THE

 WHOLE
PICTURE



EFFECTIVE U.S. FOREIGN ASSISTANCE

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Dear Colleagues:

We are pleased to present the enclosed report, Reform of

United States Foreign Assistance. The report contains Inter-
Action’s Principles and Values to Guide Foreign Assistance
Programs, and a position paper on how to move forward with
the reform of the U.S. foreign assistance program. InterAc-
tion has for many years devoted its resources to ensuring that
U.S. foreign aid reflects the values of the American people
and relies on sound, effective structures in delivering interna-
tional assistance. This report reflects a broad consensus among InterAction’s members
on Secretary of State Rice’s initial steps in the reform of U.S. foreign assistance.

InterAction members are critical partners in U.S. foreign assistance, serving as the imple-
menting partners for countless programs throughout the myriad of countries that ben-
efit from U.S. programming. [Our work is nonpartisan: based instead on our over-riding
commitment to ensuring the most effective assistance programming that furthers the
interests of the U.S. and the needs of those struggling for a better life and a better future
around the world.] Using our experience, we contribute to many stages of the assistance
process: from roles in program development, to program management and program
evaluation throughout the developing world. It is this experience that leads us to believe
that the need for a comprehensive U.S. foreign assistance approach has never been higher,
and the need for global poverty reduction has never been greater.

We hope that the Administration, Congress and other concerned parties will take into ac-
count the principles laid out in this report: principles based on six decades of experience
working with vulnerable people around the world.

We look forward to continuing this discourse and welcome your comments and
questions.

Sincerely,

Mohammad N. Akhter, M.D., M.P.H.



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As the Administration considers changes in
how U.S. foreign assistance programs will be
organized and managed, InterAction wishes
to share the views of its members on the
principles we believe should guide that re-
view and be reflected in its outcome. Inter-
Action is committed to making U.S. foreign
assistance resources and programs both ef-
fective and efficient for the benefit of those
we serve and will support the reforms nec-
essary to achieve this.
InterAction is the largest coalition of Amer-
ican non-governmental organizations work-
ing in humanitarian and development as-
sistance abroad with 165 members engaged
in every developing country in the world.
We have almost six decades of solid expe-
rience in humanitarian relief, post-conflict
reconstruction and long-term development.

