How is U.S. Foreign Assistance Funded?

The authority for funding foreign assistance comes from the Foreign Assistance Act of 1961, which “promote[s] the foreign policy, security, and general welfare of the United States by assisting peoples of the world in their efforts toward economic development and internal and external security, and for other purposes.” The Foreign Assistance Act has been amended multiple times since initial passage but never fully reauthorized.

U.S. Government Funding Process - The Executive Branch

Agencies and OMB develop budget justifications for the entire U.S. government.

• The budget development process can begin more than two years in advance of enactment.
• Each year, the Office of Management and Budget (OMB) creates general guidelines for the budgeting process of each agency. The agencies will develop their budgets based on those guidelines and their needs, submitting the resulting budget request to OMB.
• OMB develops and publishes the President’s Budget Request for Congress after
  internal review.

U.S. Government Funding Process - The Legislative Branch

Congress appropriates funding through 12 appropriations bills each fiscal year.

Appropriations Authority

• Congress has the constitutional power to appropriate money for the federal government.
• Appropriations subcommittees will put together 12 appropriations bills that fund the operations and programs of the U.S. government.
• Currently, foreign assistance funding comes from three different appropriations bills: The State and Foreign Operations Bill (SFOPs), the Agriculture Appropriations Bill, and the Labor, Health and Human Services Bill.

The Congressional Budget Process

• The Congressional Appropriations Process begins after the release of the President’s Budget Request. Congress then holds hearings on topics of interest to the drafting of the appropriations bills.
• The regular appropriations process is supposed to end on September 30 of the previous fiscal year with the enactment of the 12 appropriation bills the appropriations bill; recently, however, the government has been operating on continuing resolutions and enacting final legislation in February or March of the year for which they are appropriating funds.
• Recently, the process has been significantly delayed, often with no agreement reached until February or March. The process that is supposed to take a few months instead takes more than a year.

Foreign Assistance Allocation Process

Congress and Executive Agencies work together to allocate appropriated funds.

• After enactment, the Foreign Assistance Act and the SFOPs bill require DoS/USAID to develop and submit certain plans and notifications to Congress for some programs.
• The agencies present plans and notifications to Congress.
• Upon completion, funds then undergo a procurement process – a process that identifies ways for the agencies to disburse and spend money.
• This entire process, from enactment to spending, can take up to two years.

Funding Challenges for U.S. Foreign Assistance

The growing need. U.S. foreign assistance resources have not kept pace with the growing global need.

The uncertain process. The long and complex funding processes prevent beneficiaries from obtaining the best development and humanitarian assistance available.

The threat of rescissions. The threat of rescissions for humanitarian and development funds limits or reduces the scale and scope of beneficiaries that depend on the U.S.’ help to survive.