TransparencyGate: the end of the road

by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. Sixteen months after I first filed a Freedom of Information Act request with USAID for the budgets of American-financed NGO projects in Georgia, I have reached the end of the road. Rejecting my appeal, USAID has confirmed that it continues to regard NGO project budgets as “privileged or confidential” information, and will not release budgets without contractors’ permission.

The opacity of USAID’s subcontracting makes it impossible for researchers to get access to comprehensive and comparable data that could inform debates about the effectiveness of delivering aid through NGOs. For example, the issue of aid fragmentation within NGOs could only be raised because Oxfam GB voluntarily provided a researcher with a list of all its projects abroad.

USAID is on very thin ice when it tries to push developing country institutions to become more accountable. The next time USAID lectures an African official on the importance of transparency in public procurement, I hope she will pull out a list of blacked-out budgets and argue that her ministry is following American best practice when it treats all financial details of its subcontracting arrangements as “privileged or confidential.”

Financial opacity also remains the default position for most NGOs. CARE and Counterpart instructed USAID to release more information in response to this FOIA, and they deserve credit taking for this step. However, USAID’s latest information release suggests that no other NGO has given the green light for such information sharing.

The recent public statements by NGOs and other aid actors reveal wildly divergent understandings of what accountability should mean in practice. As InterAction points out, “the issue at hand is what constitutes relevant information, and to whom specific information should be disclosed.”

What information is relevant? Scott Gilmore argued that we should be interested in accountability for outcomes rather than for expenditures, and many commentators on this blog have questioned the desirability or utility of public access to NGOs’ salary figures or NICRA rates, and raised concerns about privacy, security and competitive disadvantages.

I continue to believe that project proposals, including uncensored budgets, are essential components of a meaningful rendering of account. Proposals spell out what an NGO plans to achieve, when, where, why and how, and at what cost. If we don’t even know what a project sets out to do, and with what resources, how can we hold it to account for its success or failure?

Equally, there is disagreement on who qualifies as a legitimate stakeholder. CNFA and Mercy Corps have both emphasized that they feel themselves obliged to render account to institutional donors and beneficiaries, but not necessarily to third parties. This line of argument glosses over the sad reality that NGOs do not reveal project budgets to their beneficiaries either. Also, as charities enjoy tax-exempt status and spend public money, we are all donors, like it or not. And we all care about the beneficiaries, so we are all “aid watchers”.

If project budgets are not particularly relevant, and scrutiny by ordinary citizens does not bolster accountability, why do international NGOs regularly make their local sub-grantees post project budgets in public places for all to see? As far as I know, no Northern NGO has worried that such excessive transparency may compromise the privacy, security or competitiveness of community-based NGOs in the South.

This FOIA journey has shown one thing above all: NGOs (save Oxfam GB) simply do not want outsiders to see their project budgets, full stop. Not a single NGO has used this forum to announce its willingness to give beneficiaries or other stakeholders access to its project proposals and budgets in the future, even though every country director has these documents on his hard drive and could attach them to an email within two minutes.

Project budgets are shown only to those stakeholders who have the power to force NGOs to open their books: donors, headquarters, and audit institutions. The poor and powerless have to be content with whatever information NGOs choose to provide.

Can NGOs be accountable without showing outsiders where the money goes? The Humanitarian Accountability Project thinks so. “Public disclosure of financial information is not a requirement for HAP membership,” HAP recently confirmed. InterAction concurs, stating that it “purposefully does not define in our standards specific mandates for disclosure.” InterAction also highlights “the request of some donors to keep their financial support private.”

Transparency International, drawing parallels to the oil and gas industry, strongly disagrees: “Competitive advantage or even privacy, are not acceptable exceptions. Only personal physical security suffices.” Aidinfo observes that “the burden of proof is shifting to those who would keep information secret.”

Donor-abetted secrecy jars with President Obama’s call at last week’s MDG summit: “Let’s resolve to put an end to hollow promises that are not kept.  Let’s commit to the same transparency that we expect of others.”

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InterAction's statement on NGO accountability

Editor’s note: Aid Watch asked InterAction for a contribution to the debate originally sparked by Till Bruckner’s post The accidental NGO and USAID transparency test. See below for a list of all related posts. Statement from Barbara J. Wallace, InterAction’s Vice President of Membership and Standards, on NGO Accountability

Washington, DC (September 27, 2010)—InterAction appreciates the active discussion about NGO accountability and transparency, and has been monitoring the debate. The variety of opinions and information is valuable. This is not a new conversation for us. Our community of U.S.-based international NGOs has been discussing these issues for more than 20 years and they are the basis for development of our Private Voluntary Organization (PVO) Standards. These standards state that each member organization ‘shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.’ The issue at hand is what constitutes relevant information, and to whom specific information should be disclosed.

We deplore the nature of the debate taking place on your blog.  Highly inflammatory accusations have been made against NGOs—now proven to be untrue—using faulty research and questionable methodology. Whistleblowers bring disturbing information to light, but also bear responsibility for sharing accurate information based on fact. Instead of igniting a constructive conversation with a different take on accountability and transparency, this blog chose to smear the NGO community using conclusions from incomplete information that fit the author’s premise rather than engage in constructive discussion about what constitutes sufficient transparency, generating a lot of attention, but little constructive change.

InterAction purposefully does not define in our standards specific mandates for disclosure, nor do we dictate to any organization the details of their organizational management. InterAction’s membership is wide and diverse. Our largest members are worldwide and have total budgets over $1 billion. Our smallest has an annual budget under $60,000, works in one country and has no paid staff. Our members have varying operational models, methodologies and organizational capacities. This makes it almost impossible to compare the raw data from one organization with the raw data of another. The following caution in evaluating comparative detailed financial information may be useful as an example of this pitfall.

The ratio of indirect cost to direct cost or total cost varies and depends on many factors. It will be difficult if not impossible to get a definitive or measurable indicator for cost reasonableness since each organization has a different accounting/allocation methodology. That is to say there are numerous differences in both workforce and accounting classifications as to direct or indirect costs, as well as other variables such as the extent to which subcontractors are used, the structure of an organization, the expanding and declining business base for individual organizations, and the differing accounting methodology of one organization verses that of another. For example: one company may have a large labor overhead ratio to direct labor because it includes vacation and sick leave along with other types of overhead costs directly related to labor, while another organization will have a lower ratio because they direct charge vacation and sick leave. Neither practice is preferred over the other and both are equally acceptable. They are merely different. (

In our working groups, annual Forum and CEO Retreats ongoing discussions about the responsibility of accountability and definition and value of transparency in a newly technologically advanced world are common themes.  In addition to the request of some donors to keep their financial support private (and the NGOs legal responsibility to honor that request),  organizational capacity, security concerns and other circumstances all have to be taken into consideration when determining whether or not specific information should be made public in part or in its entirety. All NGOs are not the same. That said,InterAction member organizations believe that informed citizens provide important insight, and they value the participation of informed local citizens in project design, implementation and evaluation and have used such insights to improve practices and methodology.