Our members enjoy the confidence of the
American people, who contribute $3 billion
annually to support their activities. Many
are partners of the U.S. Agency for Inter-
national Development and the Department
of State in the implementation of American
government relief and development pro-
grams overseas.
Since World War II, the United States has
viewed foreign assistance both as a tool of
foreign policy and as an essential element of
our moral responsibilities as a world citizen.
InterAction applauds the Administration’s
initiatives that have substantially increased
funding for U.S. foreign aid. InterAction also
recognizes that we cannot afford to ignore
failed and failing states, which are home to
much of the developing world’s population
living in absolute poverty without adequate
FORM OF UNITED STATES
FOREIGN ASSISTANCE
access to food, education and basic health
services. In addition to the compelling hu-
manitarian concerns, these failed states, if
left unattended, can become fertile breeding
grounds for instability and terrorism.
InterAction recommends that any changes
in structures and procedures include safe-
guards to ensure that funding for humani-
tarian assistance and the achievement of
the long-term development objectives of
the eradication of extreme poverty and the
fulfillment of the President’s commitment
to the Millennium Development Goals are
protected from diversion to meet more
immediate foreign policy requirements. In
addition, InterAction calls on the Admin-
istration to see that civilian agencies of the
government receive the support required
for them to continue to respond to develop-
ment needs abroad, including those in coun-
tries and regions experiencing or threatened
by instability. And finally, InterAction be-
lieves any reforms must enhance cohesion
in the implementation of our foreign assis-
tance programs abroad while maintaining a
mutually respectful partnership with those
non-government organizations that elect to
assist the government in the implementation
of its foreign aid programs.
In our community’s six decades of experi-
ence, we have learned what is needed for
development to be effective in transform-
ing the lives of men, women, and children
around the world. We offer these criteria as
a set of principles to guide the reform of
development assistance currently under dis-
cussion by the Administration.
/Principle 1/ Poverty reduction must be a primary objective of U.S. foreign
assistance because it promotes stability.
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
InterAction welcomes Secretary of
State Rice’s interest in reforming for-
eign aid. We share the desire of the
President and Secretary Rice that the
U.S. has a coherent, progressive, and
effective foreign assistance program.
To this end, we firmly believe that
poverty reduction should remain the
core element of the U.S. foreign as-
sistance portfolio. Since World War II,
the United States has viewed foreign
assistance as an essential component
of our moral responsibilities as a
member of the international commu-
nity. Addressing the systemic roots of
poverty and instability overseas will
allow the U.S. to fulfill its obligations
as a global citizen, while advancing
prosperity, freedom, and the security
of our own people.
We see the reforms proposed by the
Secretary as the start of what likely
will be a lengthy process that ultimate-
ly will need to involve other elements
of the U.S. government, including
the White House, Congress, and ad-
ditional cabinet departments. While
focused primarily on the reforms an-
nounced by Secretary Rice, this state-
ment is intended to encourage and
help shape what we hope will become
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/Principle 1 / The members of InterAc-
tion believe there are both moral and stra-
tegic grounds for making the eradication
of extreme poverty and the achievement
of the Millennium Development Goals
core elements of the U.S. foreign assis-
tance portfolio, together with humanitar-
ian relief and stabilization. History has
shown that countries not able to meet
basic needs and provide opportunities for
their people often have come to require
greater and more urgent engagement by
the United States in later years. A people-
centered development approach requires
both long-term investments in the social
sector, such as health and education, as
well as trade, debt, and foreign invest-
ment policies that promote job creation
and sustained economic growth. Progress
toward democratic reforms by developing
countries is important, and InterAction
has welcomed the Millennium Challenge
Corporation’s emphasis on human rights,
the rule of law, and promotion of demo-
cratic practices. Gender equity should be
an integral part of development practice
and a key goal of development programs.
the first major overhaul of U.S. gov-
ernment foreign aid activities since
1961. InterAction shares the desire of
the Secretary and many others to see
the U.S. government adapt its foreign
aid programs to meet the priorities of
the 21st century.
/Principle 2/ Achieving the long-term objectives of global prosperity and
freedom depends upon sustainable development as a long-
term process that should not be sidetracked for any short-
term political agenda.
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As the largest alliance of U.S. based
non-governmental organizations pro-
viding humanitarian and development
assistance overseas, our 165 members
have experience working in every de-
veloping country, in many cases for
decades. The American people con-
tribute $3 billion annually toward the
activities of InterAction members – a
remarkable sign of their interest and
support. Many of our members are
partners of the U.S. Agency for In-
ternational Development or the State
Department in the implementation of
their foreign assistance programs.
We appreciate the importance that
President Bush and Congress have at-
tached to foreign assistance programs
in recent years. We have welcomed
the significant increases in funding of
these activities in the past five years, as
well as new initiatives such as the Mil-
lennium Challenge Account and the
President’s Emergency Plan for AIDS
Relief. We are proud of the leading
role the United States government is
playing in responding to humanitar-
ian crises around the world. We are
heartened by the significant increase
in funding for Africa, the continent
most broadly affected by extreme
poverty. We applaud U.S. leadership in
provision of debt relief.
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/Principle 2 / While U.S. foreign and se-
curity objectives will inevitably change to
reflect new priorities in an evolving world,
the achievement of long-term develop-
ment goals requires a patient and steady
approach. Balancing short-term political
and economic calculations with the long-
term nature of sustainable development
approaches requires a proper mix of
short- and long-term objectives. Given
this interdependence, development as-
