Donor Profile: US

Last updated: December 8, 2022

Summary



ODA Spending


ODA in Context


The US is the largest donor country, with ODA at US$42.3 billion in 2021 (current prices; US$40.7 billion in constant 2020 prices).


Relative to economic size, the USODA is low, at 0.18% of GNI, placing the US in 23rd among OECD DAC members.




US ODA has jumped considerably since US President Joe Biden took office in January 2021. In 2021, total ODA increased by 14% compared to 2020, up from a 5% increase in total DAC from 2019 to 2020.


In addition to the increased development emphasis by the Administration, the global development agenda continues to have strong bipartisan congressional support. In March 2022, Congress passed a US$1.5 trillion omnibus bill, which includes US$13.6 billion for military and humanitarian assistance to Ukraine.



ODA Breakdown


The US channels US$30.3 billion of its ODA bilaterally, accounting for 84% of its total ODA in 2020 (including US$7.2 billion in earmarked funding through multilaterals, which is reported as bilateral funding). This is far above the OECD US average of 58%.


US bilateral ODA is provided almost entirely in the form of grants, or 99% of total bilateral ODA. In 2020, the US distributed 32% of its bilateral ODA funding through the public sector ( DAC average: 46%), 23% through multilateral organizations (as earmarked funding, which is considered bilateral; DAC average: 22%), and 21% through NGOs and CSOs ( DAC average: 19%). The Biden Administration is prioritizing development partnerships at the local level.



Bilateral Spending

The largest share of US bilateral ODA went to ‘humanitarian assistance’ (US$8.6 billion, or 28% of bilateral ODA in 2020, a slight increase of 4% from 2019 levels. The second-largest sector was ‘health and populations,’ which received US$7.8 billion in 2020, or 26% of US bilateral ODA that year, a large jump of 18% from 2019 levels, due to increased investment in tackling the COVID-19 pandemic.


Budget documents suggest global health funding will increase further in FY2023. President Biden’s FY2023 budget request includes a total of US$10.6 billion for State Department and USAID Global Health Programs, a US$746 million (8%) increase over the FY2022 enacted level. In addition to global health being a priority sector, climate and gender have gained greater attention under the current administration.



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$5.7 billion in 2020, up from US$4.2 billion in 2019. Core contributions to multilaterals accounted for 16% of the US’ total ODA ( DAC average: 42%). In absolute terms, the US became the top provider of core contributions to multilaterals in 2021 (US$9.1 billion).


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 the president, 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 defined by the US Congress, including the two chambers – the House and the Senate – which have a final say on federal spending, including foreign assistance; the US Department of State, which is responsible for foreign policy and development policy-setting; and USAID, which leads the implementation of US global development programs and defines priorities.


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
  • Revitalizing the US commitment to democracy.

These sectoral priorities are more clearly outlined in the State Department- USAIDJSP 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.” In addition to the inter-departmental ‘ JSP 2022-26,’ USAID is also updating its ‘Policy Framework,’ which lays out its overarching policy strategy. The final ‘Policy Framework’ will be released in fall 2022.


By issue

Global health: Global health is a priority sector for the Biden Administration, as the US remains the largest global health donor. with over US$9.8 billion appropriated in 2022 to address global health priorities, such as the ongoing COVID-19 response, SRH, HIV/AIDS, malaria, TB, health systems strengthening, and global nutrition. In addition, the climate and gender sectors have gained greater attention under the current administration.


Read more about US’ ODA to Global Health


Climate: Biden has also signaled that his administration will take development in climate seriously. 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.


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.


Read more on US' ODA for Gender Equality


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While agriculture and education are key sectors for the US, neither are considered top-level within the new JSP 2022-2026.


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 2018 - 2020, the US provided an average of US$10.7 billion (35% of bilateral ODA) to the region per year, followed by the MENA region, with US$3.9 billion or 13% of bilateral ODA during that time, and Asia, with US$3.5 billion or 11% of bilateral ODA during that time. Under the Biden Administration, SSA will remain a high-priority region.


In 2020, Jordan was the largest recipient of US bilateral spending. It received US$1.2 billion in ODA, a slight 8% increase over 2019. Afghanistan received the second-largest allocation (US$1 billion, a large 30% decrease compared to 2019, when it was the largest recipient; this number is expected to fluctuate in coming years as the US government negotiates development assistance to Afghanistan under Taliban control), followed by Nigeria (US$933 million; a large jump of 40% due to increased humanitarian need in the country), and Ethiopia (US$796 million; a decrease of 10%).


Political Outlook

The Biden Administration released its first budget on April 6, 2022, and called for a US$9.7 billion increase in US foreign assistance from FY2022 levels. The request totaled US$68.2 billion in “discretionary non-emergency funding” and was 17% above the FY2022 enacted level. The approved House and Senate SFOPS appropriations bills came in at US$66.6 billion and US$66.5 billion, respectively, falling short of the request by roughly US$1.7 billion. In addition to increasing development spending, President Biden has reversed many of the moves made by former President Donald Trump to withdraw from multilateral health initiatives and cut US funding to global health works. Biden rejoined the WHO, pledged support to the Access to COVID-19 Tools Accelerator ACT-A, and joined its COVAX Facility.


Since the beginning of the Russian invasion of Ukraine on February 24, 2022, the US has provided over US$1.5 billion in humanitarian assistance funding to Ukraine, with just over US$1 billion channeled through USAID. This funding comes in parallel with the May 2022 ‘Ukraine Supplemental Appropriations Act, 2022,’ which outlines US$13.6 billion in emergency funding to Ukraine. Emergency funding to Ukraine has affected ODA allocations to other development priorities, and with the ongoing nature of the conflict, it is likely that more funding will be pulled from the larger US ODA budget to assist Ukraine.


Budget


Budget breakdown


The overall US foreign assistance funding level for FY2022 (October to September) was enacted at US$58 billion, this baseline funding does not include US$29.3 billion in emergency funding that primarily went to Ukraine and Afghanistan.


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 IAB, which includes ODA-accountable funding and non-ODA money, such as operating embassies, military assistance, and promotion of US exports.


President Biden’s FY2023 budget was released on March 28, 2022 and proposes a 3% (US$1.9 billion) increase in US foreign assistance from the FY2022 request at US$60.4 billion. The budget is 14% (US$7.4 billion) higher than the FY2021 enacted budget.


The vast majority of funding included under International Affairs usually comes from the SFOPS appropriations bill (97% in the proposed FY2023 budget), with the remainder sourced primarily from the agricultural appropriations bill for food security and food-assistance funding. The US House of Representatives (the House) passed the SFOPS FY2023 appropriations bill on June 22, 2022, which provides US$66.6 billion in funding for US foreign assistance programs, a 15% increase over FY2021 enacted levels. Despite the increase from FY2021, the bill still falls US$1.7 billion (2%) below the Administration’s FY2023 request of US$68.2 billion. The Senate Appropriations Committee passed its companion 2023 SFOPS bill over a week later on August 1, 2022, with funding at US$66.5 billion. Beyond the baseline amount, the Senate SFOPS bill also puts forward US$5 billion for emergency funding toward the global COVID-19 response in FY2022 and US$950 million toward pandemic preparedness in FY2023.


The SFOPS bill is divided into ‘titles’, each covering a different budget envelope (see ‘Table 2’). The money in these envelopes is mainly, but not exclusively, managed by the State Department and the 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 chart 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 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.  

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Adam Jennison

ajennison@seekdevelopment.org

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