Amid the widespread outcry over the destruction of the U.S. Agency for International Development, many of the agency’s defenders concede that the U.S. aid system needs to be reformed. They have argued that aid needs to be localized, needs to be nimbler, needs to be better aligned with foreign-policy goals, and ultimately needs to have an expiration date.
As longtime policymakers and practitioners in the sector, we’ve heard all these arguments, and we agree. But there’s a reason these goals are hard to achieve. It’s not simply bureaucratic inertia or stubbornness on the part of the aid community. Rather, there are structural trade-offs that often make it impossible to solve one problem without introducing a new one.
The biggest obstacle to localizing aid, for example, is the compliance requirements imposed by donors who are unwilling to accept the risks that localization entails. Likewise, making aid nimbler runs up against a host of other government-imposed constraints, from congressional earmarks to the need for approvals from the Office of Management and Budget.
Similarly, making aid more responsive to U.S. diplomatic goals sounds obvious, until you realize how many diverse and sometimes clashing players exist in U.S. foreign-policy making, all with differing measures of success. Aid providers aren’t ignoring U.S. policy priorities—they’re doing their best to respond to an ever-changing multiplicity of them.
Acknowledging these trade-offs doesn’t minimize the case for reform. Rather, being clear-eyed about them is a prerequisite for anyone who hopes to eventually rebuild the U.S. foreign aid sector.
For an industry focused on supporting the developing world, overreliance on Western-based NGOs has long raised eyebrows. The current U.S. administration is not the first to lament the dominance of a Western “aid industrial complex.” Previous administrations, as well as other donors, have repeatedly sought to “localize” foreign assistance. While cost reduction has been a motivating factor for those currently in power, most others have argued that empowering local actors to assume control of their own development is the right thing to do and development strategies would be more effective if grounded in a deeper understanding of local context.
These are laudable intentions, but they will never be accomplished without reforming the burdensome regulatory and reporting requirements that exist to assuage policymakers’ limited acceptance of risk.
Private sector companies build a certain amount of loss into their financial models. UPS and FedEx, for example, anticipate a 3-5 percent rate of package loss in the United States. Yet policymakers tend to have a no-tolerance policy for foreign assistance diversion even in the most challenging environments.
To comply with U.S. law, aid organizations must submit regular financial reports and audits to track spending, quarterly performance reports to measure program results, and proof of compliance with U.S. regulations on human trafficking, gender, and the environment. In addition, they must register in federal databases and follow strict rules for procurement and subaward oversight, vet partners for terrorist links, comply with sanctions lists, and report on risks or incidents in conflict zones.
Each of these requirements has strong rationale on its own. But their overlap has created an entire industry focused on responding and complying. This means significantly higher overhead costs, and it leaves smaller, local organizations unable to apply for direct assistance from the U.S. government. Until we raise our risk tolerance and streamline requirements, localization will remain more rhetoric than reality.
In addition to derailing localization, onerous oversight and bureaucracy prevent nimbleness. U.S. Secretary of State Marco Rubio told Congress in May that foreign assistance needs to “move at the pace of relevance” and empower those on the ground to “identify chronic or critical needs … and allow us to quickly operationalize it.” Few would argue that flexibility isn’t crucial for an effective aid program. But here, too, various well-meaning bureaucratic requirements have created a byzantine system that inhibits responsiveness to dynamics on the ground.
The annual foreign assistance appropriations bill is now so heavily earmarked that only about 10 percent of it remains available for new or evolving priorities each fiscal year. Many statutory requirements served an important purpose when first instituted. However, earmarks are rarely revisited after their initial inclusion, and the sheer volume of them leads to overlapping and contradictory directives. To take just one example, an earmark for the International Fund for Ireland remains in place nearly three decades after the Good Friday Agreement was signed, despite the fact that Ireland and the United Kingdom are high-income countries.
