Foreign assistance has long been one of the United States’ most potent tools for advancing its global interests. From post-World War II recovery efforts to modern-day responses to pandemics and climate change, the U.S. has used its foreign aid budget to address humanitarian crises, foster economic development, and bolster security in fragile states. Today however, the way the U.S. allocates and manages its foreign assistance is increasingly under scrutiny. As the U.S. faces rising global challenges and domestic calls for fiscal restraint, it must rethink how foreign aid is budgeted, allocated, and implemented.
In fiscal year 2023, the U.S. committed approximately $55 billion to foreign assistance—a sizable investment, but one that is spread across multiple agencies, accounts, and initiatives. This sprawling system reflects the diversity of U.S. foreign policy goals, but it also creates inefficiencies and misalignments, raising questions about whether the current budgeting process is capable of addressing the full scope of modern challenges.
U.S. foreign assistance, in its modern form, originated with the Marshall Plan, when the U.S. provided significant aid to help rebuild Europe after World War II. This marked a pivotal shift in U.S. foreign policy—one where economic aid became a cornerstone of national security. Today, U.S. aid programs span the globe, targeting everything from poverty alleviation and public health to governance and counterterrorism. Key programs include the President’s Emergency Plan for AIDS Relief (PEPFAR), which has saved millions of lives in sub-Saharan Africa, and initiatives like Feed the Future, aimed at tackling global hunger.
Yet the budgeting process for foreign assistance has grown increasingly complex. Twenty-two agencies now manage foreign assistance programs, from USAID to the Millennium Challenge Corporation to the Department of Defense. Each agency has its own budget and its own priorities, leading to overlaps and at times, fragmentation. For instance, both USAID and the Department of Defense engage in humanitarian assistance programs in conflict zones, often without clear coordination. The consequences are not just administrative inefficiency, but strategic incoherence.
One of the biggest challenges in the budgeting of U.S. foreign assistance is the proliferation of separate accounts. Historically, foreign assistance funding was allocated through a handful of large accounts, such as Economic Support Funds (ESF), which could be used flexibly to meet different needs. However, over time, the budget has become compartmentalized into dozens of distinct accounts, each with its own legislative mandates and restrictions. Today, the State Department and USAID oversee around 20 separate accounts for foreign assistance, including Development Assistance (DA), the Global Health Programs (GHP) account, and the International Disaster Assistance (IDA) account, among others.
This fragmentation makes it difficult to reallocate resources quickly in response to emerging crises or evolving global challenges. For instance, when the COVID-19 pandemic erupted in early 2020, USAID and other agencies had to navigate a labyrinth of budgetary restrictions to redirect funds toward pandemic relief efforts. In an era where global challenges are increasingly unpredictable—whether it's pandemics, refugee crises, or climate-induced disasters—greater flexibility in foreign assistance budgeting is essential.
A recent example is the introduction of the “Outcompete” initiative in the 2024 fiscal year budget, which aims to enhance the U.S. response to China’s growing influence in the developing world. This program seeks to bolster U.S. economic and development aid in regions where China’s Belt and Road Initiative (BRI) has made significant inroads. While strategically important, the creation of such initiatives sometimes exacerbates budgetary fragmentation, as new accounts are established to meet emerging policy priorities without a corresponding streamlining of older, less effective programs.
Congress plays a central role in shaping foreign assistance budgets, particularly through the appropriations process. Each year, the administration submits its foreign aid budget request, detailing proposed funding levels and justifications for every account. This proposal then moves through the House and Senate appropriations subcommittees on foreign operations, where it is subject to intense scrutiny. Lawmakers must balance competing interests: responding to pressing global crises, satisfying domestic constituencies, and advancing U.S. strategic goals.
In recent years, there has been a growing emphasis on ensuring that foreign assistance programs demonstrate clear results. Under pressure from Congress and watchdog groups, USAID and other agencies have increasingly adopted performance management systems designed to measure the impact of aid programs. The goal is to link funding levels to outcomes, ensuring that taxpayer dollars are spent effectively.
