What the sector would like to see to replace USAID

Installing a deputy secretary to lead foreign assistance. Separating development work from humanitarian aid. Retaining the knowledge of USAID staff. And combining regional bureaus at the State Department and the U.S. Agency for International Development. Those are just a few of the many proposals being put forward for USAID’s future — floated by everyone from advocacy groups to former USAID political appointees to those within the Trump administration itself. “Starting the dialogue with a fresh set of actors, and [having USAID] located in a different place could provide an opportunity that I think is long overdue,” said Larry Nowels, the co-chair of the Modernizing Foreign Assistance Network, or MFAN, a coalition focused on improving the effectiveness of U.S. aid. Of course, many of those offering up proposals — including MFAN itself — would have preferred USAID remained an independent agency separate from the State Department. But after the Trump administration sliced 86% of USAID’s awards from the agency, a merger into the State Department seems to be the only way some form of USAID will stay alive. “Right now, so much of the debate seems to be stuck between this choice of cut and save foreign aid,” said Walter Kerr, co-founding executive director of Unlock Aid, an advocacy group focused on aid reform. “What we’re trying to do with the proposals is rethink what our conception of these investments and spending can be in the first place.” Who should lead the United States’ foreign aid work? In the latest memo circulating from the Trump administration, teams from three separate entities — the so-called U.S. Agency for International Humanitarian Assistance, the State Department, and the U.S. International Development Finance Corporation, or DFC — would report directly to the secretary of state. But MFAN and Jim Richardson, the former director of the Office of Foreign Assistance at the State Department, said there should be another high-level figure in charge: a deputy secretary focused on foreign assistance. It’s something Richardson listed as his first recommendation in a recent opinion piece for The Hill, and it’s also one of the leading pieces in MFAN’s proposal for the future of U.S. aid. “If you look at our proposal versus the leaked memo, [the Trump administration] has everyone at what’s left at USAID, and State, and the DFC all reporting to the secretary of state — which in real life, is not going to work,” explained Justin Fugle, the head of policy at Plan International, and a working group co-chair at MFAN. Fugle’s view is that the secretary of state does not have time to manage multiple aid leaders. “If you have a deputy secretary of state, then that person can provide, on a practical day-to-day basis, leadership for all of this work,” he said. Both Richardson and MFAN pointed to the importance of accountable leadership, with Nowels adding that this deputy secretary would be the one responsible for reporting to Congress, similar to the role of the USAID administrator in years past. While the proposal circulated by Trump aides places DFC and the Millennium Challenge Corporation, or MCC, beneath the secretary of state, MFAN’s proposal puts the deputy secretary at the same level as the heads of each organization; the deputy secretary would also become chair of DFC and MCC boards. What should the structure be? For years, the U.S. foreign aid system has been criticized as fragmented, with dozens of aid agencies focusing on different development, economic or humanitarian agendas. MFAN, Richardson and Daniel Runde, a senior vice president at the Center for Strategic and International Studies, recommended pulling many of those agencies together. “The opportunity for greater coherence, clearer lines of authority and accountability — that’s something MFAN has been talking about since our founding,” said Tod Preston, the executive director of MFAN. “There are over 20 different agencies involved in foreign assistance, so if you can get more alignment and reduce some of those redundancies, that would be very valuable.” The MFAN proposal laid out four bureaus and three offices to be placed beneath the deputy secretary of state. The bureaus include those focused on humanitarian assistance, development assistance, global health, and good governance; the offices center on foreign assistance more broadly (which would focus on policy and budget), human trafficking, and global women’s issues. When it comes to global health, water and food-related programming, the organization broke it down further. MFAN recommended creating a comprehensive program that pulls together initiatives that are currently siloed by disease type, such as the President's Emergency Plan for AIDS Relief; and integrating water, sanitation, hygiene, and food and nutrition programs to create more comprehensive approaches. In some ways, MFAN’s proposal echoes pieces of Richardson’s opinion article: He recommended consolidating smaller agencies such as the U.S. African Development Foundation, the Inter-American Foundation, and the U.S. Trade and Development Agency into the State Department, while also