January 2021. In 2021, total ODA increased by 29% compared to 2020, up from a 5% increase in total ODA from 2019 to 2020.

ODA increased by 8% in 2022, mainly due to support to Ukraine as well as increased costs for in-donor refugees. US$6.6 billion of their funding went to in-donor refugee costs, equivalent to 12% of total ODA, a massive 340% increase from the US$1.5 billion allocated in 2021. Bilateral support to Ukraine accounted for an additional 16% of total ODA in 2022.

In addition to the increased development emphasis by the Biden administration, the global development agenda traditionally has had strong bipartisan congressional support. The final FY2023 appropriations for US foreign assistance saw a 6% increase and President Biden’s FY2024 budget proposal requested an additional 11% increase over that. However, this is expected to meet strong resistance in the US House of Representatives, which is now controlled by Republicans, whose leadership is purported to have a plan to slash the US foreign assistance budget by 45%. Such a significant cut is unlikely, but experts predict a long process before it will be resolved, which will likely not come to an end by the September 30, 2023 deadline for the FY2024 budget, putting a strain on the otherwise bipartisan support for this spending.

ODA Breakdown

The US channels US$38.9 billion of its ODA bilaterally, accounting for 81% of its total ODA in 2021. This includes US$9.3 billion in earmarked funding through multilaterals, which is reported as bilateral funding. This is far above the OECD DAC average of 59%. Historically, US Congress favors bilateral assistance as it allows congress to have greater control in how US foreign assistance is spent. FY2023 enacted levels, however, did provide for a small increase in multilateral funding.

Bilateral Spending

US bilateral ODA is provided entirely in the form of grants. In 2021, the US distributed 30% of its bilateral ODA funding through the public sector ( DAC average: 44%), 23% as earmarked funding through multilaterals, which is considered bilateral ( DAC average: 26%), and 21% through NGOs and CSOs ( DAC average: 17%). The Biden Administration is prioritizing locally led development and USAID has set a target to have 25% of its funding going to local partners by 2025. The US focus on grants over loans is to ensure that US development money is directed to the most vulnerable.

The largest share of US bilateral ODA went to ‘humanitarian assistance,’ with a total of US$12.3 billion, or 32% of bilateral ODA going toward the sector in 2021, a 38% increase from 2020 levels. The second-largest sector was ‘health and populations,’ which received US$8.2 billion in 2021, or 21% of US bilateral ODA that year, a marginal increase of 1% from 2020 levels. The sector with the largest jump in ODA was ‘refugees in donor countries,’ which increased from US$1.6 billion in 2020 to US$4.8 billion in 2021.

President Biden’s proposed FY2024 budget adds slightly to the 8% increase in global health in FY2023. This includes additional funding for global health security and large increases in climate assistance. It is not likely that these climate increases will get through, as his previous budget proposed a large increase in FY2023, but the final enacted levels were essentially flat relative to FY2022 levels. Gender has also been a priority for Biden. In FY2023, gender and WEE funding received large percentage increases; the president’s proposed FY2024 budget includes more than US$3 billion for gender equity and equality.

Multilateral Spending and Commitments

As a result of its focus on promoting national interests and strengthening bilateral relationships, the US channels a lower share of its total ODA to multilateral organizations than other OECD DAC donors. Core funding to multilateral organizations stood at US$9.3 billion in 2021, up from US$6 billion in 2020. Core contributions to multilaterals accounted for 19% of the US’ total ODA ( DAC average: 41%). In absolute terms, the US became the top provider of core contributions to multilaterals in 2021. Overall, the Biden Administration has reengaged with the multilateral system. The FY2024 Biden budget proposes to fully fund US contributions to international organizations in addition to paying down past debts and providing US$57 million in support to UNFPA.

Recent commitments to multilateral organizations are summarized below.

Politics & Priorities

Political Context

The US is a constitutional federal republic, where powers reserved for national government are shared between independent branches of government: the executive branch, which is headed by the president; the US congress, and the judiciary. The president, currently Joe Biden (Democrat) who took office in January 2021, sets overarching policy orientations for US foreign assistance, including for development. Development policies and priorities are also defined by the US congress, including the two chambers, the House of Representatives and the Senate, which have a final say on federal spending, including foreign assistance. Within the executive branch, the US Department of State is responsible for foreign policy and diplomacy and works with USAID on development policy setting. USAID is largely responsible for implementation of US global development programs. Under President Biden, development has been given a more elevated role alongside defense and diplomacy, including naming the USAID Administrator as a principal in the NSC.

Main Actors

Development Priorities

The Biden Administration views global development as tied to diplomatic and defense priorities. President Joe Biden released an Interim National Security Strategic Guidance document in March 2021, outlining priorities for his administration’s global footprint, including:

• Decisively responding to the public health and economic crises triggered by COVID-19, including global health security;
• Reinvigorating and modernizing the US’ global alliances and partnerships;
• Moving swiftly to earn back the US’ position of leadership in international institutions to tackle shared challenges, including the climate crisis; and
• Revitalizing the US commitment to democracy.