As we become an increasingly technologically advanced and interconnected society, NGOs will need to keep pace with new requests for information, and to balance questions of security, law, individual privacy rights, and proprietary methodology with this ever increasing demand.  InterAction and member organizations will continue to discuss NGO accountability, transparency and the impact of technology on our standards within its communities of practice, and will continue to wrestle with the increasing demands for public information and the reduction of unrestricted funding for operating expenses, which include this kind of public information management.

The discussion about what constitutes accountability under what circumstances and to whom continues. The most important focus of that discussion is what difference the NGO makes to the population it serves.

Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency NGO Transparency: Counterpart International to release budget Transparency International clarifies the debate, deplores attacks on Till Bruckner Statement from CARE on Bruckner FOIA Request Return to TransparencyGate: Humanitarian Accountability Partnership weighs in

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Return to TransparencyGate: Humanitarian Accountability Partnership weighs in

Editor’s note: Aid Watch asked HAP for a contribution to the debate originally sparked by Till Bruckner’s post The accidental NGO and USAID transparency test. See below for a list of all related posts. The HAP (Humanitarian Accountability Partnership) Secretariat is encouraged that issues of NGO accountability are being discussed in fora such as this, and in particular that the debate is now going beyond the sector.

While public disclosure of financial information is not a requirement for HAP membership,  members and other aid organisations that apply for certification with the 2007 HAP Standard in Humanitarian Accountability and Quality Management are expected to make their humanitarian plans and progress reports available to key stakeholders. Humanitarian plans include the overall goals and objectives, the timeframe and linked financial summary. Progress reports include progress against the plan, including against the financial summary, and are communicated at time intervals suitable to the different audiences.

As part of the HAP certification process, the auditor notes commitments made by the organisation, including in relation to financial integrity and reviews the management system that supports the implementation of commitments. Specifically linked to the current discussion, the auditor also verifies that the organisation has in place an information policy that includes narrow criteria for non-disclosure, and reviews how the organisation shares financial summaries and progress reports.

Financial transparency is an important aspect of an organisation’s public accountability, recognised as such by various initiatives, including HAP. However, financial transparency is not a sufficient indicator of accountability, in particular of accountability to the group that matters most, the people whom an aid organisation aims to assist. Financial details alone do not reveal much about the quality of the services provided to communities: do the projects deliver good quality services that meet the communities’ needs? Are the interventions appropriate in the specific context? Is the population that the organisation is aiming to assist included in the design and implementation of programmes? Are communities satisfied with programme delivery? Are they able to provide feedback and affect the way in which organisations that affect their lives work? Are they able to raise complaints and receive a response when programming is poor?  And last but not least: are organisations continuously improving the way in which they operate to best serve the needs of those they aim to assist?

The fact that an agency may not make its financial information publicly available at all times does not necessarily mean that it is not transparent or that it lacks accountability. There may be significant risks associated with sharing such information in certain contexts, in which case the organisation should provide a justification for non-disclosure.

Related posts:

The accidental NGO and USAID transparency test Till Bruckner Responds to Critics on Meaningful Transparency NGO Response: CNFA Reaffirms Commitment to Transparency World Vision responds on transparency USAID and NGO transparency: When in doubt, hide the data Response from Mercy Corps on Transparency NGO Transparency: Counterpart International to release budget Transparency International clarifies the debate, deplores attacks on Till Bruckner Statement from CARE on Bruckner FOIA Request

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Statement from CARE on Bruckner FOIA request

AidWatch received the following statement from CARE regarding Till Bruckner's AidWatch post on USAID and NGO transparency:

Statement from CARE (Aug. 30, 2010):

Contrary to what Till Bruckner suggested in a recent blog, CARE did not withhold information in response to his FOIA request to USAID regarding certain projects in the Republic of Georgia. Our records indicate that CARE never received the request from USAID to review CARE’s budget information before USAID provided it to Mr. Bruckner. USAID’s email request to CARE went to two inoperative emails; one was for a former employee and one went to a current employee, but the email address was incorrect.  As a result, the CARE document that USAID sent to Mr. Bruckner was redacted without CARE’s knowledge.

We have since reviewed the document and will ask USAID to produce it in full without any redactions, including our indirect cost rate, which was the primary information that had been withheld.

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The accidental NGO and USAID transparency test

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator.  An op-ed from Bill in Monday's Wall Street Journal mentioned Till's struggles with USAID; here Till provides the details. The aid industry routinely pushes institutions in developing countries to become more transparent and accountable. But a slow and almost comically incomplete donor response to a request to see some specific project budgets sheds light on exactly how willing donors are to apply such “best practices” to themselves.

As I described in a previous Aid Watch blog post, I filed a Freedom of Information request with USAID after ten international NGOs working in the Republic of Georgia refused to publish their project budgets. After a painful, 14-month struggle, including failing to respond at all to my first three communications, USAID finally released a set of documents covering project budgets of 19 UN bodies, NGOs and private contractors.

A portion of World Vision project budget provided by USAID

The documents are disappointingly full of blacked-out non-information. The level of disclosure varies drastically from one document to the next. Some budgets are provided in full, while others appear as blacked-out row upon row. In three cases, USAID even withheld the identity of the contractor itself. USAID explained this inconsistency saying that it was legally required to contact each grantee to give it “the opportunity to address how the disclosure of their information could reasonably be expected to cause substantial competitive harm.”

I wondered why USAID is legally bound to follow its grantees' wishes in deciding which information to withhold. Can the grantees of a US federal agency really compel that agency to keep the total amount disbursed, or even their very identities, secret? Why doesn’t USAID specify full disclosure as a grant condition? I have filed an appeal with USAID to address these questions, and will keep the readers of this blog updated.

Since according to USAID every piece of blacked-out information was withheld on request of the grantee, the budgets provide a fascinating glimpse into aid agencies' willingness to open their books. If USAID blackouts do NOT correspond to NGO requests, I would be happy to correct the record.

Perhaps surprisingly, the United Nations showed the highest consistent commitment to transparency. The budgets of the two UN agencies funded by USAID are both reproduced in full.

UMCOR, Mercy Corps, and AIHA emerge as the most transparent NGOs. These charities apparently felt that they had nothing to hide, and did not request USAID to black out any of the information contained in their budgets.

In contrast, Save the Children apparently asked USAID to withhold all information related to salaries. As even the aggregate subtotals for international and national staff have been blacked out, concerns about the privacy of individual staff members cannot have been the sole concern driving the organization's response. Still, the fact that all non-salary related budget lines remain visible put Save the Children in the middle ground in terms of NGO transparency.

