Summary Justification

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The Inter-American Foundation (IAF) is an independent U.S. foreign assistance agency that promotes and invests in citizen-led grassroots initiatives in Latin America and the Caribbean to help communities realize opportunities and solve their own problems. This approach results in effective, community-owned development characterized by economic opportunity, resilience to violence, social inclusion and greater citizen participation in democratic processes.

The IAF requests that Congress support the agency’s fiscal year 2017 funding request because the IAF directly serves U.S. interests, provides a cost-effective approach to development assistance, delivers results, and contributes specialized capabilities and expertise that complement other U.S. foreign-assistance work.

The IAF Serves U.S. Interests

Public support for democracy is high in Latin America, yet a majority of citizens in the region are not satisfied with how democracy works in practice in their country and far too many have not yet benefited from economic growth. Despite falling rates of poverty in many countries of the region, there are 31 million more poor people in Latin America than in 1980. In public opinion polls throughout the region, citizens cite insecurity and economic problems, including unemployment, as the most pressing problems in their lives. These are challenges of governance that must be addressed at all levels of the civic space.

IAF investments serve U.S. interests by creating economic opportunities, fostering more secure communities, and improving social inclusion and citizens’ participation in democracy. Where youth have strong, lasting ties to their communities, they are less likely to emigrate. Communities that are economically vibrant and secure and have an engaged citizenry provide the foundation for stronger U.S. allies.  The agency’s judicious investments provide the U.S. government with a direct link to civil society and lessons about effective development practices.

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  • Creating economic opportunity. IAF investments catalyze economic activity and create jobs that enable the poor and excluded to benefit from economic growth and allow communities to retain their workers and leaders.
  • Fostering secure communities. IAF funding complements the work of other U.S. agencies to improve security and rule of law by enabling members of at-risk communities to access income-generating alternatives to crime and create a safe environment that is intolerant of criminal activity.
  • Strengthening democratic practices. IAF grantee partners are building a more democratic citizenry and a more inclusive civil society by exercising their civic responsibilities, respect rights and hold officials accountable.
  • Addressing root causes of migration. The IAF is working to address the root causes of migration, particularly in Central America as an implementing agency of the United States’ Strategy for Engagement in Central America. The IAF’s model of citizen-led development serves to establish social and economic anchors in high-sending communities. It has been supporting the U.S. Government’s Strategy for Engagement in Central America and looks forward to increasing its efforts there, in collaboration with the Department of State and USAID, consistent with the FY 2017 whole-of-government approach and FY 2016 Explanatory Statement language.
  • Providing a direct link to civil society. Having worked with more than 5,000 grantee partners, the IAF’s credibility and contacts among civil society groups across the region are a valuable resource for the U.S. government and other development organizations.
  • Informing investments in development. By evaluating each investment and providing opportunities for learning and exchange across the grantee partner network, the IAF applies, shares and multiplies its lessons learned.
  • Generating goodwill. In an independent survey conducted by the Center for Effective Philanthropy in 2014, seventy-one percent of IAF grantee partner respondents stated that working with the IAF had improved their opinion of the United States.

IAF Provides Cost-Effective Approach

The IAF provides the U.S. government with a smart, cost-effective approach to development assistance. It delivers aid with minimal cost to U.S. taxpayers, brings in private resources, and maximizes the impact for the intended recipients.

  • Low overhead. In FY 2015, IAF administrative costs represented only 12% of its budget when including the resources leveraged from grantee partners. The IAF constantly works to keep overhead low, including by outsourcing many administrative and technical functions. With 38 staff in Washington, DC, the agency is well below its statutory ceiling of 100.
  • Leverage. The IAF requires all of its grantee partners to invest their own resources. Giving grantees a stake in the outcome of their projects makes them more likely to succeed. Over the last five years, each dollar invested by the IAF leveraged $1.36 from grantees or others.
  • Direct delivery. 100 percent of the IAF’s grant budget goes directly to grassroots and community-based groups working with the most vulnerable to improve their circumstances.
  • Grassroots initiative. The IAF selectively funds 10-15 percent of the proposals it receives. It invests in initiatives that are designed and implemented by the poor, which means that each community takes ownership and ensures local commitment for their success and sustainability.
  • Private-sector partnerships. The IAF collaborates with the private sector in joint funding initiatives, including with members of the IAF-initiated Latin American business-sector alliance, RedEAmérica. This network matches IAF funds at a ratio of 3:1 and helps parent corporations move beyond philanthropic giving toward a more commercially integrated and sustainable approach that can positively impact core business practices.
  • Flexibility. The IAF can quickly amend its funding to address changing conditions on the ground or expand the reach of successful initiatives.
  • Networks. The IAF has worked with more than 5,000 grantee partners. This offers an extensive network for learning and exchange. Current and former grantee partners collaborate and share best practices across cultures and borders. This dramatically amplifies the impact of the IAF’s investment across the region.