aligning existing humanitarian offices — such as the State Department’s Bureau of Population, Refugees and Migration, and USAID’s Bureau for Humanitarian Assistance — under one roof. The same, he said, should be done for the health sector. “State focuses on policy, and USAID focuses on implementation,” wrote Richardson, who also served as the coordinator of USAID’s Transformation Task Team under Trump’s first administration. “Combining these could result in better health outcomes at a lower cost.” Despite that, MFAN’s Preston explained, USAID’s development work cannot be dropped. “The State Department is focused on diplomacy, and is dealing with more near-term issues and impacts in its day-to-day operations, whereas development is a much longer-term endeavor,” he said. “There, you’re looking to achieve results and have impact that can only be measured over time. That’s one big distinction why there needs to be independence, and a little separation, from the transactional nature of foreign policy.” What about MCC and DFC? MCC and DFC are often viewed as U.S. aid darlings: their approaches to development focus on economic growth and the private sector, and MCC’s unique country compact model means the U.S. government partners with those of other countries to agree on program aims and investment returns. But while the latest proposal from within the Trump administration places MCC and USTDA “under the tent” of DFC, MFAN would like to see the agencies working separately but together — with the U.S. government enabling countries to move along an aid spectrum depending on what fits. USTDA should also be utilized to help U.S. firms access developing countries, MFAN’s proposal stated. “You might start with USAID to build capacity and cover the basics,” said Fugle. “Then maybe it would qualify under MCC criteria, that are more stringent, to be further developed. And then once you move to a phase where a country becomes attractive for American direct foreign investment, they end up working with the DFC.” Unlock Aid called for clarifying agency roles based on similar development stages. In a recently released blueprint for USAID’s future — one that Kerr said the organization hoped to receive feedback on from the aid sector — Unlock Aid has outlined a path forward for the battered agency, one that Unlock Aid said would go beyond “simply cutting assistance or perpetuating the status quo.” Within the proposal, Unlock Aid also recommended expanding and empowering MCC and DFC. At MCC, that would mean broadening the list of eligible countries the organization works with, and increasing its scope to include cross-border health, supply chain resilience, and food security. At DFC, that would mean extending the agency’s ability to provide blended finance to social enterprises. The biggest danger here is that the United States just loses the capability to respond to emergencies … that capability is being lost right now as the agency and its implementers are laying off their staff.” --— Justin Fugle, head of policy, Plan International Similar expansions were echoed by Runde, who wants to multiply DFC’s operational capacity by increasing its credit limit from $60 billion to $120 billion. He also wants to revisit MCC’s budget of less than $1 billion a year. “There are a lot of areas in which traditional aid programs and the DFC can collaborate, and they do today,” said George Ingram, a senior fellow at the Brookings Institution. “[US]AID has a lot of experience and engagement with the private sector, and that work — in collaboration with the other two [can work well]. You want each to stay in their own lane of their expertise and their mission.” How should the US approach programs? Many of the proposals echoed one another when it came to how the U.S. government should be delivering aid, and who it should be giving aid to. MFAN broke down their recommendations into four categories: designing programs that promote country self-reliance, and directly engage local governments; better coordinating with economic growth programs to foster economic growth and trade (including MCC and DFC); strengthening innovation by “thoroughly integrate[ing] the U.S. private sector” into development efforts; and ensuring government focuses on cost effectiveness, efficiency, results, and a return on investment. Similar themes were surfaced by Runde and Unlock Aid, both of whom pushed for ways to deliver aid beyond traditional grants. That includes through government-to-government agreements similar to the MCC compact approach, pursuing innovative approaches to development, pushing pay-for-results program models, and prioritizing initiatives with clear transitions to local ownership, among other recommendations. Unlock Aid, for example, proposed creating a “Global Innovation Office” to pull innovators, industry, and academia into development, one that they suggest could be created over the next 12 months. The group also advocated for a few other models, including a pay-for-results health fund, which would require the rapid launch of $1 billion — a pot of money already approved by Congress through USAID’s Global Health Supply Chain project — to fund “verifiable