sistance should be designed, managed
and evaluated from the perspective of its
long-term nature, not only its short-term
political impact.
For the past nine years, InterAction
has advocated a fresh look at how U.S.
foreign aid is being managed and de-
livered. InterAction is committed to
making U.S. foreign assistance more
effective and will support reforms
that we believe can accomplish this
goal. We believe the rich experience
of our members in implementing
development programs qualifies us
collectively to make a well-informed
contribution to the discussion about
how our government funds and uses
foreign aid to support American na-
tional interests.
/Principle 3/ Cohesion and coherence, in place of current fragmentation,
are necessary to achieve the effective use of foreign
assistance resources.
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
Poverty reduction should be acknowledged as the
primary objective of U.S. foreign assistance.
The elimination of extreme poverty
and fulfillment of the President’s com-
mitment to achievement of the Millen-
nium Development Goals should be
at the heart of U.S. foreign assistance
policy. However, poverty reduction
was barely mentioned in the recent an-
nouncements regarding transforma-
tional diplomacy. The White House
should give its full support to all facets
of its proposed foreign aid budget at ev-
ery stage of the budget process. Despite
the administration’s call for increases in
humanitarian and development aid in
the FY 2006 budget, Congress cut these
core accounts in the final budget end-
game. The just unveiled FY 2007 bud-
get further cuts humanitarian aid and
some core development accounts.
InterAction supports working with
our partners in the international com-
munity to build and sustain democratic,
well-governed states that will respond
to the needs of their people and con-
duct themselves responsibly in the in-
ternational system. Realization of this
objective will often require long-term
external investments in social sectors.
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/Principle 3 / Since 1997, InterAc-
tion has, through the issuance of three
papers, called for steps to address the
multiplication of U.S. foreign assistance
programs and its implications both for
planning and funding in Washington,
D.C. and for delivery of assistance in
the field. Despite a commitment to cre-
ate a more coherent policy framework
for foreign aid as an element of national
security strategy, the responsibilities and
resources for foreign assistance have
been dispersed so widely that the deliv-
ery and impact of foreign aid may fall
far short of expectations, including the
expectations of the Administration. A
coherent structure for aid would be bet-
ter equipped to plan for and assess the
efficient use of aid resources.
As the President reminded us in his
State of the Union Address, free elec-
tions do not by themselves always lead
directly or immediately to policies that
promote growth and stability. Most of
those countries in Asia and Latin Amer-
ica that have become stable democra-
cies were nurtured by decades of for-
eign assistance. South Korea is but one
example. USAID’s recently published
Policy Framework for Bilateral Foreign
Aid envisions roles for development as-
sistance in promoting transformational
/Principle 4/ Building local capacity promotes country ownership and leads
to self-sufficiency.
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development, strengthening fragile
states, and supporting strategic states— /Principle 4 / For development as-
three of the agency’s five core strategic sistance to work, it must be directed
toward efforts that its beneficiaries
goals for foreign aid.
identify, design, and value. Country
ownership, through the participation of
The need for long-term investment a strong civil society and effective and
also is evident in the challenge of transparent public institutions, is vital to
achieving results for women. Our building programs and investments that
years of development programming are sustainable for generations to come.
Truly effective assistance must hold all
experience tell us that providing op-
stakeholders in the development process
portunities for girls and women is —donors, civil society, and government
crucial if societies are to escape pov- —accountable for achieving the defined
erty. Furthermore, women are often results that lead to measurable impact
the voice of change and reform. Yet and sustainable changes in well-being.
there has been little mention in recent
pronouncements about the need for
Beyond the reforms announced by the Secre-
more of the educational and employ-
tary of State, further immediate steps could
ment programs that have successfully
be taken to make U.S. foreign aid signifi-
addressed this challenge in countries
cantly more effective.
experiencing real transformation.
Consolidating responsibility for pol-
With a third of the world’s population
icy, budgets, and implementation of
still living in extreme poverty, resourc-
the foreign aid programs undertak-
es to end this situation must be sub-
en by the Department of State and
stantially increased and commitments
USAID should improve coherence in
must be sustained over lengthy time-
the employment of these resources.
frames. Moreover, we strongly urge
The joint State/USAID staff sup-
that development funding be pro-
porting the new Administrator in his
tected from diversion to meet short-
additional role as Director for Foreign
term political or military objectives.
Assistance should give the USAID
Safeguards are needed—especially if
Administrator the ability to reduce
one person is going to formulate, jus-
redundancy and cover critical gaps
tify, and allocate the resources of both
in the USAID and State Department
USAID and the State Department.
programs for which he is responsible.
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/Principle 5/ Harmonize priorities among the U.S. government agencies,
multilateral institutions and recipient governments to assure
the best use of resources.
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However, the new Administrator will
have no formal authority for the con- /Principle 5 / In order to achieve the
duct of those foreign aid programs greatest impact for each foreign assis-
tance dollar, partnership, collaboration,
beyond his expanded jurisdiction,
and dialogue with other donors, both bi-
including, for example, those of the lateral and multilateral, are critical. Such
Millennium Challenge Corporation, efforts allow humanitarian and develop-
the President’s Emergency Plan for ment programs to build upon best prac-
AIDS Relief, or those administered tices and avoid wasteful duplication. Bi-
by other cabinet departments, includ- lateral and multilateral efforts each have
distinctive contributions and should be
ing Agriculture, Defense, Health and
seen as complementary. Aid works best
Human Services, and Treasury. Pend- when donors work together, each using
