The United States is one of dozens of countries and multilateral financial institutions providing such aid, together with non-governmental organizations (NGOs) and foundations, and alongside private financial flows to developing countries from investors, international corporations, and diaspora communities. The December 2010 Quadrennial Diplomacy and Development Review (QDDR) report includes specific strategies to improve coordination with other aid donors, public and private. This report provides a summary of official development assistance (ODA), discusses coordination goals established by donors at international development policy forums, and provides an overview of U.S. policy and efforts to meet these goals. Furthermore, it does not include several increasingly important donors, such as Brazil, China, Russia, India, and South Africa. Not all foreign aid professionals are concerned about the growing number of donors in many developing countries. In the context of recent international development forums, however, donor and recipient countries alike have expressed widespread agreement on the desirability in principle of greater donor coordination and consolidation of foreign assistance activities to address fragmentation concerns. International Framework for Donor Coordination

The first formal coordination of official development assistance dates to the establishment of the OECD DAC in 1960, a forum created for the major bilateral aid donors, including the United States, to discuss issues and develop guidance related to aid and development. The United States has played a leading role in this process. Busan Partnership for Effective Development Cooperation

The final High Level Forum was held in Busan, Korea, in November 2011. Channeling aid through multilateral entities, however, is unlikely to reduce fragmentation or improve coordination while multilateral organizations are proliferating in much the same way as bilateral donors. This type of cooperation has worked both ways. Similarly, the Office of the Global AIDS Coordinator (OGAC) was created in 2003 to manage the President's Emergency Plan for AIDS Relief (PEPFAR) , through legislation that lists coordination among donor governments as an essential part of the global strategy to combat HIV/AIDS and requires a report describing the mechanisms used to coordinate programs between the United States and foreign governments, among other things. Concerns About Direct Budget Support and Funding Pools

Many development experts believe that the most effective means of harmonizing foreign assistance is not by coordinating among donors, but rather by channeling aid through recipient governments as direct budget support. In recent years, USAID has sought to increase the use of host country systems while limiting the associated risks. Agency and Personnel Incentives

Some observers assert that there are disincentives for donor coordination at every level of foreign assistance policy making and implementation. Lack of Inter-agency Coordination

It has long been recognized by analysts and other aid professionals that lack of coordination between the two dozen or so U.S. departments and agencies involved in foreign assistance is an obstacle to coordination with other donors, in addition to a source of inefficiency and incoherency within the U.S. aid structure. Conflicting Strategic Interests

The goal that drives most efforts to improve donor coordination—more efficient and effective development assistance—is only one of many U.S. foreign assistance objectives, some of which conflict with the donor coordination agenda. Participants at the Busan HLF attempted to strengthen the aid effectiveness agenda by incorporating these non-traditional donors and establishing a new Global Partnership to include civil society organizations and emerging donors, though on a voluntary basis. In the meantime, the United States may continue efforts to improve aid effectiveness and efficiency through maintaining strong relationships with bilateral donors that share U.S. interests and objectives in the developing world, building on the significant progress that has been made with respect to aid transparency, and considering how best to use multilateral development entities and partnerships to enhance the effectiveness of U.S. foreign assistance.
Many experts believe that improved coordination among donor governments and multilateral aid organizations could make global development assistance more efficient and effective. Proliferation of donors in recent decades, and fragmentation of aid among an increasing number of countries and projects, has increased calls for coordination. More than 45 countries and 21 multilateral organizations reported providing official development assistance (ODA) in 2010. An estimated 150 countries received this assistance in 2010, with the United States alone providing aid to 139 countries. Many developing countries host officials from dozens of bilateral and multilateral aid agencies each year. This diffuse aid structure, reformer advocates argue, leads to redundancy, policy incoherence, inefficient use of resources, and unnecessary administrative burdens on host countries.
While some observers argue that there are benefits to pluralism in foreign assistance, donors and recipients alike have expressed support for improved donor coordination and consolidation of aid activities. A series of high-level forums sponsored by the Organization for Economic Cooperation and Development (OECD) Working Party on Aid Effectiveness, between 2002 and 2011, established widely accepted goals for key aspects of coordination, or harmonization, as well as mechanisms for evaluating progress toward those goals. The United States has supported these donor coordination efforts, both in international forums and within the U.S. foreign assistance structure. Channeling aid through multilateral institutions, posting coordination officers to act as liaisons between U.S. and foreign development agencies, and increasing transparency about U.S. aid flows and objectives are part of this effort. Donor coordination provisions are incorporated into the founding legislation of relatively new U.S. aid entities, such as the Millennium Challenge Corporation (MCC) and the President's Emergency Plan for AIDS Relief (PEPFAR). Furthermore, the 2010 Quadrennial Diplomacy and Development Review (QDDR) established donor coordination and reduced fragmentation as foreign aid priorities.
Despite the global attention paid to the issue of aid effectiveness, monitoring surveys indicate that limited progress has been made toward coordination goals by the United States or donors in general. Persistent obstacles to increased donor coordination remain. Division of labor problems, political concerns about direct budget support, lack of inter-agency coordination, and personnel disincentives all play a role. Perhaps most important, the goals of official donor coordination efforts are not always consistent with the diverse objectives of U.S. foreign assistance policy or those of other bilateral donors. Nevertheless, traditional donors renewed their commitments at the Busan High Level Forum in November 2011, while at the same time expanding the scope of coordination efforts to include emerging donors, such as China and Brazil, and civil society organizations. A new entity conceived at the Busan forum, the Global Partnership for Effective Development Cooperation, was established in 2012, with the support of the United States, to embody this new, broader framework for cooperation.
Related CRS reports include CRS Report R40213, Foreign Aid: An Introduction to U.S. Programs and Policy, by [author name scrubbed] and Marian Leonardo Lawson, and CRS Report R42621, State, Foreign Operations, and Related Programs: FY2013 Budget and Appropriations, by [author name scrubbed], Marian Leonardo Lawson, and [author name scrubbed].