Foreign Aid: USAID Has Increased Funding to Partner-Country Organizations but Could Better Track Progress
Highlights
What GAO Found
The U.S. Agency for International Development's (USAID) reporting on its principal Local Solutions indicator—the percentage of mission program funds obligated to local organizations in partner countries—lacks clarity, complicating the assessment of the agency's progress toward its fiscal year 2015 target of 30 percent. The March 2013 USAID Forward progress report states that these obligations increased from about 10 percent of mission program funds in fiscal year 2010 to about 14 percent in fiscal year 2012—a $465 million increase. However, the agency also has reported progress on the principal Local Solutions indicator in three other ways, depending on whether two key types of funding—cash transfers and certain qualifying trust funds—are included (see figure). These reporting differences make it difficult to compare the indicator from year to year and to quantify the progress needed to achieve the 30 percent target by fiscal year 2015. Moreover, USAID's approach to tracking the Local Solutions indicator has evolved since the launch of the initiative. For example, USAID included funds in Afghanistan and Pakistan, missions the agency previously had planned to exclude. If these missions are excluded, the percentage of mission program funds obligated to local organizations in fiscal year 2012, including qualifying trust funds and cash transfers, decreases by 10 percentage points.
Reported USAID Mission Program Funds Obligated to Partner-Country Local Organizations, by Type of Funding Included, Fiscal Year 2012
USAID's principal Local Solutions indicator does not fully reflect activities the agency has undertaken to implement the initiative, and USAID does not have a means to track relevant mission-led evaluations of programs implemented by partner-country organizations. USAID relied primarily on its principal Local Solutions indicator to demonstrate progress. While this principal indicator reflects, to some degree, the steps missions are required to take before obligating funds to local organizations, it provides no information about the status of activities both prior to and following obligation of funds, such as assessing risk and monitoring programs. Furthermore, although USAID has laid some groundwork for evaluating the Local Solutions initiative, the agency does not currently have the means to determine the extent to which missions are conducting performance evaluations to assess the effectiveness of programs implemented through local organizations. Such evaluations can provide evidence needed to demonstrate progress toward the initiative's goals related to local partners' capacity, country ownership, and program sustainability.
Why GAO Did This Study
Since 2010, USAID has undertaken a series of reforms, collectively called USAID Forward. One key reform, the Local Solutions initiative, aims to shift program implementation from U.S.- based and international organizations to partner-country organizations, including governments and for-profit and nonprofit organizations. The three overarching goals of the initiative are to strengthen the capacity of partner countries, to enhance and promote country ownership, and to increase the sustainability of development efforts. GAO was asked to review the implementation of this initiative. GAO assessed the extent to which USAID (1) has demonstrated progress toward achieving its fiscal year 2015 target for the principal Local Solutions indicator, and (2) is tracking progress in achieving the initiative's goals related to local partners' capacity, country ownership, and program sustainability. To address these objectives, GAO reviewed funding data and documents and interviewed USAID officials.
Recommendations
USAID should (1) clarify in future reporting the types of funding included in the percentage of USAID funds obligated to partner-country local organizations, (2) identify additional indicators to better capture progress toward the initiative's goals, and (3) provide a means to identify evaluations of programs that used the initiative's approach. USAID neither agreed nor disagreed with the recommendations but identified actions it has ongoing to address these issues, and just prior to publication of this report released fiscal year 2013 data on its website that includes some clarifying information.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| U.S. Agency for International Development | To improve the agency's tracking and reporting on progress of its Local Solutions initiative, the USAID Administrator should clarify in future reporting the types of funding included in the percentage of USAID funds obligated to partner-country local organizations. |
While USAID neither agreed nor disagreed with this and other recommendations in the report, the agency has since taken steps to implement this recommendation. For its fiscal year 2013 data, USAID changed its reporting by separately listing the amount of funds the agency provided as cash transfers and qualifying trust funds, as well as how these amounts affect the percentage of funds the agency has provided to local organizations. This new reporting format makes it clear what data USAID is reporting and easier to track progress from year to year.
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| U.S. Agency for International Development | To improve the agency's tracking and reporting on progress of its Local Solutions initiative, the USAID Administrator should identify additional indicators to better capture Local Solutions progress toward the initiative's goals. |
In September 2017, USAID reported that the agency had added two additional Local Solutions indicators that seek to provide a more complete picture of the steps missions are taking to support the Local Solutions initiative. The first new indicator is whether any individuals indigenous to the country or region with evaluation or sector expertise participated on the evaluation team as a team member or team leader. According to USAID, including local experts on evaluation teams demonstrates the agency's commitment to having local perspectives included in the evaluation of USAID programs, which is an important aspect to improving sustainability of these programs. In addition, including local experts can help build capacity by strengthening the knowledge and expertise of local evaluation communities. Second, the agency also plans to keep track of the number of ex-post evaluations that missions conduct. Ex-post evaluations are generally focused on program outcomes and, according to USAID, can also focus on whether services or processes were sustained beyond the funding period for the activity, as well as whether benefits to particular beneficiaries were sustained. Moreover, in response to our recommendation in a subsequent GAO report on the Local Solutions initiative (GAO-15-377), USAID had developed guidance to supplement the agency's operational policy on the program cycle, which includes monitoring and evaluation approaches to assess the effects of government-to-government assistance on the goals of the Local Solutions initiative. Finally, in October 2017, USAID determined that the principles of the Local Solutions had been institutionalized throughout the agency and closed out the reform initiative. On the basis of the actions taken by USAID, we are closing this recommendation as implemented.
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| U.S. Agency for International Development | To improve the agency's tracking and reporting on progress of its Local Solutions initiative, the USAID Administrator should provide a means to identify evaluations of programs that are implemented by partner-country local organizations. |
USAID neither explicitly agreed nor disagreed with this recommendation, but has since introduced a way to tag evaluations in its evaluations registry for projects and activities that have a component with funds provided directly through the local organization, per the Local Solutions initiative. As of the end of fiscal year 2015, the evaluation registry includes a field for missions to indicate whether the evaluation is of a program, project, or activity that includes a Local Solutions component.
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