results” in three to five countries. “Historically, the way we’ve done a lot of this work is to tender out proposals that organizations can win, and do work on behalf of a country,” said Kerr. “What we’d like to offer is the idea of, instead, is going to a country with a menu of options that are good for the United States — that could be in digital infrastructure, it could be in health, it could be in food security — but also in the interest of the host country, and jointly determining, among this menu of options, what we want to do together.” Runde and Unlock Aid also both referred to the aid sector “middlemen” — large contractors, multilateral organizations, and international nongovernmental organizations, which Runde described as playing “an oversized role” in delivering aid. “If money is disbursed via grants and contracts through implementing partners, national governments do not have ‘skin in the game’ and political buy-in,” Runde wrote. “Direct transfers to governments, or ‘budget support,’ bypass these ‘middlemen,’ both local and international.” It’s something many in the sector have been pushing for years — and in several of the proposals, these groups continue to do just that. MFAN, for example, emphasized how development and humanitarian programs should build local capacity, with the ultimate aim of having local public and private entities take over that work. And Unlock Aid, for another, recommended halting the development of aid projects in Washington, D.C. that “lack buy-in or co-investment from host countries or the private sector,” and breaking large, global awards into smaller projects focused at the local or regional level. “The administration has billions of dollars that they have to spend by Sept 30,” said Kerr, highlighting funds that have already been appropriated by Congress. “Because of the way we’ve invested in U.S. foreign aid over decades, we have created scenarios where people now depend on programs to continue. It’s really important that we turn back on those lifesaving programs, but we can do this in a way that is different.” Who will do all this work? The latest proposal from the Trump administration didn’t mention how many staff would be needed to create what it called a “reimagined U.S. international assistance structure.” But for MFAN, Runde and Richardson, that’s the biggest piece of the foreign aid puzzle. In the two months since President Donald Trump returned to office, thousands of USAID employees have been terminated from the agency, leaving a skeleton staff of a few hundred in their place. In early February, an internal notice stated just 600 people would be left at USAID when the Trump administration finished its carveout, down from more than 13,000 before Jan. 20. “The biggest danger here is that the United States just loses the capability to respond to emergencies, to be first on the ground in disasters, to make sure that people are not experiencing famine, that women and girls are no longer able to go to school and lose their rights,” said Fugle. “We’ve been the leader on so much of this for decades, and that capability is being lost right now as the agency and its implementers are laying off their staff.” Both Richardson and Runde echoed those concerns in their pieces, with the latter stating that embassies will need a “dedicated, interagency team of technical experts,” contracting officers, and program managers across the world, later adding that USAID’s program design, monitoring and evaluation capacities could be lost if such staff aren’t retained at the Department of State. “The complete loss of USAID’s field presence, with professionals who have skills that few diplomats can replicate, could weaken U.S. leverage in strategic regions,” wrote Runde. “The administration should think about how it can maintain and shape the expertise and technical capacity of USAID, especially in the field.” “We can’t lose what makes USAID unique in the federal government,” added Richardson in his opinion piece. “USAID’s workforce and processes far exceed those of the State Department when it comes to developing and monitoring assistance programs to ensure effectiveness and efficiency. Regardless of how much foreign assistance the United States funds, we need the technical capacity of USAID staff to ensure it is built for purpose and has impact.” That being said, most of the proposals highlight how a reimagined U.S. aid system could pull in new actors. MFAN noted the American private sector, and using catalytic funding to invest in innovative, effective aid programs — something USAID was already doing, and can continue to build on. Runde emphasized co-investment and whether implementing partners and national governments could match U.S.-made investments. And Unlock Aid highlighted America’s diaspora communities, and how “everyday American investors” could co-fund projects alongside DFC. “We’re not opposed, and never have been opposed, to foreign policy driving our foreign assistance. It’s always been the case,” said Ingram. “What’s important is once that macrodecision is made of how much assistance we’re going to provide in a particular situation, it needs to be implemented by the experts.”