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Private or Public? Exploring USAID's Efforts to Help the Poor

Having been recently convicted by Brian Fikkert’s comprehensive approach to poverty alleviation, I sat in on an event at AEI keynoted by Rajiv Shah, the administrator of the United States Agency for International Development (USAID). I was interested to see how the visions of these two experts were complementary and how they conflicted. I came away impressed by the direction in which USAID is headed, but also aware of how the agency falls short. Dr. Shah’s remarks emphasized reform—starting with the agency’s budget. For the past several decades, only 9 to 10 percent of USAID’s aid has gone to local institutions in developing communities. That means that historically, 91 percent of its spending has been doled out to U.S. and international development contractors. This is the epitome of doing development “to” or “for” a person in need, rather than involving them in the process. Such a strategy, as Dr. Shah admitted, is ineffective—it fails to create sustainable development. However, USAID is working to redirect the distribution of its resources, and engaging in partnership has become a growing priority for the agency. In the last few years, funding to local institutions has increased from 9.7 percent to 14.3 percent. In 2012, $1.4 billion in funding was given to these institutions, which include various governmental bodies, private firms and non-governmental organizations in local communities. One of these organizations is Project Mercy, an NGO in Ethiopia that “empowers individuals to be self-sufficient and creates thriving, economically independent communities.” Founded and run by an Ethiopian couple, the project educates children, provides job training, introduces agricultural innovations and encourages spiritual growth. It is foundationally participatory, as it intentionally involves individuals and communities in pursuing their own development and independence. This is precisely the kind of development that Dr. Fikkert is calling for, and USAID’s support should be applauded. By fiscal year 2015, the agency’s goal is to give 30 percent of its aid to local institutions like this one. This budgetary reform has been much needed and is a positive step forward for USAID. At the very least, it is encouraging to hear that our tax dollars are going to some effective causes. But, there is still room for improvement. Even if USAID reaches their 30 percent goal by 2015, 70 percent of aid will continue to go through contractors. While oversight is necessary, more progress could be made to emphasize local involvement and ownership. Also, channeling philanthropy through the government is not ideal. More often than not, government spending is less effective and more wasteful than private giving. Bureaucracies are often inefficient and bloated, and any bureaucratic institution—even USAID—is prone to these failings. Along the same lines, because much of USAID’s money goes through governments in developing countries, it must perform risk assessments, forcing it to refuse support to countries that are corrupt. However, the people in nations with corrupt leaders are often those that most need our help; another reason why private organizations and individuals must take charge. Countries that are politically and economically in shambles desperately need people who are willing to invest their money and time to walk alongside suffering people and improve day-to-day life—something that government simply cannot do. This is why it is the responsibility of private individuals and organizations to help those in the worst places who are in need of our assistance. That USAID has shifted its focus toward partnerships for sustainable development is an honorable and welcome change. But a governmental agency should not be the central focus of America’s global development efforts. It is primarily up to individuals—to you and me—to provide funding, inspire programs and partner with local people in communities to holistically alleviate poverty in any way we can.