ing consideration of further consoli- their comparative strengths to achieve
dation, the cabinet officers and oth- agreed-upon goals to which both govern-
ers responsible for these programs ments and citizens are committed.
could meet with the President once
or twice a year to review major issues
Implementation of U.S. foreign assistance
and trends and take steps necessary
programs should remain under civilian con-
to limit duplication and close gaps in
trol in all but the most exceptional cases.
foreign aid coverage.
The U.S. military has provided life-
Secretary Rice’s pledge to USAID’s
saving assistance in recent natural
staff that they will remain the primary
disasters because it had assets not
mechanism for hands-on delivery of
available from the civilian economy in
U.S. foreign assistance is reassuring.
the required timeframe. We are grate-
But we are concerned that the continu-
ful for this assistance and proud of
ing shortfalls in appropriations to meet
the performance of the U.S. military.
USAID’s operating costs are crippling
There may be circumstances when
an agency that already has lost much
active hostilities in which U.S. armed
of the technical expertise for which it
forces are involved exclude most civil-
once was admired by development pro-
ian relief activities. Under the Geneva
fessionals around the world. This un-
Conventions the U.S. government may
derfunding of USAID capacity should
actually be obliged to use its military
be addressed immediately by increas-
forces to feed and otherwise ensure
ing the agency’s operating budget.
the welfare of local people in territory
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/Principle 6/ Humanitarian assistance programs should continue to be
a core part of foreign aid and be guided by the principle of
impartiality to conform with international humanitarian law.
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occupied by the American military.
But relief activities by the U.S. armed
forces in these exceptional circum-
stances do not justify the Pentagon’s
recently announced plans to engage
in stabilization operations across the
spectrum from peace to conflict. The
lack of capacity within the U.S. gov-
ernment to undertake non-combat
stabilization operations should be
cured by providing civilian depart-
ments with the required additional
mandates and resources. The key role
assigned to the Secretary of State in
stability operations by National Secu-
rity Presidential Directive 44 should
be reinforced by appropriation of
funds requested by State for the Of-
fice of the Coordinator for Rehabili-
tation and Stabilization.
A bolder approach will better serve Ameri-
can interests.
We reaffirm our agreement that a full-
scale reform of U.S. foreign assistance
management and programs is long
overdue. The steps currently under
consideration can at best result in in-
cremental and partial improvements in
the ability of the government to coor-
dinate its resources to better serve es-
sential U.S. interests. While the legisla-
tive climate may not be propitious for
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/Principle 6 / The U.S. government
has long been a leader in providing as-
sistance to refugees and others affected
by natural disasters and conflict. These
programs should be a core part of U.S.
foreign aid and continue to be guided
by the humanitarian imperative, which
dictates that help should be provided to
all of those in dire need, regardless of
politics and creed. Similarly, programs
focused on global health threats such as
HIV/AIDS and avian flu should benefit
all of those exposed to risk of illness.
more ambitious proposals at present,
fundamental reform is a long process
that merits active consideration now.
The next step in this process could be
to add to the portfolio of the Direc-
tor for Foreign Assistance/USAID
Administrator authority for manage-
ment of the Millennium Challenge
Corporation, the President’s Emer-
gency Plan for AIDS Relief, and the
State Department’s Office for the Co-
ordination of Rehabilitation and Sta-
bilization. A more ambitious option,
or a subsequent phase in an iterative
reform agenda, would be to expand
further the responsibilities of the Di-
rector/Administrator to include all of
the foreign aid programs run by other
cabinet departments and federal agen-
/Principle 7/ U.S. foreign assistance programs should be under civilian
control and run by development professionals in order to be
appropriate for the public abroad.
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cies. While this further consolidation
would promote even greater coher-
ence, it could also make foreign as-
sistance accounts more vulnerable to
pressure to subordinate the long-term
goal of poverty reduction to shorter-
term political and military objectives.
InterAction advocates the eventual
establishment of a cabinet level de-
partment charged with the mandate
of managing all U.S. foreign aid activi-
ties. The fragmentation of authorities
and programs that currently has gov-
ernment agencies sometimes working
at cross-purposes to the confusion of
our partners and detriment of effec-
tive delivery would be ended. Within
the cabinet there would be a leader
charged with forewarning colleagues
of the humanitarian consequences
of strategic decisions, taking the lead
in mobilizing responses to foreign
disasters, and advocating for a bud-
get share for foreign aid consistent
with those of other advanced indus-
trial countries, which have committed
themselves to devoting 0.7% of their
GDP to official development assis-
tance. Our partners in the developed
and developing world would have a
single authoritative U.S. spokesperson
with whom to discuss and negotiate
foreign aid issues. As a full cabinet
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/Principle 7 / Currently the Department
of Defense has unprecedented influence
over our nation’s largest and most vis-
ible development assistance programs:
those in Afghanistan and Iraq. Addi-
tionally, there are recent indications that
the Pentagon seeks an expanded role in
foreign assistance activities tradition-
ally undertaken by civilian components
of the U.S. government and American
non-governmental organizations. To
remain consistent with American tradi-
tions and the image the U.S. wishes to
project abroad, the military should be
engaged in foreign assistance delivery
only in exceptional circumstances when
they have unique capabilities or respon-
sibilities, e.g. during natural disasters
when the logistical capabilities of the
U.S. military may be crucial in providing
life-saving assistance, or during conflict
which precludes the presence of civilian
aid workers. In any reorganization, the
U.S. foreign assistance program should
be under civilian control.
member, the leader of the foreign aid
department would be less vulnerable
to pressure to divert funds from de-
velopment programs to activities in-
tended only to serve political or mili-
tary objectives.
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