The IAF Delivers Results

The IAF delivers real results in both individuals and organizations looking to build the capacity to sustain their own efforts.

  • Results. More than 300,000 people and 280 community-based organizations benefited directly from projects in 20 countries in FY 2015. See more results in FY15 Accomplishments.
  • Accountability and transparency. The IAF holds all grantee partners accountable for the responsible use of U.S. public funds and successful implementation of their projects through annual financial audits and required reporting at six-month intervals on their progress in achieving targeted results. The IAF’s evaluation methodology includes independently verifying the data reported. See Appendix III for more on the IAF’s evaluations.
  • Strengthened local capacity to sustain development efforts. IAF pushes the citizen-led efforts it supports to become financially sustainable, not dependent on IAF or other U.S. assistance. In an independent survey conducted in 2014 by the Center for Effective Philanthropy, the IAF ranked highest against all other participating private foundations regarding its impact on strengthening the capabilities of grantee partners. Nearly half (47%) of active IAF projects in 2015 included the creation of a sustainability or business plan for grantee partners without one in place.

The IAF Complements Broader U.S. Government Development Efforts

The IAF’s direct connection to civil society, broad networks, nuanced knowledge of local contexts and specialized expertise directly complement other U.S. development efforts. In the last five years, the U.S. Department of State has partnered with the IAF to tap its network of civil society groups via two Inter-Agency Agreements (IAAs), the Inter-American Social Protect Network (IASPN) and the Americas Partnership for Social Inclusion and Equality (APSIE), as part of executing U.S. commitments at the Summits of the Americas.

  • Expertise in citizen-led development. The IAF is expert in identifying and supporting promising ideas introduced by grassroots groups working to help their communities thrive. Investing in their knowledge, skills, ingenuity and organizational strength improves their ability to sustain their own efforts beyond IAF support.
  • Direct access to civil society. The IAF’s relationship with partner organizations is direct, fluid and dynamic throughout the period of the grant. This approach has earned the IAF legitimacy and trust from civil society groups and increased the chances of a grant-recipient’s success.
  • Flexibility. IAF funding can be rapidly adapted to address changing contexts on the ground or to realize emerging opportunities.
  • U.S. presence. The IAF does not operate through foreign governments. Due to its direct funding to communities, it is often able to continue working in countries where diplomatic relations with the United States are strained. Twenty percent (57) of our active grants (as of Sept 30th, 2015) are in the eight countries (Argentina, Belize, Bolivia, Chile, Costa Rica, Ecuador, Panama and Uruguay) where there is currently no USAID mission.
  • Preparation of communities to scale up. The IAF’s investments help disadvantaged groups take part in economic opportunities created by larger development investments in infrastructure or other programs. Successful IAF grantee partners are often better prepared to participate subsequently in programs of their local or national government or private philanthropic initiatives and to partner with other U.S. government agencies.

Focus on Marginalized Groups

The IAF puts a priority on the inclusion of the region’s most disadvantaged citizens -- including women, African descendants, indigenous peoples, children and young people, and persons with disabilities -- in the economic advances and civic life of their country. IAF grants active in FY 2015 have directly benefitted more than 300,000 people in poor and marginalized communities in 20 countries throughout Latin America and the Caribbean. (See more results in FY15 Accomplishments).

The President's Request

The President is requesting an appropriation of $22.2 million for the IAF in FY 2017. This amount is $0.3 million below the level enacted in FY 2016. In addition to its work across the region, the IAF will continue to coordinate with the Department of State, the U.S. Agency for International Development (USAID) and others to implement the U.S. Strategy for Engagement in Central America. It has the ability to help implement this strategy by partnering with disadvantaged communities to build their own capacity to address challenges.

The IAF is also developing new donor partnerships to replace diminishing re-flows from the Social Progress Trust Fund (SPTF), which has been an important source of funds for the agency for more than 40 years. The $3.5 million available from the SPTF in FY 2017 is $5 million less than the historical average of $8.7 million per year. Adding funds expected to be recovered or carried over from prior years, from inter-agency reimbursements and from anticipated gifts, would bring the IAF’s total operating budget to $27.95 million. (See IAF Operating Expenses.) The agency will continue its effort to minimize overhead expenses, maximize the programmatic impact of its resources and further refine the IAF’s evidence-based evaluation system.

An appropriation of $22.2 million would enable the IAF to continue to promote economic opportunity, strengthen democracy and foster social inclusion, in line with U.S. foreign policy and national security priorities in Latin America and the Caribbean. Citizen-led development that helps build more secure and resilient communities in our Hemisphere is fundamentally in the interest of the United States.