Rebuild USAID through a Migration Lens: Exploring Effective Foreign Aid Strategies

By: Henry Deng

Edited By: Stephen Shiwei Wang

Introduction and Background

The influx of migrants from the Southern Border has always been topical in American politics. As of 2024, five of the Latin American countries, including Mexico, Cuba, Honduras, Haiti, and El Salvador, were among the top 10 countries of origin for migrants encountered at the southern border, with more than 1.4 million border crossings reported.1 As unauthorized crossings reached an all-time high in December 2023, there were an estimated 11.7 million undocumented immigrants currently in the U.S.2, 3 For that reason, past presidential administrations have spent considerable amounts of money each year solely on immigration enforcement, from $400 million in 1994 to over $7.3 billion in 2024, and now to $170 billion over the next four years from the passage of the One Big Beautiful Bill Act.4, 5 In aggregation, these funding increases outpaced U.S. spending on humanitarian protection, which only $427.3 million was spent in FY2023 specifically on foreign aid programs in Latin American countries. 6, 7 

The immigration phenomenon we see today is rooted in American intervention since the 19th century. When President James Monroe expanded U.S. foreign influence in Latin America in 1823, it initiated a chain of cross-national interests linked to armed conflicts across Central America — most notably the Banana Wars, in which the U.S. militarily intervened and occupied countries such as Honduras for political and private interests, allowing corporations like the United Fruit Company to assert commercial and even political dominance over local regimes.8 These patterns persisted well into the Cold War: Nicaragua faced the emergence of the U.S.-supported Contra militia, whose attacks against the incumbent Sandinista government produced a series of human rights violations, while in El Salvador, the US-backed government engaged in a 12-year civil war that led many Salvadorians to flee to the United States, some of whom later formed MS-13, a criminal gang that continues to endanger Central Americans and Americans to this day.9 Compounding this instability, factors behind international migrations also involve finding better economic opportunities: poverty rates in Latin American and Caribbean countries currently sit at 26.8 percent, with over 50 percent of the population in Honduras and Guatemala living on less than $6.85 per day, and more than 30 percent in Mexico, Nicaragua, and El Salvador who live on between $6.85 and $14 — all within a region posting just 1.9 percent economic growth in 2024, the lowest among all regions worldwide.10, 11, 12, 13

This is why current immigration policies do not address the “problem” they intended to solve in the long term. Despite prior administrations’ efforts, including two million deportations during the Bush administration and three million deportations alongside enforcement measures like E-Verify under the Obama administration, unauthorized immigration continued to rise going into the 2010s.14, 15 Even though the recent Trump administration’s stricter enforcement led to a drop in unauthorized border crossings, researchers proves that there will still be millions in the undocumented population even after the drastic increase in immigration enforcement, because compared with their homeland’s insecurity, the U.S. remains a comparatively safer and more economically desirable destination, even if that means risking their lives to get here.16, 17 Enforcement may fortify the border, but it cannot create the safety and sustainability that make staying home a viable choice. 

A Review of USAID: What were some Missed Opportunities?

Despite foreign aid arguably being the most viable pathway to progress for people in Latin America, the hard truth is that the U.S. Agency for International Development (USAID) is now defunct, and its problems were visible long before its dismantling. For that reason, U.S. soft power has been vulnerable and less effective, due to three compounding failures: accountability, localization, and bureaucracy.