CARE's response is harder to interpret as USAID inexplicably sent only an aggregated “summary budget” that leaves little to conceal. What information exists shows that CARE did not object to the release of unit prices for supplementary food items, or of aggregated staff and operational support costs. In contrast, CARE appears to regard its “indirect cost rate” and “cost share” as confidential. To hide this information, USAID also had to black out the budget's bottom line, thus leaving unclear how many taxpayer dollars were handed over in total.

Portion of CNFA project budget provided by USAID

The least transparent NGOs in this test are CNFA, World Vision, and Counterpart International. They apparently requested that USAID black out all information in their budgets except for the grand total. Apparently, these NGOs consider budget items such as “office furniture” (CNFA), “visibility items (t-shirts, caps, publications)” (World Vision) and “forklift expenses” (Counterpart) as confidential information whose release could cause them substantial competitive harm.

What does this transparency test tell us? First, USAID's mechanism for responding to Freedom of Information requests desperately needs an overhaul. It took USAID 14 months to respond to a simple information request. Ironically, in terms of FOIA responsiveness, USAID is less transparent than public institutions in the Republic of Georgia, as recently assessed by a local watchdog organization. And we are still waiting to hear why USAID allows its own contractors to operate in secrecy whenever they wish. All of this places USAID in an awkward position as it recommends greater transparency and accountability to Georgia.

Second, NGOs have publicly committed themselves to transparency and accountability, but their actions show that their interpretations of what this entails in practice differ widely. For example, World Vision is a full member of the Humanitarian Accountability Partnership, but still asked USAID to hide all of its budget information apart from the bottom line. The Georgian country office of Mercy Corps had earlier refused to release its project budgets, but its headquarters apparently has no such reservations. Save the Children is willing to release indirect cost rates but refuses to divulge even aggregate salary information, while CARE appears more relaxed regarding human resource expenses even as it fiercely guards information on its indirect costs rates. Both USAID and the NGOs have too often violated the elementary principles of transparency.

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US gets a strategy to meet the Millennium Development Goals – please explain

UPDATE: UN Dispatch disagrees, we respond (see end of post). Although the eight goals that seek to reduce the global burden of hunger, poverty and disease were agreed upon by aid donors almost 10 years ago, and most of the goals come due in 2015, the world’s largest donor has never had a strategy to achieve them. Obama campaigned on the promise of making the MDGs “America’s goals,” but the first year and a half of his administration has not yet delivered on this promise.

On Friday, though, the US released a document written by USAID which declares that the US “fully embraces the MDGs” and “will put innovation, sustainability, tracking development outcomes, and mutual accountability at the heart of our approach to development, and, consequently, to the MDGs.” The administration is delivering this strategy just in time for the MDG summit in September.

I recently came across a paper by David Hulme that frames the fierce debate around the value of the MDGs nicely. According to Hulme, the viewpoints

… range from the high modernists, who take them at face value and are optimistic that they are a blueprint for the transformation of the human condition (Sachs,  2005); the strategic realists, who don’t believe the MDGs are a blueprint for action but believe they are essential to stretch ambitions and mobilise political commitment and public support (Fukuda-Parr, 2008); the critics, who see them as well-intentioned but poorly thought through – distracting attention from more appropriate targets (or nontargets) and more effective policies and actions (Clemens et al, 2007; Easterly, 2006);  through to the radical critics, who view them as a conspiracy obscuring the really important ‘millennial’ questions of growing global inequality, alternatives to capitalism and women’s empowerment (Antrobus, 2003; Eyben, 2006; Saith, 2006).

The US strategy is notable in that it is not internally coherent according to ANY of these alternative MDG world-views.

By doing a strategy at all, the US would seem to have placed itself firmly in the high modernist camp and to have rejected the critics’ view. But a curious feature of the new US strategy is its failure to mention the goals by name, or to strategize progress specifically towards any of the agreed-on indicators. From the critics’ point of view, this is certainly better than the UN Millennium Project’s strategy, which created a 449-step comprehensive strategy to reach the 8 goals and 18 targets. But with no concreteness on goals or indicators at all, one wonders what exactly was the point of the new US strategy according to the “high modernist” approach.

As far as “mobilizing political commitment,” it’s perhaps telling that the report is subtitled “Toward 2015 and Beyond,” which reads like an unintentional acknowledgement that the MDG exercise has already failed for 2015 – something on which this blog opined a year ago. But then again, we are a little confused why the US is now jumping on the MDG bandwagon when the band is starting to pack up their instruments.

Could it be that there should be a fifth Hulme category – the “PR view,” according to which the MDGs are a politically costless way for any given aid donor to create a positive image of benevolence towards the world’s poor, which is sadly unrelated to whether the goals are actually achieved?


UPDATE Monday August 2, 3:22 pm: Duncan Greene of Oxfam GB more optimistically reckons that this strategy shows “how quickly Shah and USAID have won back lost political ground from other government agencies;” UN Dispatch interviews Rajiv Shah;  Porter McConnell of Oxfam US says the development community is still waiting for the administration’s long-promised global development strategy.

UPDATE 2 Tuesday August 3, 11:36 am: Mark Leon Goldberg of UN Dispatch has responded to this blog post, arguing that The US MDG Strategy is More than a PR Ploy! and represents real progress:

….It was only five years ago that we had a freelancing UN ambassador [John Bolton] who thought he could get away with erasing the mere mention of the MDGs from a UN Summit…. Fast forward to 2010 and not only is the United States embracing the MDGs, but the administration has made it an organizing principal of US foreign policy.

Sure, the new US willingness to engage with the UN, and this new MDG strategy document, may represent progress in repairing the fractured relationship between the US and the UN. In the annals of UN bureaucratic infighting this does indeed sound like a revolutionary change.

But on the more important question of whether this change in orientation on the MDGs will make a real difference in the way that the US and other donors deliver development assistance to the world’s poor, we’re going to need more than just an official statement of intentions before we can conclude that real progress is being made.

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Is Impact Measurement a Dead End?

This post was written by Alanna Shaikh. Alanna is a global health professional who blogs at UN Dispatch and Blood and Milk. We’ve spent the last few years watching the best donors and NGOs get more and more committed to the idea of measurable impacts. At first, the trend seemed unimpeachable. International donors have spent far too much money with far too few results. Focusing more on impact seemed like the way out of that trap.

But is it? The last couple of weeks have seen a spate of arguments from development thinkers rethinking this premise.

Steve Lawry at the Hauser Center, argues two main points against excessive focus on impact evaluation. The first is that it stifles innovation by keeping NGOs from trying risky new things. But I think that the problem is an institutional culture that doesn’t allow for failure. By allowing NGOs to fail and learn from failure, innovation is encouraged.

His second point is more interesting: “Many real-world problems are not easily described with the kind of precision that professional mathematicians insist upon. This is due to the limitations of data, the costs of collecting and analyzing data, and the inherent difficulties of giving mathematical expression to the complexity of human behavior.” This strikes me as very true. At what point are we expecting too much from our impact assessments?

