The Foreign Service Journal, June 2006

as a result of this aggressive communications campaign. In Aceh, Indonesia, where a large U.S. government tsunami reconstruction program is under way, more than 50 percent of the people surveyed could identify U.S. projects. This much higher visibility and public identifi- cation of American aid programs make a powerful state- ment about our intentions in the world that can win the hearts and minds of people at the community level. The Global Development Alliance Over the years, USAID cultivated a comfortable group of implementing partner organizations — univer- sities, nongovernmental organizations and contractors — which did not change much from year to year. The agency maintained this continuity for a good reason: this relatively fixed set of partners has reduced the risk of pro- gram failure and improved accountability and program quality. But some of these organizational relationships fostered dependency and a sense of entitlement, which translated into an increasing effort by some partner orga- nizations and advocacy groups to protect themselves and their sectors against the risk of USAID leaders changing priorities, regional emphasis and programming focus. They did this by encouraging congressional earmarks and directives, which have tied the agency into a budgetary straitjacket with little flexibility. To minimize this tendency, we have now expanded the circle of partner organizations to include more groups that do not principally depend on the federal appropria- tion process for their survival. Through an initiative called the Global Development Alliance, the agency has invested more than $1.1 billion in more than 300 alliances with private foundations, faith-based groups, nongovernmental organizations, corporations and univer- sities, garnering $3.7 billion in private foreign aid. The Kennedy School of Government at Harvard Uni- versity recently conducted a case study on USAID alliance-building and has chosen the GDA for its Lewis and Clark Award for Innovations in Government. The GDA takes advantage of the massive increase in private funding of foreign assistance programs over the past four decades. In 1970 only 30 percent of aid flows to the developing world from the U.S. were private con- tributions, while 70 percent were official development assistance, principally from USAID. By 2004 nearly 85 percent of the cash flows came from private donors, while just 15 percent was public. This is not so much because of cuts in U.S. government funding as a massive increase in private funding, a desirable trend in that pri- vate funding brings with it commitment and support from American civil society for foreign assistance. One of the most interesting components of this pri- vate foreign aid has been remittances from ethnic dias- poras in the United States. While remittances account for a substantial percentage of the gross national product in many developing countries, until recently, research on international development did not examine their full impact. For example, much of the private funding for micro-lending in Mexico comes from Mexican-American remittances from California. Recognizing this trend, we designed an innovative approach to multiply the power of remittances through the technical and management disciplines of the agency. Working with members of the Haitian-American com- munity who agreed to contribute a small percentage of all their remittances passing through a bank in Port-au- Prince, USAID matched their contributions through a Global Development Alliance grant and built public schools using the combined funds. We opened the first of these Haitian schools in 2003. Changing the Way USAID Does Business USAID’s business systems, country strategy processes and internal structures have all been overhauled to pre- pare to implement the new strategies and programs. In the summer of 2001 we undertook a major reorganiza- tion, which later made possible the agency’s massive efforts in Iraq and Afghanistan. A new financial manage- ment system has been installed, the first unified system in 25 years. This has resulted in clean, unqualified audits for two years in a row, the first time this has happened in the agency’s history. All nine management vulnerabilities identified by the Inspector General in 2000 have now been eliminated. A new automated procurement system, designed also for use by the State Department, is under development. And a new unified management informa- tion system to better track USAID spending and pro- gramming will replace 129 informal ad hoc systems that individual operating units have created over the years to help managers with their budgets and programming. We undertook these internal reforms just as the agency was designing and implementing two of the largest programs in its history in Afghanistan and Iraq, together totaling more than $9 billion over four years. F O C U S 22 F O R E I G N S E R V I C E J O U R N A L / J U N E 2 0 0 6