As the administration considers folding USAID into the State Department, it should study lessons learned from Australia, Canada, and New Zealand – all of which have done the same.
There is much hand-wringing about the fate of the United States Agency for International Development (USAID) since President Donald Trump returned to office. The independent agency was established in 1961 by President John F. Kennedy as a means to counter Russian influence through U.S. development and aid programs. Since its inception, USAID has largely focused on disaster and poverty relief, technical cooperation on global issues, including the environment, U.S. bilateral interests, and socioeconomic development. Many of these programs are conducted in the Asia-Pacific region.
Increasingly, USAID has been criticized as outdated and inefficient, or accused of supporting transnational elites, money laundering, and funding a “censorship-industrial complex.” This includes scrutiny for using aid as a political weapon to force actions from other nations, accusation of wasteful spending on programs that are not in line with U.S. national interests, and “boomerang” aid funding practices, where awards based on inflated costs bounce back to the donor and awardee firm. The majority of USAID’s programs are delivered by private entities or NGOs, some of which are for profit. Some have questioned whether the selection of these contractors has been determined by political influence.
Despite all of the recent criticism of USAID, it is responsible for high-value programs, including emergency response assistance due to natural disasters and political unrest, support for the removal of unexploded ordnance, supplying medication and testing for HIV/AIDS, support for basic healthcare, and maternal and child health. These are lifesaving programs whose funding as well as technical support should continue – no matter what USAID’s fate is.
The United States spends 0.3 percent of its GDP on aid, even though USAID’s budget has nearly doubled since 2019. USAID has a workforce of 10,000, about two-thirds of whom are serving overseas. Funding for USAID is appropriated by the U.S. Congress based on administration requests. In 2024 USAID’s budget was $44 billion; just 12 percent of these funds go to local organizations in foreign countries, while the majority goes to international organizations and companies, most of which are based in the United States. This suggests USAID has high operational costs including salaries, benefits, overseas missions, training, security, and information technology.
It also suggests there may be collusion or corruption. Since early 2000, USAID programs have become increasingly reliant on contractors and grantees, which has resulted in a few D.C.-area for profit firms such as Chemonics International and Development Alternatives Inc receiving an outsized share of USAID spending. All of this needs to be investigated.