In the same vein, the fascinating Wanderlust blog just ran a post about Cynefin. Cynefin is a framework for understanding systems. It categorizes systems into four subsets: Simple, Complicated, Complex or Chaotic. Chaotic systems, the author argues, can’t be evaluated for impact using standard measures. He states that “In a Chaotic paradigm, there is relatively little difference likely to occur in quality between a response that is based on three weeks’ worth of detailed analysis and one that is based on the gut reaction of a team leader…”

The Center for Global Development just published a paper by former USAID administrator Andrew Natsios. Natsios points out that USAID has begun to favor health programs over democracy strengthening or governance programs because health programs can be more easily measured for impact. Rule of law efforts, on the other hand, are vital to development but hard to measure and therefore get less funding.

Now we come to the hard questions:

If we limit all of our development projects to those that have easy metrics for success, we lose a lot of programs, many of which support important things like rule of law. Of course, if they don't have useful metrics, how do we know those programs are supporting the important goals?

And how meaningful is impact evaluation anyway when you consider the short time frames we’re working with? Most development programs take ten years or more to show real impact. How are we supposed to bring that in line with government funding cycles?

On the other hand, we don't have a lot of alternatives to impact evaluation. Impact is not unimportant just because it’s hard to quantify at times. We can’t wish that away. Plenty of beautifully designed and carefully implemented projects turned out not to have any effect at all. For example, consider what we’ve learned from microfinance impact evaluations. Microloans have a positive effect but not the one we expected.

It’s a standard trope of this blog to point out that there’s no panacea in global development. That’s true of impact evaluation, too. It’s a tool for identifying worthwhile development efforts, but it is not the only tool.  We can’t go back to assuming that good intentions lead to good results, but there must be room for judgment and experience in with the quantifiable data.


UPDATE: This post was edited to correct an attribution error in the third paragraph - Eds.

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The Wellington Dilemma

…[I] request elucidation of my instructions from His Majesty’s Government so that I may better understand why I am dragging an army over these barren plains. I construe that perforce it must be one of two alternative duties, as given below. I shall pursue either with the best of my ability, but I cannot do both: 1.) To train an army of uniformed British clerks in Spain for the benefit of the accountants and copy-boys in London or, perchance…

2.) To see to it the forces of Napoleon are driven out of Spain.

Your most obedient servant,


—Attributed to the Duke of Wellington, during the Peninsular Campaign, in a message to the British Foreign Office in London, 11 August 1812

This quote is pilfered from a new Center for Global Development essay by Andrew Natsios, former USAID Administrator and current Georgetown Prof. In the full (though possibly apocryphal) letter, the Duke complains that the demands of regulation, bureaucracy and compliance (“the accountants and copy-boys in London”) threaten to compromise the achievement of his country’s true goal (driving Napoleon out of Spain).

Natsios makes a similar argument about US aid programs, which he says are suffering from a disfiguring imbalance. The compliance side of aid, which he calls the “counter-bureaucracy,” has grown grotesquely out of proportion to the programmatic, technical side, and threatens to undermine aid’s goals.

As on Wellington’s plains of Spain, the goals of the US counter-bureaucracy are not necessarily compatible with or even complementary to the goals of the organization as a whole. That is, the counter-bureaucracy exists to make sure that US aid programs are managed according to voluminous, archaic, and sometimes internally-contradictory US laws, regulations, and management systems, while aid programs exist to encourage development abroad by building developing-country partnerships and strengthening institutions. US aid has become paralyzed by endless reporting requirements.

Natsios writes:

…[T]he question is whether the counter-bureaucracy has become counter-developmental.

Of course, we would all be a lot more sympathetic to the counter-bureaucracy if it performed functions like preventing waste and corruption, or if it performed independent evaluations of whether aid actually brought benefits to the intended beneficiaries. Unfortunately, a string of recent scandals (made possible of course by reports from the counter-bureaucracy) showed millions of USAID dollars going astray in Afghanistan and Iraq, with little assurance in USAID’s reaction so far that the same will not happen again in the future. So exactly what IS accomplished by those costly reporting requirements?

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Secret NGO Budgets: Publish what you spend

The following post was written by Till Bruckner, PhD candidate at the University of Bristol and former Transparency International Georgia aid monitoring coordinator. Are you ashamed of your organization’s budgets? Do you think your supporters would be shocked if they could see exactly how you are spending their money? Do you feel the need to keep your finances hidden from your local partners and clients? If you answered all three questions with “yes,” you might be working for an international NGO.

After the August 2008 war between Georgia and Russia, Transparency International (TI) Georgia, a local organization working on transparency and accountability issues, tried to track and monitor 4.5 billion dollars in humanitarian and reconstruction aid that donors had pledged. It was in for a shock.

Out of twelve NGOs that it asked to publicize the budgets of their ongoing projects, only one (Oxfam GB) complied. In an unusual display of interagency coordination, ten NGOs convened a meeting and wrote a joint letter to TI Georgia, arguing that they were unable to share their budgets at short notice as “there are a number of legal and contractual implications involved with donors, head office and other stakeholders which will take time to resolve.”

Nine of the signatories to the letter were members of InterAction, whose standards state that “organizations shall substantiate, upon request, that their application of funds is in accordance with donor intent or request” and that “the member organization shall be committed to full, honest and accurate disclosure of relevant information concerning its goals, programs, finances and governance.” In theory, the NGOs had committed themselves to transparency.

In Georgia, international development organizations have been advocating for greater transparency for years, teaching citizens that they have the right to know how their money is spent, ordering community-based organizations to publicly display the budgets of their micro-projects and telling local governments that they have the duty to provide financial information to those they serve. Years ago, I asked an NGO manager what he considered the greatest success of the project that he was running. “We finally got the district government to post its budget in the mayor’s office, where everybody can see it,” he proudly told me. When I suggested that he post his own project’s budget in his office, he recoiled. “This is an experimental project, so the overheads are very high,” he replied. “So it would be very difficult to explain.”

While there appears to be little hope of gaining access to project budgets through NGOs themselves, institutional donors are subject to legislation in their home countries. I filed a Freedom of Information request with USAID in May 2009 to request copies of the budgets of all NGO projects in Georgia funded by American taxpayers’ money. Six months later USAID informed me that it needed the consent of the NGOs to release this data as it might contain “confidential commercial information,” thereby closing the opacity loop: first NGOs had blamed donors for not being able to release budgets, and now the biggest donor was passing the buck back to NGOs.

After a series of follow-up emails to USAID's Information and Records Division had gone unanswered, I lodged a formal complaint with USAID's Inspector General in March 2010. Two months later, the Inspector General's office finally replied, saying “this matter does not fall within the investigative purview of our office” and passing the buck to the Director of Administrative Services. Meanwhile, one year after my original request for information, the budgets of US-funded NGOs in Georgia remain as elusive as ever.