These sectoral priorities are more clearly outlined in the State Department and USAID JSP 2022-26. Under the plan, the US government commits to “race to end the COVID-19 pandemic, help nations adapt to climate change, fight corruption and authoritarianism, reduce poverty, enhance food security and nutrition, improve health and education, prevent conflict, protect human rights, promote equality, and provide lifesaving assistance during crises.”

USAID released its revised Policy Framework in March 2023, which serves as a guide for driving progress through and beyond its programming. The framework is USAID’s highest-level policy document and it orients development aims for USAID and the US government; aligns national security and foreign policy goals with development objectives; and provides cohesion among the development, humanitarian, and crises response work of the agency and its partners.

On top of reaffirming the 2030 Agenda for Sustainable Development and the SDGs, the three overarching priorities of the Policy Framework are:

• To confront the greatest challenges of our time,
• To embrace new partnerships, and
• To invest in USAID’s enduring effectiveness.

The framework defines 'greatest challenges' as responding to complex crises including conflicts and food insecurity, addressing climate change, countering rising authoritarianism and supporting democracies, strengthening global health and health security, addressing economic headwinds, and promoting inclusive growth.

Also in March 2023, USAID released its long-awaited Acquisitions and Assistance strategy, which governs how the agency spends about 85% of its funding. The strategy lays out three new priorities for awarding USAID contracts:

• The agency will continue its work to strengthen its workforce, hiring more contracting offices, agreement officers, and more local staff with authority to award contracts;
• USAID aims to decrease the time it takes to award contracts more than US$25 million; and
• The agency will diversify its partner base through reducing barriers for new partners, increase outreach to the private sector, and expand the ability of USAID to work with local partners.

Experts stated that the third pillar would be critical to achieving USAID's ambitious targets for increasing locally led development.

By issue

Global health: Global health is a priority sector for the Biden Administration, as the US remains the largest global health donor. Biden’s FY2024 budget proposal requests a small increase in overall global health spending to a total of US$10.9 billion. This includes US$1.2 billion in global health security and US$2 billion in the US contribution to the replenishment of the Global Fund. Global health in FY2023 will receive an 8% increase to a total of US$10.6 billion, with increased funding for the Global Fund and a 29% increase in funding for global health security. US global health budgeted for FY2023 includes US$4.4 billion for PEPFAR, as well as funding for SRHR, HIV/AIDS, malaria, tuberculosis, maternal and child health, and nutrition.

Read more about US’ ODA to Global Health

Climate: Biden has made climate a top priority. In his April 2021 Leaders’ Summit on Climate, Biden announced that the US would double climate finance for LICs by 2024. He also elevated the role of US Special Presidential Envoy for Climate to a cabinet position. In late 2021, USAID released a draft climate change strategy, which sets performance targets for 2030 on climate, including CO2 reduction and putting US$150 billion in public and private sector funding toward addressing climate change. Despite proposing large increases for FY2023, the final enacted funding kept levels essentially flat and contained no funding for GCF. The FY2024 budget once again proposes large increases for climate, including US$3 billion to fund the Green Climate Fund (US$1.6 billion) among other programs, and loans for the Clean Technology Fund (US$1.2 billion).

Read more on US' ODA for Climate Change

Gender equality: Gender has gained greater attention under Biden. He has elevated a representative for gender equality to a cabinet-level position for the first time, established a White House Gender Policy Council within the Executive Office of the President, and released the first-ever US National Strategy for Gender Equity and Equality, which applies to both US domestic and international policy. Biden’s 2023 budget request included a US$2.6 billion global gender equality program package, the largest-ever gender budget request and more than double the amount requested for 2022. The FY2024 budget once again prioritizes gender equity and equality, with an even larger US$3 billion ask.

Read more on US' ODA for Gender Equality

While agriculture and education are key sectors for the US, neither are considered top-level within the new JSP 2022-2026. Food security, however, has consistent bipartisan congressional support and is a high priority for the Biden Administration. The FY2024 budget contains US$1.2 billion for bilateral food security and agricultural programs .

Read more about US’ ODA for Agriculture

Read more about US’ ODA for Education

By region

The US concentrates its bilateral ODA on sub-Saharan Africa. Between 2019-2021, the US provided an average of US$11.8 billion (35% of bilateral ODA) to the region per year, followed by the MENA region, with US$4.2 billion or 13% of bilateral ODA during that time, and Asia, with US$3.8 billion or 11% of bilateral ODA during that time. Under the Biden Administration, SSA will remain a high-priority region. Biden reinforced this aim by calling the US-Africa summit in December 2022, which brought together a number of African leaders and top level members of his administration to create and expand partnerships across the African continent to cover a range of issues including food security, climate change, health care and pandemic preparations, inclusive economies, good governance, human rights, and peace and security. The summit resulted in a total of US$55 billion in commitments to the continent from the US over 2022-2025 .

