Report: U.S. ranks low on effectiveness of foreign aid

The United States may be the largest donor of foreign assistance in the world, but it ranks among the lowest in terms of the quality and effectiveness of its aid, according to a new report.

The Center for Global Development (CGD), in cooperation with the Brookings Institution, released its "Quality of ODA Assessment" report Tuesday, which assesses the aid provided to 23 countries by more than 150 aid countries to determine how much value they are getting for their foreign aid money. Although the United States does poorly overall when compared to other countries or multilateral organizations, some agencies rate better than others: The U.S. Agency for International Development (USAID) and the Defense Department get poor marks, while the Millennium Challenge Corporation (MCC) does much better.

U.S. foreign assistance has suffered by attempting to address too many of the world’s problems — a challenge that has spread operations too thin to specialize in any one field. "USAID doesn’t build any comparative advantage the way many other donors do in any particular specialization or country," explained CGD President Nancy Birdsall, speaking about the report with The Cable. "Over many years USAID has been subjected to more kinds of pressures that have made it less and less efficient, particularly on fostering institutions."

The study looked at 30 separate, measurable indicators and evaluated them in terms of four dimensions: maximizing efficiency (how smartly the money is distributed), fostering institutions (whether the money is helping host governments), reducing the burden on recipient countries (how much the host countries need to do to get the money), and transparency and learning (how much we know about how the aid is being spent).

CDG and Brookings even set up an interactive web tool that allows one to compare the results of different countries and different agencies.

The report is based on data from 2008, but CGD plans to update the information when new data becomes available.

However, Birdsall was optimistic that the current administration was making progress in improving the way the United States distributes aid. "The Obama administration has done a very good job on articulating what needs to be done," she said, referring to the president’s speech at the U.N. General Assembly and the recent U.S. Global Leadership Coalition panel with Cabinet Secretaries Hillary Clinton, Robert Gates, and Timothy Geithner. She also said that the administration’s recently completed overall development policy review holds out the promise of improvements in the future.

But the rebuilding of USAID, which saw its ranks fall from 15,000 to 3,000 over the last two decades, will take years of painstaking work. Birdsall is also calling on the administration to designate a lead U.S. agency for some of its largest aid initiatives, such as the food security and global health programs.

"Nothing much yet has happened," she said. "The proof of the pudding is in the eating, not in the talking. The direction is right, the rhetoric is good, let’s see what the action is."