Once Congress appropriates funding to the executive branch, additional constraints further limit flexibility. Congressional country and sectoral directives lead to an allocation process that can take months to work through. Foreign assistance is also the only type of funding that requires notifying Congress before obligation, which typically includes multiple briefings and rounds of questioning. If you follow the winding process of appropriations and allocations, of strategies and approvals, you see that the vast majority of foreign assistance ends up being obligated in the last quarter of the fiscal year—nearly a year and a half after funds were initially requested from Congress.
These processes aren’t compatible with moving at the speed of relevance. In a fast-changing world, aid that arrives too late and with too many restrictions is aid that fails. If the U.S. government really wants to make aid more nimble, it will have to accept delegating more authority and decision-making to those who are actually on the ground and in real time.
Another common refrain of aid skeptics is that U.S. foreign assistance has deviated from the goals of broader U.S. foreign policy. This criticism suggests that there is a single policy song sheet that every agency—except development agencies—is singing from. In reality, U.S. foreign policy has always pursued multiple aims—security, democracy, trade, climate, health, and beyond—because the world itself is complex. That range of objectives has been a strength in helping the United States to navigate a complex world, not a flaw.
An honest discussion of foreign assistance must recognize the multiple interests that Washington is trying to advance at any given time. One only need look at the sprawling U.S. country strategy for a key swing state such as Brazil: Until recently, Washington was trying to respect Brazil’s growing role as a global power while also seeking to shape its politics, sell it weapons, and help it combat climate change.
Indeed, foreign assistance, when deployed effectively, can serve as a Swiss Army knife to advance multiple short- and long-term interests at the same time. It can help build the legitimacy of host governments while supporting civil society and independent media to hold that same government accountable. It can offer ambassadors opportunities to strengthen their relationships with ministers in capitals while also giving them critical insight into citizen viewpoints in hard-to-reach places. Foreign assistance can support reforms to the regulatory environment to help attract private sector investments while also supporting Indigenous groups to prevent environmental degradation by those same businesses.
These approaches might seem contradictory when cherry-picked to advance an agenda, but together they reflect the complexity of policymaking in a multipolar, interconnected world. As long as U.S. foreign policy pursues multiple objectives, so will its aid programs.
Finally, a core critique is that once a country begins receiving aid, it rarely ends. Every administration has pledged to change this, from President John F. Kennedy’s call for countries to “make the transition into self-sustained growth” to the Trump administration’s emphasis on “opportunity over dependency.” Yet only a handful of countries, most notably South Korea, have successfully transitioned off assistance.
That’s because success is often in the eye of the beholder. For those focused on development outcomes, there is tension between where aid is most needed and where it promises the greatest return, especially in the face of rapidly shrinking budgets. Does success mean preventing famine in a protracted conflict even when there is no resolution in sight, or is it providing technical training in a stable, lower-middle-income country that may not be lifesaving but could bring in private sector investment? Furthermore, even when aid works, it alone is not sufficient to transform societies; domestic politics, external actors, and structural barriers all shape development trajectories. In short, knowing when to pack up and go home is rarely clear-cut.
From a national security perspective, foreign assistance is an important tool for wielding influence. Ironically, the legacy earmarks discussed above often endure precisely because they’re seen as fulfilling direct foreign-policy goals. Foreign assistance helps build relationships and engender goodwill with host governments and local communities, whether Ireland, Israel, or Egypt. This is why diplomats and military leaders are often the ones to most forcefully resist efforts to phase it out. This tension will persist—if not deepen—as the U.S. government reorganizes to implement foreign assistance from the State Department.
Foreign assistance has not always been used effectively, but tearing it down entirely denies the United States a vital tool of influence, security, and partnership. To rebuild, Washington must confront trade-offs head-on: balancing speed with accountability, localization with risk, and self-reliance with enduring relationships. This means bringing in the broader national security apparatus from the outset to build by-in and resolve these trade-offs in the most effective possible way.
The United States cannot have it all—zero risk, perfect alignment, and total control. But it can certainly build something better, for both its interests and the world’s.
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