Did You Know?
The Role and Impact of International Development Companies
in Meeting US Foreign Aid Goals
The mission of the Coalition of International Development Companies is to inform and educate audiences on the vital role our companies play in achieving accountable, transparent and sustainable development results in support of US national security, economic, and humanitarian goals overseas.
What do we stand for? We stand for maximizing competition in the execution of work performed using US tax dollars. Building competitive free markets and robust, multi-stakeholder civil societies. Exporting American values. Bringing small and medium enterprises into the marketplace. Improving peoples’ lives.
The seemingly simple term “development” in truth lumps together programs with myriad complex goals and processes affecting billions of people most in need around the world. Smart development policy should leverage the best that America has to offer, regardless of whether it comes from nonprofits, large companies, small companies, universities, think tanks, or the public sector. It’s not about who, it’s about how well. The fact is, the best resides in all of these places – often times working in tandem.
To be certain, there are times when grants and cooperative agreements make good sense: when, for example, a public purpose strongly coincides with a grantee’s existing program. There are many other instances, however, when the US government needs specific activities implemented in a specific manner, and in those cases contracts may be most effective because they provide greater government control over objectives and results.
In 2007, the HELP Commission, a bipartisan collaboration of the best foreign assistance minds appointed by Congress and the president, reported that “using a grant when a contract would be more appropriate weakens program effectiveness and responsibility.” The commission also found that “USAID officers reported they had few avenues to use when faced with poor performance by a grantee.” A contract, on the other hand, is the easiest aid delivery mechanism to modify or terminate when it is in the government’s and taxpayers’ interest to do so.
We believe the debate over who should implement more of our foreign aid programs – nonprofits or development companies – misses the point. The better question is what type of implementation instrument, what type of funding vehicle, will be most effective for a given program.
We believe decisions about America’s development strategy should be based on facts, not anecdotes, assumptions or myths. We believe policymakers and other influencers will benefit from an evidence-based dialogue about the dedication, expertise, cost-effectiveness and impact of US development firms.
We believe there’s still too much that important audiences do not know:
Did You Know…that funding through international development companies offers superior accountability and transparency, because the companies implement scopes of work clearly specified by the government, and their contracts with the government are, by law, subject to rigorous scrutiny and audits?
Did You Know… that for every US employee on a given project, American development companies hire on average nine local staff – and that many of these foreign nationals who work on US projects go on to become community, business and government leaders?
Did You Know…that international development companies are subject to the government’s direct instruction and control?
Did You Know…that in FY 2011, according to USAspending.gov, USAID disbursed 69 percent ($9.3 billion) in aid using grants and cooperative agreements, and only 31 percent using contracts? While all but a very small portion of the grants and cooperative agreement funds went to non-profit organizations, contract funding went to both non-profits and tax-paying development firms.
Did You Know…that contracts allow for both for-profit firms and non-profit organizations to compete head-to-head for government work? Competition lowers costs, assures greater responsiveness, and offers better value to the government and taxpayers.
Did You Know…that in 2005 USAID analyzed the relative total costs of grants, cooperative agreements, and contracts, and reported to Congress that there was no appreciable cost difference?
Did You Know…that unlike other government agencies, USAID for decades has not permitted most development company staff billable on contracts to receive higher salaries than US government employees, but non-profits are not subject to the same restrictions?
Did You Know… that comparisons between overhead rates of grantees and contractors are normally not “apples to apples” – because non-profit organizations are allowed to charge the government directly for many costs (marketing, for example) that development companies must include in general overhead allowances, or are not allowed to recoup at all under a contract?