Erratic budget processes threaten US foreign aid

Most policymakers understand that foreign assistance is a key instrument of U.S. foreign policy, but they also need to recognize that disruptions to the supply chain—rescission, proposed cuts, and erratic budgeting—undermine America’s ability to deliver vital assistance. This has implications for food, medicine, or education assistance in developing countries. Indeed, funding delays and the threat of budget cuts undermine our government’s support for programs aimed at creating economic growth, reducing poverty, and promoting stability.

Foreign aid is not like a water reservoir ready to flow with a turn of the tap. Rather, it is like a business or a sports team, requiring planning and strategies, hiring and developing the right staff skills, soliciting grants and contracts, designing partnerships, providing management and oversight, monitoring and evaluation, feedback, and learning.  All of this involves not just the staff of the aid agency, but of implementing organizations, donor partners, and host governments.

When the Office of Management and Budget threatens to rescind 20 percent of the aid budget, or the president proposes a 30 percent cut in funding (even if dead on arrival), or Congress fails to enact the appropriations bill on time, it reverberates down the line.  It hinders the effectiveness of the work of tens of thousands of aid workers and affects the livelihoods of tens of millions of intended beneficiaries. Moreover, it wastes U.S. taxpayers’ money.

These budget abnormalities are the new normal for diplomacy and development.  By contrast, spending for defense is far more reliable, with annual authorization and appropriations bills and increased funding from one year to the next.

Giving short shrift to U.S. foreign assistance hurts our effectiveness at the country level, as evidenced in a new four-country study by Publish What You Fund that looks at the likely impact of U.S. foreign assistance cuts proposed in the FY19 budget in Cambodia, Liberia, Nicaragua, and Senegal.

Widespread damage from a dysfunctional budget process

The disjointed budget process is damaging the effectiveness of U.S. foreign assistance in multiple ways:

Waste of time

• With congressional rejection almost assured, some dismiss the administration’s proposed 30 percent budget cut to international affairs as mere political point scoring. Too few recognize the practical ramifications for hundreds of USAID and State staff who spend thousands of hours planning, preparing, and programming based on budgets that are unrealistic. This can involve writing up to two or three funding scenarios rather than one—wasting valuable staff time that could be more usefully devoted to realistic planning and project management.
• USAID staff toil on work to defend budgets that few support, resulting in time diverted from meeting commitments to partner countries, helping government and communities define the path to self-reliance, and improving the effective delivery of humanitarian assistance.
• Implementers and partners become nervous and unsure, so USAID staff spend valuable time calming nerves by explaining what may realistically happen.
• A lack of certainty on what is coming leaves USAID mission staff and partners devoting time to interpreting the tea leaves and preparing for unlikely events.

Delays compound inefficiencies

• Uncertainty due to incremental or delayed funding leads to stalled project start-up.
• When funding is delayed or reduced, it results in staff having to be let go. When funding is restored, staff have to be re-hired, or new staff have to be recruited and trained.
• Due to delayed funding, projects have to slow down and staff are put on hold, twiddling their thumbs waiting for the funding spigot to turn on again. This means projects go from normal speed to slow or high speed, disrupting staffing plans and delivery schedules.
• Waiting six to nine months for a year’s funding to be enacted and allocated means missions are planning, planning, planning, then suddenly face the challenge of completing a year’s work in three to six months.

Setbacks to projects and programs

• Projects are disrupted if aid is held up and recipients are denied intended benefits. If food or medicine fails to arrive, it can be a matter of life or death; in the case of education and training, learning is delayed or lost.
• The disruption can be particularly severe for small, knowledge-based programs that emphasize behavioral change.
• New, innovative projects are the first to be put on hold, as the agencies are obliged to plan in accordance with the President’s budget and to ‘protect the core.’
• Sudden shifts can undercut the functioning and goals of a project and, particularly in fragile countries, undermine stability.

Reputational damage

• Host countries and local communities look to the U.S. for consistency and an indefatigable commitment to democratic values and open markets; when we fail to show up and act as promised, the confidence is lost.
• Threats or rumors of cuts, or the spigot being turned on and off, lead to the perception that the U.S. is unreliable. Potential partners search out other partners and implementers seek other sources of funding.
• U.S. credibility is undercut when USAID is unable to implement a project being executed in partnership with a national ministry—for example, when facilitating domestic resource mobilization in a given country or when building up the capacity of a ministry.
• Mixed signals from Washington reduce U.S. credibility with host governments and prevent meaningful planning.
• The U.S. looks like it does not know what it is doing.

How can the U.S. be credible when it conveys mixed signals and cannot live up to the sound budgeting principles it preaches to others? Rescissions, proposed budget cuts, and delayed appropriations sully the reputation of the United States, undermine the effectiveness of U.S. assistance, hinder our intended objectives, and constitute a disservice to our aid workers and to country partners. Policymakers need to recognize these ramifications and return the aid budget to regular order.