Visionary Aid Agency Now Stumbling Toward Cliff

In its heyday, the Inter-American Foundation was a pint-sized government pioneer, a tiny federal development agency with a staff of former Peace Corps volunteers that harnessed 1960s-era idealism to the then-visionary goal of helping the poor of Latin America help themselves.

But today, the maverick aid agency is in decline, and its survival is in jeopardy. Since 1994, the IAF’s budget has been cut by a third, its staff by almost half and the number of countries it serves by a quarter.

It is wracked from within by mismanagement and dissension. It is assailed from without by critics who want it shut down.

If the agency goes under, as it almost did at the hands of congressional budget-cutters last month, so could its unusual person-to-person approach to dispensing aid. And that, in the view of some aid experts, would represent an unfortunate triumph of expediency over idealism in U.S. foreign policy.

IAF Presented ‘Face of Concern’

“The IAF presented a face of concern to small villages and small grass-roots groups in Latin America--people who would only have heard bad things about the U.S. government otherwise,” said Diane La Voy, a senior policy advisor at the Agency for International Development. “If the IAF is not able to do that anymore . . . who will?”

The IAF’s problems have mounted in recent weeks. Its budget for fiscal 2000 was almost “zeroed out” last month after organizations it funded in El Salvador kidnapped two Americans and held them for ransom. The agency scrambled to distance itself from the groups but not before drawing the ire of key conservatives on Capitol Hill.

A month earlier, the agency was investigated by the General Accounting Office, which concluded that one of its senior officers had violated government hiring policies.

The high-profile mistakes follow several years of gradual decline at the agency, whose mission and energy once set it and its Birkenstock-clad staffers apart.

Founded by Congress in 1969 with the experimental task of promoting small-scale, self-help programs in the hemisphere, the IAF was given a high degree of autonomy and a nonpartisan board.

Working from a modest office suite in Arlington, Va., it developed a reputation for taking risks that made life a little more bearable in poverty-stricken communities from Mexico to the Amazon. In countries otherwise hostile to U.S. interests, the IAF was trusted and often given free rein.

While most U.S. government aid in Latin America was doled out to corrupt anti-Communist regimes that did little to improve the conditions of the poor, the IAF eschewed Cold War ideology. Instead of funneling money to governments that might mismanage it, it took it right to the people in need.

“This had never been done before. Certainly not by the U.S. government,” said Raymond Offenheiser, a former IAF staffer and current president of OxFam America, a nongovernmental development agency.

Conservatives Mount Attack

But things began to change during the Reagan years. The conservative Heritage Foundation, although conceding the agency had done much good, accused it of favoring “collectivism” over free enterprise in ways “incompatible with the philosophy of the Reagan administration.”

The White House placed on its board a conservative chairman and two loyal State Department officials, using recess appointments that bypassed congressional approval. The board’s new, conservative majority complained that the agency was funding too many left-leaning groups and projects in Latin America.

Many top staffers resigned. Some migrated to other aid groups, taking with them the ideas and energy that once guided the IAF.

In recent years, the agency has sharply scaled back its ambitions. Its budget was whittled to $20 million this year, down from $30 million in 1994. It has eliminated grant programs in Chile, Costa Rica, Uruguay, Jamaica and much of the Caribbean. And its leaders have spent increasing amounts of time defending the agency on Capitol Hill.

“In terms of U.S. national interests in 1999, I don’t know exactly what [IAF is] accomplishing,” said Garrett Grigsby, deputy director of the Senate Foreign Relations Committee. “In the best-case scenario, it’s sort of a nice thing to do. In the worst case, we’re funding groups who are extremely questionable.”

In what its managers acknowledge is an attempt to save the agency, the IAF has abandoned the small community groups it became famous for helping. It now sends its money exclusively to groups working with local governments and business interests.

Support Withdrawn for Cooperative

In Mexico, for example, the IAF has withdrawn support from a small farmers’ cooperative in strife-ridden Chiapas that marketed its coffee by opening a successful chain of cafes in Mexico City. Today, it is teaming up with Levi Strauss & Co., J.P. Morgan & Co., Green Giant and 3M to fund training programs in areas where U.S. corporations do business.

It is too early to say whether those efforts will work. But with such programs, development experts say the IAF ceases to be unique.

“It has been a kind of downward spiral the last couple of years due to mismanagement,” said Jonathan Fox, professor of Latin American and Latino studies at UC Santa Cruz and a former consultant to the agency.

“It’s a huge setback,” Fox said. “If you think the U.S. government should be funding people-to-people social change and institution building, then the IAF is the kind of institution that needs to go back to its original mission.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Foreign Aid

Assistance Aid as a Percentage of GNP

In 1997 the United States ranked last in development assistance as a percentage of GNP among the 21 member countries of the Development Assistance Committee of the Paris-based Organization for Economic Cooperation and Development:

Denmark: 0.97%

Norway: 0.86

Netherlands: 0.81

Sweden: 0.79

Luxembourg: 0.55

France: 0.45

Switzerland: 0.34

Canada: 0.34

Finland: 0.33

Iceland: 0.31

Belgium: 0.31

Germany: 0.28

Australia: 0.28

New Zealand: 0.26

United Kingdom: 0.26

Austria: 0.26

Portugal: 0.25

Spain: 0.23

Japan: 0.22

Italy: 0.11

United States: 0.09

Foreign Aid as a Slice of U.S. Budget

Less than 1% of the $1.7-trillion U.S. budget for fiscal 1999 is for foreign aid.

* The foreign aid total includes funds for international development and humanitarian and security assistance, but not aid from the Justice, Commerce and State departments.

* Numbers have been rounded

Source: Office of Management and Budget