Senate Eyes Crackdown on U.S. Aid Group’s Abuse of Taxpayer Funds

Legislation would force USAID to implement reforms to drive down costs

USAID Administrator Samantha Power (Alex Wong/Getty Images)
March 21, 2024

A bipartisan coalition of senators is proposing legislation that would stop the U.S. government’s leading foreign aid group from wasting hundreds of millions in taxpayer funds on costly items such as luxury hotels and airfares, the Washington Free Beacon has learned.

The legislation, spearheaded by Sen. Joni Ernst (R., Iowa) and set to be unveiled later Thursday, would force the U.S. Agency for International Development (USAID) to implement a series of reforms to drive down the cost of projects and stop it from spending taxpayer dollars on high price items like hotels, lobbying services, and luxury airfares, according to a copy of the measure obtained by the Free Beacon.

USAID, which doled out around $15 billion in 2022 alone, has been in the spotlight as it takes a leading role delivering humanitarian aid in the Hamas-controlled Gaza Strip, an effort that has included pressuring Israel to open up border crossings that ultimately help the Iran-backed terror group siphon goods from civilians.

Ernst’s bill—which is backed by Sens. Chris Coons (D., Del.), Pete Ricketts (R., Neb.), and Tim Kaine (D., Va.)—comes as USAID stonewalls a congressional probe into its spending habits, which have largely gone unchecked. Ernst has been pressing the agency to come clean about its global expenditures for nearly two years, as government oversight reports indicate that 43 percent of USAID’s awards achieved "on average, approximately half of award expectations."

USAID’s budget has expanded by at least 10 percent since President Joe Biden took office and it is now leading efforts to pump humanitarian aid into the Gaza Strip as Israel fights to eradicate Hamas in the wake of the Oct. 7 terror attacks. USAID’s spending in the region has long drawn congressional scrutiny due to the agency’s history of supporting groups that are affiliated with terror outfits such as Hamas.

The legislation would boost congressional oversight on USAID’s spending by requiring the agency to submit detailed annual reports on its allocations. It would also force partner organizations across the globe to increase the amount of money they put up for joint projects, eliminating overhead costs that are covered by the U.S. taxpayer.

The measure also would force USAID to accept applications written in a country’s native language.

Organizations that receive American aid dollars often spend a significant portion of the funds of items unrelated to the actual delivery of services. These costs, which can include lobbyists, hotel stays, and even first-class airfares, have swelled in recent years and are the subject of a congressional investigation into USAID’s ballooning budget.

Ernst’s bill addresses the issue shifting a portion of the cost onto grantees and ensuring they are responsible for footing a portion of the total. As of last year, just 7 federal employees were responsible for reviewing nearly 6,000 transactions to more than 300 organizations, making it more likely that frivolous items are funded, the lawmakers say.

"I have been tirelessly working to ensure that taxpayer dollars are spent discerningly and efficiently," Ernst said in a statement to the Free Beacon. "While USAID has resisted my previous oversight, I’m taking bipartisan action to clarify USAID’s policies to ensure they are localizing needs and ending abuses of taxpayer dollars, so developing countries reduce their dependence on U.S. dollars."

Other provisions in the bill would limit competition on projects to local organizations rather than large global nonprofits, resulting in what the lawmakers say are significant cost savings.

Ernst disclosed last year during her investigation into USAID that indirect costs footed by the U.S. taxpayer can include rent for a grantee’s corporate headquarters and other unrelated expenses. The cost "can easily exceed 25 percent of an organization’s total award," resulting in a significantly increased cost for the American taxpayer.