However, measuring the effectiveness of foreign assistance is notoriously difficult. Many of the challenges that foreign aid seeks to address—such as poverty, weak governance, and conflict—are deeply entrenched and not easily resolved within a single budget cycle. Moreover, success in foreign assistance is often incremental and long-term. For instance, while U.S. investments in global health have led to significant gains—such as a 40 percent decline in child mortality worldwide since 1990—progress can be slow and uneven. In some cases, agencies are forced to continue supporting programs that show limited success, simply because the political cost of terminating them is too high.
Accountability has emerged as one of the central challenges in the U.S. foreign assistance budgeting process. Congressional oversight bodies, such as the Government Accountability Office (GAO) and the Office of the Inspector General (OIG), regularly conduct audits of U.S. foreign assistance programs. These audits often reveal inefficiencies, ranging from poor coordination between agencies to delays in disbursements. The findings typically call for improvements in how funds are managed and programs are executed.
Over the past decade, USAID has introduced several reforms aimed at improving the accountability and effectiveness of its programs. For example, USAID’s “Journey to Self-Reliance” initiative, launched under the Trump administration, shifted the focus of foreign assistance toward building the capacity of partner countries to manage their own development. The initiative sought to create a more sustainable model for development aid by emphasizing partnerships with local governments and civil society organizations. However, this approach also raises difficult questions about how to measure self-reliance and whether countries are genuinely becoming less dependent on foreign aid.
Additionally, USAID has increasingly incorporated performance management tools, such as outcome-based evaluations, into its budgeting process. These tools allow the agency to track the progress of specific programs and adjust funding accordingly. However, as the emphasis on performance management grows, so too does the risk that aid programs will focus on short-term, easily measurable goals at the expense of long-term development objectives.
As the world shifts toward a multipolar order, U.S. foreign assistance must also adapt. Increasingly, U.S. aid is viewed through the lens of great power competition—particularly with China. Beijing’s BRI, which involves massive infrastructure investments across Asia, Africa, and Latin America, has sparked concerns that China is using aid as a tool to expand its geopolitical influence. In response, the U.S. has launched several initiatives aimed at countering China’s influence, such as the Blue Dot Network, which promotes infrastructure projects that adhere to high standards for transparency, sustainability, and labor practices.
The challenge for U.S. policymakers is to ensure that foreign assistance programs remain aligned with broader strategic goals, while also maintaining their core humanitarian mission. Critics of the current U.S. approach argue that in its efforts to counter China, the U.S. risks undermining the integrity of its development programs. By emphasizing competition with China, rather than the needs of recipient countries, U.S. aid could become more transactional, focusing on short-term geopolitical gains rather than long-term development outcomes.
Moreover, the U.S. must navigate an increasingly crowded field of donors. In addition to China, new actors such as India, Turkey, and the Gulf states are expanding their aid programs. This changing landscape means that the U.S. can no longer rely on its traditional leadership role in global development. Instead, it must find ways to collaborate with new donors, while ensuring that its aid programs continue to reflect its values.
As global challenges multiply and the demands on foreign assistance programs grow, the U.S. must confront the complexities of its foreign aid budgeting process. Fragmentation, inefficiency, and misalignment between strategic goals and field realities all threaten the effectiveness of U.S. foreign assistance. Moving forward, U.S. policymakers must find ways to streamline the budgeting process, enhance accountability, and ensure that foreign assistance remains a flexible tool for advancing both humanitarian and strategic objectives.
Ultimately, the budgeting of foreign assistance is not just a question of how much money the U.S. is willing to spend. It is about ensuring that these resources are used in ways that promote stability, development, and security in a volatile world. By reforming its foreign assistance budgeting process, the U.S. can better position itself to meet the challenges of the 21st century and continue to play a leading role in shaping the global order.
