Originally published in Asterisk Magazine, April 1, 2025.
Clara: Todd Moss and Katie Auth are from the Energy for Growth Hub. I wanted to talk to them because, as most of you reading this know, there’s been an enormous amount of chaos in the international aid sector recently. In addition to all the destruction, a plan was leaked from some people in the administration — I’m not sure we actually know who — for reorganizing USAID. When I first saw it, I thought, wow, this is surprisingly good, or at least surprisingly non-nihilistic. And then I saw Todd’s Substack post saying that it looked very similar to a reorganization he proposed back in 2011, when he was pitching the organization that would become the Development Finance Corporation (DFC). Why don’t we start there?
Todd: I should caveat up front that I had nothing to do with the leaked plan. There’s an ecosystem of people who think about reforming US assistance programs and making them more efficient. It’s been going on for many years. A lot of us know each other, and many of the issues today are what they were even 30 years ago. I don’t want it to seem like I’m trying to take credit. We also don’t know that this plan will even be the administration’s plan. It’s just the most concrete example we’ve seen that there are serious people in the administration thinking about how not just to tear down the aid architecture, which is what we’ve seen over the last several weeks, but how to rebuild and maintain those capabilities in a more effective manner.
Clara: Those are all important caveats. And of course there are big gaps between what has been proposed and what is actually happening. We’ll get into that.
Todd: Good. In my mind there are three big, longstanding issues. First, the laundry list of goals and objectives of foreign assistance continues to grow. We have incredibly unrealistic hopes for what US spending can achieve in different places around the world. We want aid to accomplish everything from economic growth to promoting human rights, fostering democracy, ending famine — a very long list of things, some business-related, national security-related, humanitarian. It makes for a very confusing set of activities.
Second, we have a lot of agencies. There are more than 20 federal agencies that have some kind of foreign assistance program, so the US approach is very fragmented.
Lastly, we don’t have a rational system for making all those disparate parts work well together. When you take a laundry list of goals, a lot of people with different aims, and no system for working it out, it shouldn’t be a surprise that it’s very confused and often doesn’t lead to the outcomes we would hope.
Clara: Do you walk me through how the new proposal would address this?
Katie: I can walk you through that. There are three big things and a bunch of other details, which I’m happy to discuss.
First, it basically retains the outline of a USAID-like agency, renames it the Agency for International Humanitarian Assistance, and moves it under the State Department.
It would limit the purview of that new agency to humanitarian assistance — food assistance and a lot of the global health work that USAID did previously, for example.
The second big thing is that it moves the other trade and investment-focused agencies, specifically the US Trade and Development Agency (USTDA) and the Millennium Challenge Corporation (MCC), under the DFC umbrella. There are a lot of people who would love to see a more streamlined approach to these various agencies working on related tasks, and there are good arguments to put all the folks working on investment and trade-related issues in the same home. The plan does say that USTDA and MCC would retain some level of independence, maintaining their mandates and capabilities. That’s something to think about moving forward — how would that actually work if they were nestled inside DFC?
There’s one final component of the overall plan I wanted to highlight: it proposes using a compact model, which is what MCC has used since its founding, to govern all US assistance. Instead of having USAID programs that would go on for years and years, they would be structured around time-bound agreements between the US and another country that would say, “We as the US commit to do this over five or ten years. The other country commits to doing its own reforms and investments.” That’s a push to create more mutual accountability and focus within aid programs and structures.
Read the full article here.