Secrecy and charity make for strange bedfellows. Those who spend the public’s money in the name of the poor have a duty to make themselves accountable to rich and poor alike by publicly explaining how this money is being spent. Congress should step in and require USAID to publish what US-funded NGOs spend by posting full narrative and financial project proposals online as soon as a funding decision is taken.

Till Bruckner worked for NGOs in Georgia and Afghanistan before managing TI Georgia’s aid monitoring programme in 2008-2009. He is currently writing a PhD thesis on accountability and corruption in NGO projects in Georgia. The views in this article are those of the author alone, and do not necessarily reflect the views of TI Georgia. The author can be contacted at

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Will the real development champion please stand up?

Earlier this week, Foreign Policy blogger Josh Rogin published a leaked White House document detailing the Obama Administration’s “New Way Forward on Global Development.” The optimistically-titled document is the draft output of the Presidential Study Directive (known as the PSD-7), ordered by the Obama Administration nine months ago as a government-wide review of global development policy, and conducted by the National Security Council and the National Economic Council.

The document proposes to “elevate development” as a “key pillar of US foreign policy.” How so? The most significant change in the draft is the creation of interagency committee reporting to the President to run US development policy. This would essentially pull responsibility for development away from State, (where it has been since Condoleeza Rice initiated the mysterious-sounding “F process” in 2006), although not completely since the USAID Administrator would still report to the Secretary of State.

Meanwhile, the State Department is also promising to “elevate development” as a “central pillar of all that we do in our foreign policy.” The State Department’s own review of development policy, called the Quadrennial Diplomacy and Development Review (QDDR to close friends) has not yet been published (or leaked), but will most likely not propose that State relinquish budget and policy planning authority over USAID.

What would be the best outcome for the people around the world on the receiving end of America’s imperfect largesse? Will it make any difference which one of these plans wins out in the upcoming political turf battles? One thing’s for sure, US foreign aid reform has a long and inglorious history, and tinkering at the margins (or stirring the spaghetti bowl, as a recent Oxfam editorial put it) will only make things worse.

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Yes, Cash is Best. Now when will USAID follow its own advice?

These two posters are finalists in a student contest to create public service announcements that tell Americans why giving cash in emergencies is better than giving goods like food, bottled water, or used clothes. (Hat tip to Saundra Schimmelpfennig).

The contest guidelines, provided by the Center for International Disaster Information (CIDI), are very clear on why they require entrants to focus on the simple message that giving money is the best way to help. They give three reasons, with which many Aid Watch readers are already familiar:

1) Financial contributions are easily convertible to meet the international disaster victims' specific and immediate needs;

2) Cash donations are more efficient, allowing purchases to be made at a bulk discount, at a lower transportation cost…

3) Cash donations go directly to the disaster site, allowing for exact purchases of what is needed most urgently and stimulating local economies. Other donations, such as products/goods, take time and money to transport, rarely meet victims' urgent needs, often interfere with professional relief efforts and frequently clash with cultural norms.

The videos and posters from the student finalists are here. The winners, announced tomorrow, get a cash prize and will have their work featured in CIDI’s national public education campaign. Now in its fifth year focusing on the very same message, the contest is funded by USAID, a fact which should also be obvious from the USAID logo on every entry.

The US is globally one of the worst offenders of aid tying, whereby US aid is “tied” to the purchase of American goods and services (a useful primer is here). While the percentage of aid that the US reports as tied is now falling thanks to improvements in reporting procedures as well as increases in implicitly untied programming through the Millennium Challenge Corporation and PEPFAR, the US still ranked a sad 19th out of 23 rich country donors in 2008, losing to even Italy, and edging out only Spain, Greece, Korea and Portugal.

In particular, American legislation requires that most US food aid be bought in the US, processed and packed by US firms, and shipped on US-registered vessels. As a result, only about 40 percent of the money that the US spends on food aid actually goes to buying food, and that food is often tragically slow to arrive. When proposals to change these archaic laws have come before the US Congress, they have largely been shouted down or diluted. Canada successfully shifted to a cash-only system in 2008; the US could and should do the same.

As the smart giving movement gains steam among individual donors, aren't we ready to end these wasteful practices institutionalized in US law and carried out by the world's largest bilateral aid agency? Only then would USAID finally be able to follow its own good advice: Cash is best.

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Worst in Aid: The Grand Prize

Hillary Clinton recently declared: “We are working to elevate development and integrate it more closely with defense and diplomacy in the field…The three Ds must be mutually reinforcing.” Clinton says that the 3D approach will elevate development to the level of diplomacy and defense. Unfortunately, it could instead lower development further to an instrument employed to achieve military or political priorities. Clinton foresaw these objections: “There is a concern that integrating development means diluting it or politicizing it – giving up our long-term development goals to achieve short-term objectives.” She said reassuringly, “[t]hat is not what we mean, nor what we will do.”

But it’s too late. Sacrificing long term development aims for short term military and diplomatic objectives is what the US already does, and the 3Ds is making it worse. That’s why the Grand Prize for the Worst in Aid goes to…the 3D approach, nominated by an anonymous reader.

References to the "3D approach,"… have become so pervasive in foreign policy, development, and national security circles that they have taken on the status of self-evident, common wisdom. - J. Brian Atwood, former USAID administrator, February 2010

The frequent contradiction between defense and development is the most obvious instance of 3D dissonance. A coalition of eight NGOs in Afghanistan lamented that “[d]evelopment projects implemented with military money or through military-dominated structres aim to achieve fast results but are often poorly executed, inappropriate, and do not have sufficient community involvement to make them sustainable.” Nonetheless, increasing amounts of aid get channeled through the military, “while efforts to address the underlying causes of poverty and repair the destruction wrought by three decades of conflict and disorder are being sidelined.”

An Oxfam case study on programs to reform the security sector in “frontline” states like Iraq illustrated another way in which narrow military goals (to train and equip soldiers and police) are not entirely compatible with development goals. The report found that an increasing reliance on military contractors rather than civilians “has strongly reinforced the focus on operational capacity over accountability to civilian authority and respect for human rights.”

In the battle of the Ds, enervated development loses to pumped-up defense, and not just in Afghanistan and Iraq. The trend goes two ways: USAID is compelled to spend more and more of its budget on states that are strategically and militarily important (The 2011 foreign aid budget allocates 20 percent of State and USAID money for “securing frontline states.”) A development priority like India (with a huge chunk of the world’s poor) loses out. At the same time, a growing proportion of what the US calls Official Development Assistance flows through the Pentagon rather than USAID.