In 2021, Afghanistan was the largest recipient of US bilateral spending. It received US$1.5 billion in ODA, a significant 41% increase over 2020, but this number is expected to fluctuate in coming years as the US government negotiates development assistance to Afghanistan under Taliban control. Ethiopia received the second-largest allocation (US$1.33 billion, a large 61% increase compared to 2020 due to ongoing conflict and humanitarian need), followed by Jordan (US$1.28 billion; a marginal increase of 1%), and Nigeria (US$920 million; a decrease of 5%).

Since the beginning of the Russian invasion of Ukraine on February 24, 2022, the US has provided over US$13 billion in direct budget support, including for healthcare, education, and emergency response. In addition, US$1.4 billion has been provided in humanitarian assistance and over US$800 million in development assistance, which will bolster Ukraine’s energy grid, governance institutions, agricultural production, small businesses, and civil society.

The new FY2024 budget request also calls for an increased US role in the Indo-Pacific to advance the US economy. The budget request includes a US$6 billion mandatory proposal to the region, primarily as a measure to ‘out-compete’ China, which the US sees as its “only competitor with both the intent to reshape the international order and increasingly, the economic, diplomatic, military, and technological power to do it.” This proposal includes investments in transformative and sustainable infrastructure and beyond in the region as well as financial investments from the DFC, a newly created US government-run development finance mechanism that leverages the private sector to support growing businesses in LMICs. These initiatives are part of a wider conversation within the administration and congress on how to ‘out-compete’ China, putting pressure on USAID, DFC, and MCC on how to best address these concerns.

Political Outlook

The Biden Administration released its budget request for FY2024 on March 9, 2023, and called for a US$8.9 billion increase from the FY2023 enacted US foreign assistance budget, a 14% hike. Biden’s FY2024 budget requested US$70.6 billion in total non-emergency funding. The final enacted figure for FY2023 was US$61.7 billion (not including emergency funding), which represented a 6% increase over FY2022. During his time in office, President Biden reinstated the US as a primary donor and global leader on support for global health initiatives. He rejoined the WHO, pledged support to the Access to COVID-19 Tools Accelerator ACT-A, and joined its COVAX Facility. In the climate space, he also recommitted to the Paris Accords and has pledged significant funding for climate programs, which have not been supported in the final appropriations. The outlook for FY2024 will be much more challenging, as House Republicans, who now hold a slim majority, have called for drastic cuts in spending, including foreign assistance funding.

Budget

Budget Breakdown

The overall US foreign assistance funding level for FY2023 (October to September) was enacted at US$61.7 billion in non-emergency funding and US$16.6 billion in emergency funding for Ukraine . President Biden’s FY2024 budget was released on March 9, 2023 and requested an 14% increase from the FY 2023 enacted figure for non-emergency foreign assistance. The Biden Administration’s FY2023 budget was for US$68.2 billion, with the final enacted figure set at US$61.7 billion .

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. Almost all development-related spending is within Budget Function 150, commonly referred to as the IAB, which includes ODA-accountable funding and non-ODA money, such as operating embassies, military assistance, and promotion of US exports.

The vast majority of funding included under international affairs usually comes from the SFOPS appropriations bill, with the remainder sourced primarily from the agricultural appropriations bill for food security and food-assistance funding.

The SFOPS bill is divided into ‘titles,’ each covering a different budget envelope (see the table below). The money in these envelopes is mainly, but not exclusively, managed by the State Department and USAID. Relevant titles related to global development include:

• Title I: Department of State and Related Agency 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 regular budget and its specialized agencies.
• Title II: Administration of Foreign Assistance 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. The largest share goes to global health. Programs funded under Title III are jointly managed by the State Department and USAID. Most funding is channeled through the ‘Development Assistance’ envelope, which is broadly intended to foster economic progress and social stability in partner countries, and the 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 V: Multilateral Assistance includes money for US voluntary contributions for various multilateral organizations, including to the World Bank and global environmental funds.

This table excludes emergency funding. FY2022 IAB spending was US$87.3 billion total including emergency funding.

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. Most federal spending consists of ‘mandatory spending’ and ‘discretionary spending;' 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, often resulting in continuing resolutions that extend the fiscal year and that keep the government funding running while an agreement is reached.

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 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 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 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 CBO evaluates the request. The House and Senate then 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 or “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 to allocate 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 upon, 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 SFOPS, which funds most development programs (see ‘Budget’). During the spring, each of the relevant committees and subcommittees hold several hearings on the president’s budget request to debate, amend, and rewrite or “mark-up” the appropriations bills. Prior to this phase, there are several 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 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.