Regarding accountability, the main problem is internal. A 2024 GAO report found that, since USAID launched the 5-year Centroamérica Local initiative in 2021 to support local organizations in El Salvador, Guatemala, and Honduras, it had never received adequate resources for risk management or mandated staff training. In 2026, a GAO testimony noted that USAID did not mandate fraud awareness training for foreign assistance programs and was behind in screening, vetting, and monitoring international partner organizations and subaward recipients.18, 19 In the meantime, questions about how much foreign aid spending actually reaches intended beneficiaries have persisted for decades, which a 2022 study at the University of Washington found that in health aid, 15 to 30 percent of the spending went to program operational expenses, and sometimes it can take up more than 50 percent, meaning 30 to 60 percent of spending goes toward funding partner organizations rather than actual beneficiaries.20 The public also does not have access to the specific distribution of spending, nor is project progress publicly available, meaning there is no reliable way to know whether programs like Centroamérica Local, designed to reduce migration pressures, are actually reaching the communities most likely to flee.21

For localization, the main disconnect lies in USAID’s contracting structure. A study highlighted the “Goldilocks problem” for USAID: most of its contracts are too large for local organizations to manage, while large US-based organizations with the necessary resources are often included in partnerships.22 A survey supported this finding, showing that 73 percent of local organizations or small firms are likely to be subcontracted or underpaid compared to what was promised, leaving many in financial trouble.23 This matters because local organizations are both more cost-effective and better positioned to deliver results, as research has found that they deliver support 17 percent more cost-effectively than large organizations.24 In addition, a USAID example shows that with embedding community inputs, the “Alliance for Prosperity” initiative has led to substantial decreases in homicide rates in Guatemala, El Salvador, and Honduras, and a drop of 66 percent in high-risk neighborhoods in El Salvador from 2015 to 2017.25 

The bureaucratic nature, at the same time, also led USAID to structurally consume the resources it is meant to deliver. Congress and lawmakers have long raised concerns that USAID can pay up to a quarter of project costs in overhead alone, with suppliers routinely padding funding proposals with unnecessary administrative costs.26 An OIG report in 2024 found that an increased pace of obligations to awardees made oversight more difficult, leading to staff being unaware of their roles and requirements, and that incomplete documentation limited the agency’s ability to conduct both internal and external performance evaluations.27 A GAO audit further documented that USAID lacked an agency-specific definition of “skill gap” and had not deployed its own tools to track workforce shortages, meaning it could not accurately track its progress. USAID has increasingly replaced transient contractor staff with direct-hire officers overseas, a pattern GAO has flagged since at least 2003.28 This creates a self-reinforcing cycle: understaffing drives contractor dependence, which drives overhead higher, leaving less funding for the community-level programs that especially give people a reason to stay.

These three failures are not isolated cases but compounding design flaws that collectively prevent USAID from translating budget into impact. Rebuilding an effective foreign aid strategy, therefore, requires not just renewed programs but structural reforms to the systems that deliver them.

Policy Recommendations: Move On With Considering Local Issues

To address the challenges that impair USAID’s ability to make an impact with its aid, the U.S. should fully fund the USAID mission, address any shortcomings in the supply of labor and resources to meet the needs of more extensive foreign missions, and consider the following framework. 

  • Broad USAID Reform and Upgrades

As GAO and OIG conduct investigations and audits within government agencies, and USAID publishes regional spending distribution and progress reports annually, the transparency USAID offers should extend more deeply into each project. That includes a public-facing project tracker covering all non-confidential projects, and an annual project-based spending report collage showing the specific financial distribution by purpose. Before any programmatic relaunch, a full cost assessment should be conducted to identify the share of spending that went to operational costs and what can be reduced, so key decision-makers can leverage this information to make informed fiscal changes that both cut costs while ensuring program efficiency, such as the 7 percent cap on indirect overhead costs implemented by the European Union and some UN agencies.29 In the meantime, given the foreign development workloads, the USAID workforce and technological infrastructure should be modernized through the full deployment of existing tools, the elimination of unnecessary procedural layers while keeping the screening and vetting process intact, and mandatory comprehensive staff training, including risk management, especially for local staff. 

