The short-term future of American foreign aid is determined in part by the US government’s federal budget, but each budget can have long-term effects. This small but important line item has been consistently threatened with cuts (most recently, a proposed 21% cut for fiscal year 2021), despite accounting for just over 1% of the total federal budget.

Reporting from DevEx suggests that, for at least the next four years, foreign aid and development will fare a little better in terms of funding. With an ongoing global pandemic, there is certainly a need to focus on global development, global health, and humanitarian assistance. But despite an annual budget, each decision made regarding US foreign aid leaves its mark on its long-term future. Here’s a quick explainer on why this all matters — especially for humanitarian and development work.

Learn more about foreign aid and the other initiatives that power our work

1. Foreign aid is not just money

The term “foreign aid” refers to anything that one country gives for the benefit of another. Usually, this means high-income countries providing development assistance to low- and middle-income countries. That includes money. But foreign aid can also be in-kind donations of goods or services. Some of these goods and services include:

  • Food aid
  • Education supplies and support
  • Healthcare
  • Water, sanitation, and hygiene initiatives
  • Infrastructure assistance
  • Agriculture and climate resilience support
  • Peace-building activities

All of these options contribute to the same goal for foreign aid: to maintain a functioning global society. This goes back to the program’s roots. The United States’s formal foreign aid program began in 1948 with the Marshall Plan, which supported the reconstruction of Europe after World War II. Financial help was provided, but expertise and supplies were also key elements as countries totaled by war rebuilt themselves.

In 1961, the federal government refined and codified this work as the Foreign Assistance Act. This remains the organizing principle for our current foreign assistance efforts.

Local fishermen with their a fishing boats donated by Concern as part of a disaster risk reduction program in Kenya, funded by USAID
Local fishermen William Ewoi (47) and Daniel Ngitira (27) manoeuvring their new fishing boats donated by Concern as part of a disaster risk reduction program in Kenya, funded by USAID. (Photo: Gavin Douglas / Concern Worldwide)

2. Foreign aid meets many kinds of needs

A bit on how foreign aid works: About two-thirds of US foreign assistance funds are earmarked as economic aid. These funds are managed by the Department of State or an implementing agency — most often USAID (the United States Agency for International Development). That agency awards grants to organizations like Concern for specific projects and initiatives. Economic aid covers a number of sectors and initiatives. USAID specifies the following subsectors:

  • Conflict, Peace, and Security
  • Emergency Response
  • Government and Civil Society
  • Operating Expenses
  • Basic Health
  • Economic Development
  • Environmental Protection
  • Basic Education
  • Agriculture

Funding can also be multisector, unallocated, or classified as “other” to fit more unique situations.

The remaining one-third of US foreign aid is classified as military aid. These funds come from the Department of Defense and are used to strengthen the military of US allies, or to increase US national security by bolstering foreign counter-terror or anti-narcotic missions.

A non-food item kit (NFI kit) distributed as part of an emergency response to flooding in Pakistan
In response to catastrophic flooding in Pakistan, Concern Worldwide with the support of USAID Pakistan and USAID Saves Lives distributed cash, emergency shelters, bedding kits, winterization kits, and hygiene kits to 500,000 beneficiaries in Sindh and Balochistan. (Photo: Concern Worldwide)

3. Foreign aid doesn’t just go to governments

Only a small portion of US foreign assistance goes directly to governments (known as bilateral aid). In 2018 (most recent complete data as of 2021), USAID reports that less than 3% of all foreign aid disbursements went directly to governments. The other 97% goes to a combination of multilateral organizations (like the United Nations or World Bank), nonprofits, and other non-governmental organizations (NGOs).

This is where an organization like Concern comes in. We’re a channel through which foreign aid flows from the source of funding to the countries that need it most. In 2018, for example, we received 8 separate grants from USAID that are classified as economic aid. These grants included funding for our response to civilians affected by conflict in South Sudan, supporting civilians and refugees left vulnerable by the ongoing Syrian crisis, response to a natural disaster in Sudan, offsetting the impact of drought in Malawi, and providing access to quality education in Liberia.

4. It helps other countries — but it also helps the US

As a humanitarian organization, we at Concern believe that there is a moral imperative to alleviate human suffering wherever it happens. The more people lifted out of global poverty, the more the world benefits on the whole. Foreign aid plays a huge part in this.

But there are also many more pragmatic and immediate arguments for foreign aid. The world is more interconnected than ever, and what happens on one side of the globe can now have direct impacts in the US — and vice versa. We originally wrote this sentence long before 2021, but the ongoing social and economic effects of COVID-19 have only served to underscore this point.

Kenyan man holds a voucher for livestock assistance provided by Concern Worldwide and funded by US foreign aid
James Nangiro Lokwatuk (31) has been part of Concern Kenya’s livestock treatment e-voucher program for the past two months. Funded by USAID, the emergency response scheme enables pastoralists to access treatment from a private sector veterinary supplies company at a reduced cost. The idea is to motivate herders to treat their animals routinely, so that they will continue to make it a priority when the scheme finishes. (Photo: Gavin Douglas / Concern Worldwide)

5. The US gives much less than you might think

Many Americans think we spend about a quarter of the national budget on foreign aid. In reality, it’s just over 1.2% — and that includes military aid. Even if foreign aid was cut completely, it would do very little to reduce the United States’ $429 billion deficit.

It’s true that, in absolute dollars, the United States gives more to foreign assistance than any other country. However, as a proportion of our gross domestic product, it’s only 0.18%. Adjusted for income, this places us 35th out of 40th on the Center for Global Development’s Commitment to Development Index. (Last year, we were last out of 27 countries evaluated.)

How Concern uses foreign aid

Concern has as many as 20 programs that are funded by the US government — and many more have already been successfully completed. These projects take a variety of different forms:

  • Direct programming: This is where Concern operates a program itself, interacting with communities directly.
  • Through local partners: Where smaller, local organizations have the capacity to do their own programming, Concern will often choose to partner with them rather than directly program. Local partners have invaluable local knowledge, and can often gain access to areas we can’t reach. Concern provides support to these partners, such as technical expertise to scale up existing programs, and financial resources.
  • In partnership with other large organizations: Sometimes Concern will work with other organizations in a consortium to run big or complex projects. For example, Concern currently leads a consortium of agencies that are improving water, sanitation, and hygiene conditions in the Democratic Republic of Congo.

We’re proud of the transformative impact we’ve been able to achieve with the help of humanitarian aid and development aid from the US government. Check out the below videos for some of those initiatives in action:

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