Castro, Kim Introduce New Legislation to Spur Innovative Approaches to Foreign Aid Delivery at USAID
The bipartisan Fostering Innovation in Global Development Act would direct USAID to prioritize evidence-driven foreign aid models that leverage the power of the private sector
WASHINGTON – Today, Congressman Joaquin Castro (TX-20) and Congresswoman Young Kim (CA-40) are introducing the Fostering Innovation in Global Development Act (FIGDA), bipartisan legislation that would improve the U.S. approach to foreign aid by authorizing $45 million annually for USAID to identify and scale effective methods of foreign aid delivery, including those originating in the private sector.
“In recent years, USAID’s investments in innovation have delivered outstanding returns for American taxpayers and the global communities with the most need. The Fostering Innovation in Global Development Act (FIGDA) will give USAID the tools to identify and scale effective forms of aid while putting the United States back in our rightful place as a global development leader. FIGDA puts innovation at the center of USAID’s mission and leverages the private and public sectors to drive local solutions to the world’s most pressing problems. I’m pleased to work with Rep. Kim on the introduction of this bill, which demonstrates the bipartisan commitment to building a resilient and adaptable ecosystem for U.S. foreign aid,” said Congressman Joaquin Castro.
“Foreign assistance has proven to save lives and advance economic and security priorities of the United States and friends abroad. We must ensure that we continue to ensure cost effectiveness, include innovative technologies, and update global development to keep in step with the 21st century. The Fostering Innovation and Global Development Act will improve USAID’s operations and bring in more partners for the U.S. to work with,” said Congresswoman Young Kim. “I’m proud to work on this bill with Rep. Castro and will continue working across the aisle to ensure the U.S. maintains its leadership on the world stage.”
“Global development innovators keep running into a ‘Valley of Death’ because millions of dollars from the private sector, philanthropy, and government flows in every year to support early-stage ideas and innovations, but not enough goes to scale up what works. FIGDA changes that,” said Walter Kerr, Executive Director of UnlockAid, a coalition that works to increase the effectiveness of U.S. foreign aid and unlock resources to achieve the Sustainable Development Goals.
“Since the Global Innovation Fund was established in 2014, we have demonstrated how investing in innovation in international development pays. Investing in innovation drives greater social impact than traditional aid programming, crowds in vital private sector capital, delivers excellent value for money and measurably improves the lives of the world’s poorest people,” said Alix Peterson Zwane, CEO of the Global Innovation Fund, which invests in the development, testing, and scaling of products, services, and policy reforms that improve the lives of the world’s poorest people. “FIGDA recognizes the power of innovation. It empowers USAID to identify highly effective approaches to international development and deploy those approaches in new countries and regions to maximize effectiveness. The Global Innovation Fund welcomes FIGDA’s re-introduction to the House, and we are grateful for the bi-partisan support the bill has received.”
“FIGDA will go a long way in recognizing the role US development agencies should be playing in advancing the pipeline of science, technology, and innovative solutions to address our most intractable global challenges,” said Joshua Schoop, Director for the Federation of American Scientists’ Day One Project, which works to equip government entities with implementation-ready policy proposals from the science, technology, and innovation community.
“There is no shortage of development needs today, and innovation is vital to modernizing foreign assistance to more effectively and catalytically address these needs,” said Tessie San Martin, co-chair of the Modernizing Foreign Assistance Network (MFAN) and CEO of FHI360, a nonprofit that works to advance integrated, locally driven solutions to improve lives across the world. “MFAN is proud to support FIGDA because it will enhance USAID’s development toolkit and spur more flexible, results-oriented programming. Adoption of this bill would be an important step forward for aid effectiveness.”
“From 2017 to 2021 we were grateful to leverage a grant from USAID's Development Innovation Ventures to adapt and scale our market-based model of delivering high-impact agricultural services to smallholder farmers living below the poverty line in Malawi and Uganda. By the last year of the partnership, DIV’s investment helped us scale to annually support more than 60,000 farmers to sustainably feed their families. We provided input financing and delivery, as well as training on best practices, that helped raise these farmers’ bottom-line profits - after fully paying back loans - by 20%. Given a world of increasing shocks and stresses, we believe FIGDA will play an important role in authorizing the continued work of DIV, and supporting the scaling of innovation and “proven solutions” to serve the world’s most needy populations,” said Matthew Forti, Managing Director of One Acre Fund, an agricultural service provider that supports Africa's smallholder farmers.