  • Tiered with Phased Localization Implementation

In evaluating the impact of China’s “One Belt One Road” initiative, scholars noted that a project’s effectiveness depends on strategic planning and implementation, as well as the incorporation of “local contexts.”30 For its systemic design, however, USAID prefers partnering with large organizations because they create fewer transactions. A study shows that distributing $1 billion in aid requires only around 1,500 transactions when partnering with large organizations, whereas more than 5,000 would be needed when also working with local organizations.31 With USAID fully funded and equipped, the agency can create a separate, pilot, smaller-contract track designed to build local organizational capacity that runs alongside standard contracts. Local organizations would join through a phased partnership model, beginning with co-design and monitoring roles, then gradually assuming implementation responsibilities as they demonstrate capacity. Each local partner would undergo a comprehensive vetting process that reviews organizational health, ability to secure local resources, and past performance in distributing aid. Under this model, staff training requirements would apply specifically to locally hired staff during onboarding. This way, it addresses the “Goldilocks’ problem” affecting efficiency earlier by allowing USAID to move large volumes of funding through established channels while building genuine local capacity in parallel. 

  • Differentiated Accountability Mechanisms for Governments and Local Organizations

The trustworthiness and effectiveness of the foreign counterpart, and their evaluation, are always important. But the same level of accountability evaluation cannot be transferred directly to local organizations, and sometimes, working with local organizations cannot be done without the involvement of local governments, making the setting of conditions for aid necessary. Collaborating governments should therefore remain subject to conditional disbursements tied to measurable anti-corruption and transparency benchmarks. Local organizations should operate under a separate, more tailored framework that reflects their distinct capacities and constraints. This could include a tiered incentive structure in which smaller organizations gain access to performance-based micro-grants after meeting previously set goals, and vetted organizations with a record of effectiveness can receive streamlined access to future USAID solicitations. Stronger local groups will be eligible for co-investment matching when they demonstrate the ability to mobilize independent local resources. Through a differentiated accountability model, accountability is preserved without forcing smaller local actors to adhere to standards designed primarily for governments or large international institutions.

  • Country-Specific Strategic Planning with Local Civil Society

Back to the migration lens: the central issue is that people flee their homes due to a lack of security and economic opportunity, making it crucial for foreign aid missions to focus on building resilient living environments, thereby creating distinct critical needs across countries that foreign aid shall address. Through China’s “One Belt One Road” initiative, the programs addressed local gaps in Guatemala’s agriculture, Costa Rica’s roads, and Ecuador’s energy, but the problem is that with the mostly infrastructure-focused support, it still gives mostly the government or large organizations the power to influence the projects rather than direct needs from locals.32, 33 This is where USAID can offer a different model. Aid strategy should be tailored to each country’s core vulnerabilities, and developed through genuine partnership with local civil society groups and NGOs. To make that model sustainable, local partner selection should be governed by a comprehensive screening and vetting process that evaluates organizational health, local resource mobilization capacity, and the effectiveness of aid distribution, while ensuring greater transparency for major national-level strategic plans.

Conclusion

The simplest answer is to fully fund foreign aid, but massive changes in how it is delivered are also desperately needed. On foreign aid, it is no longer just a demonstration of “soft power” but a moment for the U.S. to consider the extent to which American taxpayers’ money can ultimately return to support both Americans and foreign assistance targets. If the U.S. were ever to re-operationalize USAID, it must consider the effectiveness of foreign aid and monitor how much it goes toward local development and long-term growth. In essence, no one would want to leave their homeland for a country that speaks a language they don’t understand. Using foreign aid as a strategic tool to promote labor stability and welfare will reduce dependence on aid and lower the number of people fleeing their homes in search of more certain futures.

Works Cited

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Author Bio

Henry Deng is a second-year MPA student at Cornell University’s Jeb. E. Brooks School of Public Policy, with a concentration in Government, Politics, and Policy Studies. Prior to joining Cornell, Henry earned his bachelor’s degree in criminal justice from George Washington University while working in communications and legislative affairs in Congress, in op-ed publications, on investigations at the D.C. Office of Police Complaints, and on local political campaigns.

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