Frequent readers of the blog will already be familiar with our final example. On Christmas Eve in Madagascar, President Obama bowed to the exigencies of diplomacy when he punished the nondemocratic government of Madagascar by taking away trade access to U.S. markets. But this same action was disastrous for development.  Already, tens of thousands of jobs created textile exports to the United States under the African Growth and Opportunity Act (AGOA) have been lost. Factories are closing, increased competition among street workers is pushing down wages, and the effects are spilling over into neighboring countries that made inputs to Madagascar’s factories. Any claim that the Madagascar AGOA delisting was part of a high-return Diplomatic initiative to promote Democracy became a wee bit more tenuous when we saw Angola, Cameroon, and Ethiopia named on Christmas Eve as still eligible for AGOA.

[We could go on -- This week brought another collision of development and defense/diplomatic goals in Somalia.]

The lie that underlies the 3D framework is that development, diplomacy, and defense are complementary (or totally “mutually reinforcing”); that there are no difficult choices to be made. Alas, politicians are fond of denying the existence of tradeoffs (we are not trying to pick on Hillary in particular; many politicians are guilty of this).

The only 3D strategy that makes sense for development is one that acknowledges the frequent conflicts between these three very different goals as natural outcomes of their different agendas.  Then we can hold our politicians accountable when they sacrifice Development big-time to achieve small-time (or sometimes illusory) Diplomatic or Defense goals.

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USAID funding Iraqi insurgents? Well, on the plus side, they finally answered one of our emails

USA Today ran a story this week on a $644 million program in Iraq suspended by USAID four months short of its end date. The program was launched three years ago to create jobs and infrastructure in cities throughout Iraq. The Community Stabilization Program, said one hopeful report from 2006, “will provide safe and productive alternatives to insurgent activities while reinforcing democratic values and processes.”


Baghdad billboard for CSP job skills program Source: USAID/Iraq

So why was CSP suspended? According to a USAID statement, an external review begun in February discovered “inconsistencies” in the implementation of the project in one of the target cities. This deadpan response from USAID leaves aside just a few other reasons to be concerned about the project, namely a 2008 audit that found evidence of fraud, phantom workers, and money being diverted to insurgents through trash collection contracts.

The audit also found “short-term employment generated by the program was inadequately substantiated.”

Surely any reasonable understanding of transparent and honest reporting practices would require USAID to indicate in some way on their website that there were questions being raised about the transparency and efficacy of the CSP program.

We brought this to the attention of the USAID press officer in an email on Monday:

Dear Mr. Edwards,

Here at Aid Watch we read USA Today's article … we noticed that the text currently available on the USAID website (among the press releases or on the Iraq page) gives no information about investigations into the CSP projects or the decision to suspend the program.

The CSP accomplishments page still lists: "Almost 45,000 long-term jobs created; Nearly $80 million in grants approved for almost 10,700 businesses; More than 40,200 Iraqis graduated from vocational training courses; More than 9,900 apprenticeships awarded; About 316,000 young people reached through sports and arts program" as highlights of the CSP.

In light of the March 2008 audit and subsequent investigations, reported by USA Today in today's paper, is USAID planning to modify the claims on its website?

Many thanks,


USAID responded promptly:

Ms. Freschi,

This is the response from USAID as to your questions.

1) USAID suspended payments and new commitments under CSP to allow the IG to conduct and complete an investigation of allegations uncovered in the course of a USAID evaluation of the program. At the time, CSP was only operating in two cities and was on a path towards being phased out entirely as the program was nearing its end.

2) The accomplishments listed on the USAID website are from completed projects that were previously audited by the IG. We implemented all of the recommendations of the IG to their satisfaction, including doing a data quality assurance exercise.

Please contact me if you have more questions.



Harry Edwards

USAID Senior Press Officer

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Are the best aid agencies the ones about to die?

Recently the acting CEO of the Millennium Challenge Corporation, Rodney Bent, invited a group of development bloggers for a congenial chat over breakfast pastries about their new monitoring and evaluation website and “results” portal. This is in contrast, mind you, with another aid organization which shall remain nameless but which has the initials U and N, which told us a couple weeks ago that they “didn’t have a communication policy for blogs” and weren’t sure whether they could give us the document we were requesting (to their credit, they eventually did.) To say nothing of another agency that emailed us: “Hello. I have received your emails and phone call. However, WHO does not participate in blog discussions. Thank you.” And let's not even mention the other US aid agency, USAID, who responds to requests for information by demanding that we talk only to the USAID press rep whose full-time job is not responding to requests for information.

So the bar here is low. And the MCC isn’t perfect. But hey, it’s nice to be given a cup of coffee every once in a while and treated like you exist.

The personable Bent started the meeting with a little story: he recently visited a university classroom and completely disarmed the students—who were eager to rip apart any self-serving propaganda he served up—by being the first to enumerate the MCC’s own failings and weaknesses. The original MCC design team was too tactless about implying that USAID had been a failure, he said, “too optimistic,” too “eager to sign things.” Not to mention the problems MCC has run into in Armenia, Nicaragua, Honduras and Madagascar…to name a few.

This little anecdote seems to represent the MCC’s current savvy outreach strategy: be honest about your failings before others can beat you to it! Hence, the chat and the coffee.

The MCC says many of the right things. Publishing economic rates of return for their projects, providing M&E data for each MCC country in two formats, adding in data visualization and more collaborative feedback tools (all currently available or in the works over the next few months) is MUCH more than many other aid agencies are willing or able to do at the moment.

You can visit the new site here, and use the feedback form to get in touch with Shiro Gnanaselvam, the MCC’s senior director for monitoring and evaluation.

Still the most interesting question to me is, why is the MCC so proactively courting bloggers when other aid agencies tell us to drop dead?

Maybe it is because the MCC—a Bush administration initiative that has never been fully funded—has been predicted to face extinction if it can’t get broad support from the public and from some key power brokers in the new administration.

Could this be a tiny piece of evidence in favor of the theory that effective accountability sometimes requires a threat to your very existence (as with private firms or with the political careers of elected officials)?

The organization with the least vested interests supporting it may be the one that will perform the best. At least, they actually invite their critics to breakfast.

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Is USAID about Aid or Development?

Guest blog by Lant Pritchett, Professor of the Practice of Economic Development, Kennedy School of Government, Harvard University The name of the United States Agency for International Development (USAID) is too clever by half. By forming the acronym “aid” it attempts to create popularity (who could be against “aid” broadly interpreted as “assistance” to the world’s poorest?) at the expense of perhaps confusing everyone, including itself, about its actual mission. There are many ways of providing assistance to people in poor countries that do little or nothing to produce development. While we might all whole-heartedly agree that de-worming is demonstrated to be cost-effective assistance, its impact on development is, at best, tiny. An existential question the next leader of USAID has to face is whether USAID is about assistance—in whatever forms and for whatever goals political support can be mobilized and logistics can be arranged—or whether it really is an agency whose mission is to promote development.

