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CRS — Does Foreign Aid Work? Efforts to Evaluate U.S. Foreign Assistance

December 5, 2012

Does Foreign Aid Work? Efforts to Evaluate U.S. Foreign Assistance (PDF)

Source: Congressional Research Service (via U.S. State Department Foreign Press Center)

Congress’s recent focus on reducing federal spending raises questions about the relative efficiency and effectiveness of all federal programs. In this context, evaluation of foreign assistance programs is of growing interest to many Members of Congress as they scrutinize the Administration’s international affairs budget request and debate foreign aid spending priorities. Policymakers, taxpayers, and aid recipients alike want to know what impact, if any, foreign aid dollars are having, and whether foreign aid programs are achieving their intended objectives.

In most cases, the success or failure of U.S. foreign aid programs is not entirely clear, in part because historically, most aid programs have not been evaluated for the purpose of determining their actual impact. The purpose and methodologies of foreign aid evaluation have varied over the decades, responding to political and fiscal circumstances. Aid evaluation practices and policies have variously focused on meeting program management needs, building institutional learning, accounting for resources, informing policymakers, and building local oversight and project design capacity. Challenges to meaningful aid evaluation have varied as well, but several are recurring. Persistent challenges to effective evaluation include unclear aid objectives, funding and personnel constraints, emphasis on accountability for funds, methodological challenges, compressed timelines, country ownership and donor coordination commitments, security, and agency and personnel incentives. As a result of these challenges, aid agencies do not undertake rigorous evaluation for all foreign aid activities.

The U.S. government agencies managing foreign assistance each have their own distinct evaluation policies; these policies have come into closer alignment in the last two years than in the past. The Obama Administration’s Quadrennial Diplomacy and Development Review (QDDR) resulted in, among other things, a stated commitment to plan foreign aid budgets “based not on dollars spent, but on outcomes achieved.” This focus on evaluating the impact of foreign assistance reflects an international trend. USAID put this idea into practice by introducing a new evaluation policy in January 2011. The State Department, which began to manage a growing portion of foreign assistance over the past decade, followed suit with a similar policy in February 2012. The Millennium Challenge Corporation, notable for its demanding but little-tested approach to evaluation, also recently revised its policy. While differing in several respects, including their support for impact evaluation, the policies reflect a common emphasis on evaluation planning as a part of initial program design, transparency and accessibility of evaluation findings, and the application of data to inform future project design and allocation decisions. Aspects of the three evaluation policies are compared in Appendix A.

Though recent evaluation reform efforts have been agency-driven, Congress has considerable influence over their impact. Legislators may mandate a particular approach to evaluation directly through legislation (e.g., H.R. 3159, S. 3310), or can support or undermine Administration policies by controlling the appropriations necessary to implement the policies. Furthermore, Congress will largely determine how, or if, any actionable information resulting from the new approach to evaluations will influence the nation’s foreign assistance policy priorities.

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