The tiny Inter-American Foundation is a strange beast in the jungle of other federal agencies. This small and little-known grass-roots economic development organization for Latin America and the Caribbean is like a small, private nonprofit group arrayed against its big brother, the massive U.S. Agency for International Development, or USAID.
For years the foundation-an agency governed by a board of private- and public-sector experts appointed by the President and Congress-boasted a singularly impressive record of success in poor areas of Latin America. Established as an experiment in 1969, the foundation embraced the "small is beautiful" way of thinking during an era in which foreign aid often was dumped from one bureaucrat's desk to another or spent on expensive infrastructure improvements.
The foundation's approach is to fund only those projects run by local private and community organizations. The hope is that these groups will have the necessary contacts, background, and interest to make small but long-lasting improvements. Between 1972 and 1996, the foundation approved more than 4,000 grants totaling $450 million to support 3,500 organizations.
But over the past decade, lawmakers have raised doubts about the foundation's relevance and practices. Many in Congress now see it as an outmoded relic of the 1960s that spends too much on overhead and squanders tax dollars. Others point out that its experimental methods have largely been incorporated into other USAID programs. "This is simply a case of duplication," said Daniel Fisk of the Heritage Foundation, a conservative think tank. "AID does projects that are identical in terms of getting below the macro level," he said.
Although Congress cut the foundation's budget this year to $5 million and gave President Clinton special power to independently close the organization, the Administration is still backing it.
The foundation insists that its micro, bottom-up approach is worth saving, and that AID could not fill the vacuum created by its dissolution or privatization. Adolfo Franco, foundation senior vice president and general counsel, said, "Its mission and purpose remains as relevant now as it was 30 years ago." Rep. Robert Menendez, D-N.J., a congressional supporter, said that "from my point of view, [the foundation] complements our foreign-aid program by doing the type of development work that can't be done by [the State Department] or USAID."
High-profile reports that the foundation gave money to political and insurgent groups have hurt its image, however. A group the foundation funded in Ecuador kidnapped two Americans, who were later released unharmed. Another foundation-funded group occupied a cathedral in Argentina in protest of the local government. In response, Franco points out that the foundation was funding legitimate grass-roots activities when radical factions of the organizations receiving funds took such extreme action. In both cases, funding has since been terminated.
Sen. Jesse Helms, R-N.C., leads the campaign to close the foundation, and in a recent letter urged the President to shut the foundation down. In the next week or so, Helms is expected to include language in the Technical Assistance, Trade Promotion, and Anti-Corruption Act that would abolish the foundation. Franco said that he and foundation supporters will fight Helms, with help from the Hispanic Caucus. After 30 years of struggling against poverty in Latin America, the Inter-American Foundation may very well wind up fighting its toughest battle at home.