The difference matters. One reaction to the critics of aid effectiveness who point to failures in development despite historically high and sustained levels of foreign assistance is to circle the wagons by arguing the goal of aid is just assistance, full stop. In this case the debate is only about whether aid is assistance: “Did this aid support an activity that has some positive benefit to human well-being?” This makes the question easy to address with available methods, likely to often produce a positive answer, and almost certainly irrelevant to development.

Development, for better or worse, has always been defined as a deliberate acceleration of modernization, conceived as a synchronized (if not simultaneous), complex, four-fold transition of economy, polity, administration, and society. Modernization is a one-word description of what the West accomplished from the nineteenth century onwards. Development, as accelerated modernization (which may or may not follow exactly the West’s historical trajectory or modalities), is what Japan accomplished following the Meiji Restoration, rising from an isolated backwater to global power; development is what Korea achieved from 1962 to today, rising from a poor, weak, powerless, post-conflict state to what it is today. The goals that are the aim of development—having a productive and prosperous economy, a polity guided by the wishes and in the interests of its citizens, a administratively capable state, a cohesive society—are desirable goals. Moreover, development is the only demonstrated and sustained way to achieve the objectives of increased well-being.

Being an agency for international development implies more than that the agency provides assistance to improve the well-being of individuals in countries that are not developed, but that the central goal of the organization is to promote development. Promoting economic development, for instance, means supporting actions and policies that create widespread opportunities for people to improve their incomes. Unfortunately, as any reader of this blog likely realizes, this is much more difficult—and much less photogenic—than planting the flag over the delivery of specific services addressing popular causes.

A new leader could make USAID exclusively about aid and focus on the narrowly prescribed goal of making aid effective assistance, but the real problem pressing the Obama administration is not that aid has not been effective assistance but rather that development needs to happen. Development needs to happen in Pakistan, in Afghanistan, in Iraq, in Somalia, in Zambia, in Guatemala, in Bolivia—and continue to happen in India and China. Even addressing a series of important problems for well-being like vaccinations, schools for girls, HIV/AIDS prevention or malaria does not add up to a development agenda. If the next leader of USAID does not own that objective and mission—putting the big “D” in USAID and not just little “a” in aid—he or she is sealing USAID’s irrelevance.

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Congress to USAID: Stonewalling is SO over

Yesterday from a deliriously happy press release of Publish What You Fund:

Congressman Howard Berman (D-CA), Chairman of the House of Representatives Foreign Affairs Committee, today introduced the Initiating Foreign Assistance Reform Act of 2009 (HR 2139), a bipartisan bill designed to increase accountability and improve the effectiveness of U.S. foreign aid

The bill:

instructs federal agencies to make aid information on a detailed country-by-country and program-by-program basis in a comprehensive, timely, comparable, and accessible fashion.

Could we dream that USAID would one day provide aid-watching citizens with basic information, as opposed to treating them like enemy combatants? That USAID could be more like its British cousin DFID, that instead of us spending weeks in getting a simple question still not answered, we could get an answer in 5 minutes?

That this could even change USAID’s behavior, so that egregious waste and diversion of funds are no longer seen as a good reason to keep doing business as usual?

As always, a timely response from USAID on these questions would be welcome.

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Life in the Aid World: Caught Red-Handed, No Consequences

Last week, a report in USA Today brought to light a story of aid funds going badly astray. In case you have not followed the story, it seems that back in 2003, USAID contracted with the UNDP and UNOPS to complete a series of “quick impact” infrastructure projects in Afghanistan, to build badly needed roads, bridges, and community buildings. A US government report on the project, sparked by a tip from an anonymous complainant, found that many of the projects reported as “complete” by the UN were in fact unfinished or had such “life-threatening oversights” that they could not be used. The USA Today reporter filed a Freedom of Information Act Request to access the government report, which he then published along with the article.

Here are a few highlights of the report:

  • According to a former UNOPS employee, some $10 million of the USAID grant funds was diverted to projects outside of Afghanistan, in Sudan, Haiti, Sri Lanka and, most memorably, Dubai.
  • The UNDP withdrew $6.7 million of project funds in 2007, after the project had ended and without USAID’s knowledge. The investigators could not pin down how those funds were spent.
  • A bank was built for $375,000 without electricity, plumbing or proper drainage. The report found that the basement had flooded, destroying stacks of money, and the walls were rotting.
  • A $250,000 bridge, reported as “completed,” was dangerous and unusable, having been designed too small for the site where it was built.
  • An airstrip budgeted at $300,000 actually cost $729,000 to build. After a description of the major engineering flaws in the construction of the airstrip, the report concluded that military planes cannot safely land there and that “erosion rills or ruts will continue to expand until they reach the runway itself, destroying it completely.” In other words, USAID paid $729,000 for a patch of mud.
  • There may be more to come: “questions remain unanswered” because several UN officials refused to be interviewed and the UN failed to provide requested documents during the investigation.

USAID is also to blame for choosing such a bad contracting arrangement, and for not having procedures to catch this earlier and seek full compensation. USA Today reported:

Federal prosecutors in New York City were forced to drop criminal and civil cases because the U.N. officials have immunity. USAID has scaled back its dealings with the U.N. and hired a collection agency to seek $7.6 million back, Deputy Administrator James Bever said. The aid agency hasn't heeded its inspector general's request to sever all ties.

"There are certain cases where working with the U.N. is the only option available," Bever said in an e-mail.

At a UN briefing last week, the UNDP spokesman said that “there have already been a number of meetings, including at the highest level of UNDP and USAID, to work through this matter.” He said that he expected that the UNDP would have to pay USAID no more than $1.5 million.

A disastrous aid outcome, exposure in the mass media -- so what were the consequences? A number of meetings, possibly some money back, USAID disregards its own Inspector General’s request to break off ties with the UN (some unspecified “scaling back” except in other unspecified “certain cases”), and yet more meetings “at the highest levels.”

Since the initial reports, there has been no further media coverage or commentary except for an editorial critical of USAID in the Las Vegas Sun on April 17th. The USAID web site accessed on Monday, April 20, 2009 still listed as implementing partners UNDP (who announces it “remains responsive to the changing needs of a nation still in transition from conflict to peace”) and UNOPS (“we help our clients turn ideas into reality.”)

The USA Today story broke the same day that a USAID rep presented at a meeting in Washington called "Open Innovation for Government: Answering President Obama's Call for More Open, Effective Public Service."

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USAID: Don’t Ask, Don’t Tell

USAID says on its web site: “The effective functioning of our constitutional democracy depends upon the participation in public life of a citizenry that is well informed.” USAID also has signed onto an inspirational document signed by all aid agencies around the world promising full disclosure of information. Anything else would be hypocrisy when the aid donors are constantly preaching to poor country governments that they should be “transparent.” Which is why we were wondering: why have we still not gotten an answer to questions on USAID reporting on aid tying we first asked USAID five weeks ago? This was in response to our blog on USAID aid tying information on February 24th. We had been having trouble getting ANY response at all from the USAID press office ever since, despite sending no less than nine polite emails (and one slightly less polite email) and equally numerous voicemail messages their way. Our hopes flickered briefly when the USAID press office left us a voice mail on March 13, promising to get back to us right away. Since then, not a word, more emails from us, and … silence.