“Investing in innovation has an outsized impact in global development. That’s why the Fostering Innovating in Global Development Act is so important. It’s a visionary piece of legislation which will help USAID spark innovative and effective solutions to the world’s most pressing development challenges. It will help USAID invest in new ways to develop foreign aid – and ensure there are well conceived solutions for the populations most in need,” said Tatu Gatere, Co-founder and CEO of Buildher, a social enterprise based in Kenya that works to prepare disadvantaged young women for jobs in the construction trades.
Specifically, FIGDA would do the following:
- Kickstart a Global Innovation Strategy: FIGDA would require USAID to create a ‘Global Innovation Strategy’ to integrate innovation across USAID programs. This includes a specific innovation plan of action for USAID Country and Regional Development Strategies and other planning documents.
- Establish a Chief Innovation Officer and an Innovation Fellowship to drive the innovation agenda within USAID. Innovation fellows would initially serve in the office of the Chief Innovation Office and then be detailed to other parts of USAID operating units, where they would be tasked with helping different parts of USAID implement innovative foreign assistance programs. USAID would be allowed to use program funds for this authority. FIGDA would also require each bureau at USAID to appoint a senior advisor responsible for innovation to serve as a connection between the Bureau and the Chief Innovation Officer.
- Codify the Development Innovation Ventures program: FIGDA explicitly authorizes the well-regarded Development Innovation Ventures (DIV) program at USAID and authorizes appropriations for the program to allow Congress to support DIV and its work more directly. FIGDA authorizes $45 million a year for five years for innovation programs, including DIV, and allows authorized funding to be available for five years. This is an increase from current levels of $40 million a year and the five-year funding authority allows USAID to make long-term planning decisions.
- Establish a Proven Solutions Program: FIGDA establishes a ‘Proven Solutions’ program that would require USAID to identify ‘proven solutions’ that have been rigorously demonstrated to have the potential to substantially improve development outcomes. This can include both innovations developed through USAID programs like DIV and those developed outside USAID, either by other US government agencies, partner government agencies, multilateral organizations, or the broader development community. FIGDA then directs USAID to deploy these ‘proven solutions’ in new countries or geographies, as appropriate. USAID would be authorized to use funds appropriated under the Foreign Assistance Act of 1961 and the BUILD Act of 2018 to scale up ‘proven solutions.’
- Authorize Participation in Global Innovation Fund: The Global Innovation Fund (GIF) was initially established through a partnership between the U.S. government and partner governments to support the use of innovative foreign assistance mechanisms. The United States retains a board seat at the GIF but has not made contributions in years. FIGDA would authorize the U.S. government to restart contributions to the Fund and authorize USAID to use funds appropriated under the Foreign Assistance Act of 1961 and the BUILD Act of 2018 to provide contributions to the GIF.
- Authorize Collaboration with U.S. International Development Finance Corporation (DFC): FIGDA authorizes USAID to enter into agreements with DFC to carry out joint innovation projects, including through the use of innovation authorities and blended finance and fixed payment rates for desired outcomes.
- Establish Explicit Innovation Authorities: FIGDA explicitly authorizes USAID to provide flexible, results- and milestones-based funding to support expanded use of innovation. This includes:
- Grants (including fixed amount awards)
- Contracts (including firm-fixed price contracts)
- Advanced market commitments
- Development impact bonds
- Performance-based contracts
- Conditional cash transfers
- Prize awards, including Innovation Incentive Awards and other evidence-driven, tiered awards.
- NOTE: FIGDA removes the caps on the number and size of Innovation Incentive Awards. The law has historically limited these awards to 15 a year with each being a maximum of $100,000. The FY23 appropriations bill removed the cap of 15 awards and FIGDA would remove the $100,000 limit.
- Expand Fixed Amount Subawards: Current government-wide law restricts fixed-amount subawards from exceeding $250,000. FIGDA supports increased use of fixed-amount awards that can improve outcomes and reduce costs by allowing USAID to issue fixed-amount subawards of up to $1,000,000.
- Establish a Recovery of Funds Authority: The bill allows the USAID administrator to structure assistance to require the recipient to return a proportion of funds provided in accordance with agreed-upon requirements. This authority would give USAID the ability to be more creative in how it provides aid. This would allow the two agencies to lend their unique capabilities to development challenges.
The full bill text is available here.
Next Article Previous Article