In responding to Secretary Rice’s re-

form initiative with this statement of
Addressing the
its appreciation and of its concerns systemic roots of
and recommendations, InterAction
looks forward to the continuing en- poverty and instability
gagement of the NGO community in
a national discussion on the future of
overseas will allow
U.S. foreign assistance. the U.S. to fulfill its
obligations as a global
citizen, while advancing
prosperity, freedom,
and the security of our
own people.

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

/Cover and inside cover/

“Sudanese woman” Karl Grobl, www.karlgrobl.com

/Page 6/
“After the tsunami” Karl Grobl, www.karlgrobl.com

/Page 8/
“The hands that feed the hungry” Diana Barnett, www.facesoftomorrow.com

/Page 10/
“A girl studies” Darcy Kiefel, Heifer International, www.kiefelphotography.com

/Page 12/
“My black finger shows I’ve voted!” Rebecca J. Vander Meulen

/Page 14/
“Aceh, Indonesia” Kim MacDonald

/Page 16/
“Hope in Darfur” Barbara Ayotte

/Page 18/
“Oranges” Jon Warren

/Page 20/
“Living a better life because of our cow” Darcy Kiefel, Heifer International,
www.kiefelphotography.com


Daniel E. Pellegrom, Chair Jo Luck

Pathfinder International Heifer International
Geeta Rao Gupta, Vice Chair Charles MacCormack
International Center for Research on Women Save the Children
John Schultz, Treasurer John McCullough
Christian Children’s Fund Church World Service
Ruth Messinger
Board of Directors American Jewish World Service
Nancy A. Aossey Steve Moseley
International Medical Corps Academy for Educational Development
Ken Bacon Sarah Newhall
Refugees International Pact
David Beckmann Raymond Offenheiser
Bread for the World Oxfam America
Sekyu Chang Linda Pfeiffer
Korean American Sharing Movement INMED
Amy Coen William Reese
Population Action International International Youth Foundation
Julius Coles Yolonda Richardson
Africare CEDPA
Chris Dunford Leonard Rubenstein
Freedom from Hunger Physicians for Human Rights
Neal Keny-Guyer George Rupp
Mercy Corps International Rescue Committee
Lee Hamilton Ritu Sharma
Woodrow Wilson International Center for Scholars Women’s Edge
Lelei Lelaulu Richard Stearns
Counterpart International World Vision
Lavinia Limon Sam Worthington
U.S. Committee for Refugees and Immigrants Plan USA
1717 Massachusetts Ave., N.W.
Suite 701
Washington, D.C. 20036
www.interaction.org
Phone: (202) 667-8227
Fax: (202) 667-8236
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