The U.S. government agency primarily tasked with distributing humanitarian aid failed to conduct proper due diligence on international organizations that received grant money, according to a new watchdog report.
The U.S. Agency for International Development (USAID) lacked organizational reviews in accordance with agency standards for more than 70 percent of the public international organizations (PIOs) its partners with, instead relying on other assessments to evaluate performance, the USAID inspector general’s office said in a report compiled last month.
The Inspector General’s analysis focused on a group of 67 partner organizations to which USAID distributed $45.9 billion worth of funding from fiscal years 2019–22. National Review has reached out to the agency for comment.
The organizational reviews examine a PIO’s publicly available materials to detect information that may suggest the organization lacks the capacity to protect the resources allocated to it. USAID is tasked with updating organizational reviews at least every five years or sooner, depending on the circumstances.
Of the 67 partner organizations, USAID did not have a review on file for eleven of them and had a lapsed review for 17 others. A substantial number of the groups, 21, lacked a review when USAID entered the partnership agreement but had one performed during the agreement period.
The World Food Programme, World Health Organization, and UNICEF were among the organizations for which USAID lacked an updated review. Over the relevant time frame, those organizations received roughly $16.9 billion of USAID funding, more than a third of which went to PIOs.
One USAID official told the inspector general that sometimes reviews were delayed in order to sync them with Multilateral Organization Performance Assessment Network (MOPAN) assessments. USAID officials also said experienced employees could determine whether other forms of due diligence worked better than the reviews.
Most of the agency’s grants to PIOs are cost-type agreements that allow USAID to conduct spot checks on beneficiaries. The report says USAID officials typically decided not to do the spot checks and failed to keep track of their results. Officials in charge of overseeing cost-type awards were not always sure about the definition of a spot check, reflecting the lack of clarity on the spot-check guidelines.
Due diligence for USAID grant recipients is particularly important because of the agency’s growing distribution of funding to PIOs, and its role in delivering humanitarian aid to Gaza and Ukraine as wars in those two areas keep going. From 2019-22, USAID increased its contributions to PIOs from $5.6 billion to $21.4 billion, a 282 percent increase.
“USAID limits its insight and ability to oversee this PIO funding, potentially leading to serious issues including diversion of funds or goods,” the report concludes.
“Failure to fully understand the organizational capacity of a PIO could create significant reputational risk, particularly in humanitarian assistance programming in Gaza, for which Congress has recently required enhanced oversight due to the potential for diversion to designated terrorist organizations.”
The inspector general gave USAID three recommendations to improve its due diligence: two for tracking organizational reviews and the recommendations included in them and another for improving spot-check guidance. Of the recommendations, two for organizational reviews are unresolved, and the third is resolved, even though the planned activities have yet to be completed.