Bending over backwards, we thought we’d give them another shot, looking for data on USAID assistance broken down by country and by sector (which we easily got in five minutes with one phone call to the British aid agency DFID – see below).

USAID has a general inquiry line, which is supposed to connect you to a “team of knowledgeable information specialists [who] can point you to the sources that have the information that you need.” Thank goodness, a live person answered the phone. But from there, things went downhill. No one whom we were able to speak with in three hours of phone calls and research on the USAID website seemed to really understand our question, and only after many tries did we reach someone who could make a credible guess about which office to direct our questions to.

At one point we were referred to the Congressional Budget Justification, an 873-page document created to request funds from Congress. At another point, we were told that we would need to gather the data from each country desk separately. This would be difficult, since the data provided on each country webpage does not always seem to be uniform or comparable, and most often just refers you back to the mammoth CBJ. USAID’s random aid numbers are so confusing and so scattered that the USAID staff themselves apparently can’t make sense of them, judging by their inability to answer simple questions.

Is it just intrinsically impossible for aid agencies to be responsive to questions and data requests? A few weeks ago, we happened to be looking for data on how much the UK aid agency DFID spends on the type of aid known as budget support, across several African countries. After a few minutes of trying to manipulate some unwieldy OECD data sets, we clicked over to the DFID website. They also had a public inquiry line listed right on the ‘Contact Us’ page. When we dialed the UK number, a live person answered the phone. This person clearly understood the question, and transferred the call directly to another knowledgeable, live person who also understood exactly what we were looking for. She told us where the data was located on the DFID website, and then actually guided us to it in exactly five mouse clicks. We had clear, user-friendly data and a precise answer to our question in less than five minutes.

(We were tough on DFID on their budget support practices, but we praise them to the skies for opening themselves up to public scrutiny so we could discuss the issue at all.)

Why does this matter? Well USAID was right that “a citizenry that is well informed” is one of the only hopes to hold public agencies accountable, and thus improve the likelihood that USAID dollars actually reach some real poor people.

President Obama has inspired great hope by promising improved US government transparency, but maybe USAID ignores the President as much as they ignore the citizens.

Update: USAID has since emailed us back about our sectoral data request! Unfortunately the analyst at the USAID Knowledge Services Center who responded did not point us to any better data sources than those we had already found in our fruitless three-hour quest the day before. On the bright side, though, the email does vastly improve USAID’s track record on answering emails.

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Unsung Hero Resurrects US Tied Aid Reporting

Official US aid policy is to slow down emergency aid as much as possible when people are dying. Well, they probably wouldn’t put it like that, but that is the consequence of a practice known as aid tying, whereby US aid must be spent on products from US companies. For emergency food aid, this causes huge delays in food shipments as the food has to come from the American Midwest rather than from easily available sources close to the emergency site. reported in December 2008 on the six-month journey of a bag of dried peas from Nebraska to Ethiopia, while in Ethiopia a grandfather watched seven of his grandchildren starve to death, victims of a famine foreseen for months.

Everyone from aid cheerleaders to aid skeptics decries aid tying. The US was reputed to be one of the worst offenders, but we didn’t know for sure, because the US government brazenly stopped publicly reporting how much of its aid was tied back in 1996 (unlike all other rich country donors). In 1996, when the US stopped reporting complete tied aid statistics to the OECD, 28 percent of its aid was untied, while the donor country average was 71 percent.

But now for some good news. USAID has finally restarted gathering and reporting data on how much US foreign assistance is tied. As far as Aid Watch can find out, this did not reflect any change in official policy at the top. One working level USAID staffer simply took the initiative on their own to do the right thing and report aid tying (apparently there are Searchers and not only Planners at USAID). Transparency is the first step to accountability for aid. Alas, incentives for transparency are weak (as far as we can tell, Aid Watch is the first to notice the end of the 9-year hiatus in US aid tying reporting).

The USAID official responsible for this change in 2006, who preferred to remain anonymous in our blog, said that the general trend in the US is towards less tied aid across the board, citing new programs under the MCC, HIV/AIDS activities, and aid to sub-Saharan Africa which are not subject to tied aid requirements. The new statistics now show 69 percent of US aid to be untied (as of 2007), compared to an average for all OECD donors of 85 percent.

“I developed a methodology for the identification of tying status based on solicitation notices, blanket untying, and other factors,” the USAID official said in an email message. Calling for a more transparent form of reporting for all donor countries, he said that reporting from other donors is at times “not supported by actual open bidding at the prime contractor level…so I wanted to perform the identification as correctly as possible.”

Hopefully, more transparency will lead to more accountability for reaching the poor. As recently as 2003 a document on the USAID website shamelessly stated: "The principal beneficiary of America's foreign assistance programs has always been the United States. Close to 80 percent of USAID's contracts and grants go directly to American firms" (source). As the international campaign for untying aid has gathered force, such self-interest has become less acceptable (the 2003 document is no longer on the USAID web site.)

There is still a ways to go. Virtually all US food aid is still required to be produced and packaged right here in the US (according to the original text of the mammoth, much-amended and much-maligned Foreign Assistance Act of 1961—that's PL 87-195 Sec 604(c) for anyone who wants to look it up).

Going back to even more dusty and remote legislation, it is the 1936 Merchant Marine Act that requires 75 percent of US food aid to be shipped on US-flag carriers. That’s money in the pocket of the US shipping industry, a blow to fair and free markets, and a failure for aid efficiency: a 2007 report by the GAO found that a major challenge continuing to hinder the efficiency of US food aid programs was “legal requirements that result in the awarding of food aid contracts to more expensive providers and contribute to delivery delays.”

In early 2008, with global food prices on the rise, the Bush administration tried to convince Congress to allow 25 percent of US food aid to be sourced locally—to allow aid agencies to buy food closer to where people need it and get it to them more quickly, cutting out the slow, cross-continental journey of the Nebraskan dried peas. But Congress quickly voted this down.

Last June, a remarkably diluted version of the Bush proposal was finally passed, creating a pilot program to “test” the results of local and regional food aid purchases. While the Bush plan would have allocated $300 million, this program is capped at $25 million per year (about 1 percent of the US food aid budget). An article in Business Week quoted former USAID administrator and Georgetown Professor Andrew Natsios’ reaction to this bill: “We don’t need a pilot like this. It works, we know it works.”

While the political coalition that funds international aid continues to prefer US shipping and farm interests over saving poor people’s lives, today we can count one small victory for aid transparency. In order to reform destructive aid practices, we need to know what those practices are. Thanks to the efforts of one unsung USAID staffer, we are a little bit closer to that goal.

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