	Introduction

Since the 1940s, the U.S. government has assisted private voluntary organizations’ (PVO) overseas activities. Literature on PVOs’ development activities describes some of the qualities that PVOs exhibit: familiarity with local populations and ability to work with the poor at the community level, innovation in approaches and flexibility in responding to development needs, lower cost compared to government-to-government aid programs, staff dedicated to the PVOs’ mission and willing to work under difficult conditions, long-term commitment to development, and ability to work with INGOs to strengthen local development capabilities. Evolution of U.S. Objectives, Scope, and Methodology

The objectives of our review were to examine (1) PVOs’ role in delivering USAID-funded foreign assistance; (2) potential issues and implications of increasing their role in delivering assistance, including accountability issues; (3) the success of their projects in achieving their objectives; and (4) the extent to which these organizations are dependent on U.S. government funding. 2.5 for a water system project in Honduras.) Providing assistance funds directly to PVOs or through a foundation, as suggested in some of the reform proposals, would eliminate a key accountability mechanism from the U.S. foreign assistance program, and the Congress would have to accept more risk and less accountability for funds expended. Most projects we reviewed included some activities designed to improve local capacity. PVO Projects Generally Achieving Most Project Objectives

The 20 projects in our case study that were making progress toward their objectives reflected a combination of the factors identified in development literature as being necessary for successful projects: good design and clear objectives, experience in the country and the development sector, qualified management and staff, and local participation. The PVO had good project design, which included local input and clear objectives, and had capable staff. However, we found that PVOs generally are less dependent on government funding than they were a decade or more ago—although some individual PVO in-country projects are funded entirely by USAID. While federal spending on PVOs has increased in absolute terms since 1982, the percentage of total PVO resources coming from the federal government has decreased 13 percent (for PVOs that receive federal funds), from 42 percent in 1982 to 29 percent in 1992. This is because private donations have increased at a much faster rate than federal funding.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed private voluntary organizations' (PVO) role in delivering federally funded foreign assistance, focusing on the: (1) implications of increasing PVO role in delivering assistance; (2) success of PVO projects in achieving their objectives; and (3) extent to which PVO are dependent on U.S. government funding.

What GAO Found

GAO found that: (1) the PVO community encompasses organizations of varying sizes, missions, geographic focuses, and capabilities, and they work to address varied development needs; (2) PVOs serve as a complement to traditional government-to-government assistance and can be a mechanism to strengthen indigenous community-level organizations; (3) while PVOs have demonstrated that they are generally effective in carrying out community-based development projects, most have not had wide experience in working with governments and institutions on sectoral and macroeconomic policy reforms necessary to create an environment favorable to development; (4) twenty of the 26 PVO projects GAO reviewed were making progress toward their objectives, and good project design, competent in-country staff, and local participation were factors common to the most successful projects; (5) PVOs are increasingly using local groups to carry out projects, which should increase the local capacity for development; (6) most projects GAO reviewed included local capacity building, which is critical to long-term development and sustainability; (7) accountability for Agency for International Development (AID) assistance funds has been a continuing concern, and over the last decade, AID has encouraged and assisted PVOs to improve their program and financial management systems; (8) providing increased amounts of foreign aid directly through PVOs or through a foundation, as suggested in some reform proposals, would remove a key accountability mechanism from the U.S. foreign assistance programs; (9) although some individual PVO projects may be funded entirely by AID, PVOs, as a group, have become less dependent on U.S. funding; (10) federal funding as a share of total funding for PVOs receiving federal support dropped from 42 percent to 29 percent between 1982 and 1992; and (11) U.S. funding for PVOs has increased, but private resources have increased faster.