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Why does the U.S. give very little foreign aid in the form of money?

Very little actually is delivered as cash, and most funds for humanitarian and development assistance are provided not to government entities but used for technical assistance and commodities provided by U.S., international, and local organizations.

https://www.brookings.edu/policy2020/votervital/what-every-american-should-know-about-us-foreign-aid/

Is there a political reason for not using money as a form of aid? Why does the U.S. uses technical assistance and commodities provided by the U.S., international and local organizations instead of letting the local government choose how to better spend the money spent by the U.S. on their behalf?

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    I think that you'll find that non-cash, in kind, aid is very common across many if not most donor countries (and probably esp the bigger ones). There are some benefits to non-cash aid, such as when the receiving country has no functioning market for what is needed. But a donor country can also "sweeten" the deal to its voters by dangling the promise of partial recovery through jobs for its local producers of in-kind aid. Jun 14 at 23:54
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    I suspect it's because cash is too liquid to give away like this. For the same reason you'd have a much easier time getting sponsorship from companies for whatever you're doing in the form of products, not cash. The "products" for the company would act as advertisement. In the case of the US, the "products" would produce jobs. I am not sure this is the answer, however, so I am not writing it as such.
    – Allure
    Jun 15 at 0:27
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    @EkadhSingh it might. IF I could point to sources, as opposed to this coming from vague recollections of articles I have read over the years. Key words to search for a "in kind" vs cash monetary aid. Jun 15 at 1:13
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    Go right ahead. I did look for a short while, but most things I saw seemed to be academic studies and no easy to cite tables of percentages of "in kind" vs cash. Plus, I dunno how many countries are going to admit that they prefer to spend aid cash on their own industries rather than "in the best way to help". If, as Allure correctly surmises, it was just the corruption risk of sending out cash, then goods could be bought from countries other than the donor country. Jun 15 at 1:17
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    @DavidHammen and if you teach him to fish using the specific kind of equipment you happen to produce, well... win-win situation, in a way.
    – Hulk
    Jun 15 at 11:05
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Two reasons immediately come to mind:

  • Money is Fungible

If you give someone money, they can spend it on whatever they want. You may want the receiving country/organization/entity to use it for medical supplies, food, sanitation, education, etc. but once you give them money, they can just as easily use it for weapons, terrorism, luxuries (e.g., a fancy new home for the leaders), etc. Giving money can be incredibly helpful, but it makes corruption and/or use in ways you don't want (including use against the donor country) much easier than if you donate goods & services.

  • Helping Your Own Country

If you donate $1,000 to buy supplies, and somehow make sure the recipient buys the supplies you want them to buy, they may buy those supplies from another country, even from one of your enemies. On the other hand, if you donate $1,000 of supplies, you not only make sure that the $1,000 is spent the way you want it to be spent, that $1,000 actually comes back to suppliers in your own country. Which helps your own people - i.e., you help the recipient while giving money/jobs/etc. to your citizens. This is taken to an extreme with military aid - millions for fighter planes (or other equipment) that can only be spent with the donor country's military suppliers is great for the donor country. (Lobbyists for military suppliers seem to like this...)


This is not a perfect system. In particular, money spent this way may not be as cost-effective. Shipping $100,000 of supplies on military aircraft to a disaster area half-way around the world makes a great photo op. But it could easily be that spending that same $100,000 locally would buy twice as much in supplies and help many more people. But then again, give a street beggar $5 and will he buy a bottle of booze or a nutritious meal?

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    Give a beggar $5 and they will buy what they think they need. Give them stuff, and you give them what you think they need. I find the last comment to be a bit denigrating towards the homeless and your answer would be better without it.
    – Erik
    Jun 15 at 17:20
  • @Erik you have a point. But unfortunately I believe my statement has some truth to it - alcoholism is part of a cycle of poverty affecting far too many people. Plus street beggar is not necessarily homeless,though I'm sure the two groups have significant overlap. But the bottom line is I put that in as a deliberate extreme, but real world and individual, analogy. Feel free to write a better answer Jun 15 at 18:18

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