The Administration also unveiled in early 2006 a restructuring of foreign aid programs administered by the Department of State and the U.S. Agency for International Development (USAID). In addition, a number of recent studies have made specific recommendations for both policy and organizational reforms. Criticisms of Current Foreign Aid Structures and Programs

The current structure of U.S. foreign aid entities and the conduct and effectiveness of aid programs have come under increasing scrutiny on a number of fronts. Aid policy is considered lacking in focus and coherence. Specific points of contention include:
the level of U.S. assistance, usually in relation to other international donors, and the composition of aid, generally the ratio of humanitarian and development aid to security assistance, by region; the coordination of aid among programs in USAID, the State Department, and independent agencies, such as the Millennium Challenge Corporation, the Trade and Development Agency, the Overseas Private Investment Corporation, and several regionally focused funds, such as the Inter-American Foundation, and the African Development Foundation; the coordination of aid among numerous domestic agencies, such as the Department of Health and Human Services (HHS) and the Center for Disease Control (CDC), that administer some type of foreign assistance program; the coordination of bilateral and multilateral assistance; the coordination of aid with other international donors; the involvement of the Department of Defense in aid programs that some observers believe should be carried out by civilian agencies; the perceived ambiguity with regard to who sets foreign aid policy among the State Department and USAID; the effectiveness of aid programs, especially in light of a steady diminution of technical expertise at USAID, and the increasing reliance on contractors both in Washington and in the field to carry out aid programs; and the lack of a foreign assistance strategy to guide and justify the provision of aid generally, and one that deals with programs, specifically, that responds simultaneously to recipient country needs and U.S. priorities. In the immediate aftermath of the dissolution of the Soviet Union, aid programs lost their Cold War underpinnings. Foreign assistance has long been defended as a way to either promote U.S. exports by creating new customers for U.S. products, or by improving the global economic environment in which U.S. companies compete. The present national security rationale for foreign affairs programs has transitioned from a largely anti-communist orientation for some 40 years following World War II to a more recent focus on anti-terrorism in the post September 11, 2001, environment. Trends in Foreign Assistance Funding

			Historic Trends

Spending for U.S. foreign assistance programs, that began in earnest in the 1940s with a four-year $13 billion (current dollar) investment in rebuilding Europe under the Marshall Plan, has fluctuated in response to world events. With the FY2008 budget request, this pledge would be exceeded. At the same time, under President Carter, human rights considerations entered into foreign aid policy. To that end, she created a new State Department position, Director of Foreign Assistance (DFA), and a new Bureau of Foreign Assistance (F). The DFA serves concurrently as Administrator of USAID. In 2006, the DFA presented a new Strategic Framework for Foreign Assistance that links aid programs to U.S. strategic objectives. First, the U.S. National Security Strategy, as articulated in 2002 and restated in 2006, elevates global development as a third pillar, along with defense and diplomacy, of national security. Give the Secretary of State the authority to ensure all aid, government-wide, is in U.S. foreign policy interest.
Since the terrorist attacks of September 11, 2001, the role of foreign assistance as a tool of foreign policy has come into sharper focus. The President elevated global development as a third pillar of national security, with defense and diplomacy, as articulated in the U.S. National Security Strategy of 2002, and reiterated in 2006. At the same time that foreign aid is being recognized as playing an important role in U.S. foreign policy, it has also come under closer scrutiny by Congress, largely in response to a number of presidential initiatives, and by critics who argue that the U.S. foreign aid infrastructure is cumbersome and fragmented, and that aid policy is unfocused.
In recent years, several initiatives have heightened congressional interest in, and caused a re-examination of, U.S. foreign assistance policy and programs, including organizational structure. In January 2006, Secretary of State Rice announced an initiative to bring coordination and coherence to U.S. aid programs. The Secretary created a new State Department position—Director of Foreign Assistance (DFA)—the occupant of which serves concurrently as Administrator of the U.S. Agency for International Development (USAID). A new Bureau of Foreign Assistance (F) was created to coordinate assistance programs, led by the DFA, who in 2006, developed a Strategic Framework for Foreign Assistance to align U.S. aid programs with strategic objectives. The Framework guided the writing of the FY2008 and FY2009 budgets, and is expected to be reflected in the FY2010 budget request.
U.S. foreign aid programs began in earnest with the Marshall Plan to rebuild Europe following World War II. Arguably, the underlying rationale for aid during most of the post-war period was to counter Communist influence in the world. Since the fall of the Berlin Wall and the collapse of the Soviet Union, and particularly since the terrorist attacks of September 11, 2001, aid programs have increasingly been justified within the context of anti-terrorism. Despite changing global conditions and challenges, U.S. foreign aid programs, their organizational structure, and their statutory underpinnings, reflect the Cold War environment in which they originated.
These factors are, arguably, motivating the heightened interest in re-evaluating how U.S. aid programs function, and in revamping how they are administered. There is also a growing recognition of the role that foreign assistance can play as a foreign policy tool that is equal to the role of diplomacy and defense within the current international environment characterized by regional conflicts, terrorist threats, weapons proliferation, concerns with disease pandemics, and the difficulty in overcoming poverty. As a result, a number of recent high-profile studies have made recommendations for specific reforms.
This report, written by [author name scrubbed], a former CRS Specialist, will be updated by Susan Epstein to reflect continuing developments.