MFAN Report Reveals 10 Significant Gaps
WASHINGTON – The White House and Congress have made it clear they want the State Department to lead the lion’s share of America’s foreign aid in the wake of the dismantling of USAID. However, a new report from the Modernizing Foreign Assistance Network (MFAN) released today reveals that the State Department lacks operational readiness to effectively and accountably manage America’s foreign assistance portfolio.
This comprehensive analysis entitled, "Operational Readiness: What the State Department Needs to Effectively Manage U.S. International Development and Humanitarian Assistance," reveals that the agency currently lacks the staff, skills, and systems to manage America’s foreign assistance portfolio. Only 700 former USAID staff—just 6 percent of the agency's pre-merger workforce of over 10,000—have transitioned to State to manage and operate the remaining and future programs. Meanwhile, State has simultaneously reduced its own staffing by 15 percent.
Despite the expanded workload now placed on employees, the State Department has yet to present a comprehensive plan for addressing serious deficits in staffing, strategic planning, measurement and evaluation, technical expertise, and risk assessment.
“Foreign assistance delivers life-saving aid and advances America’s national interests — but only if it’s managed effectively,” said Tod Preston, MFAN’s Executive Director. “As the State Department takes over this aid portfolio, it urgently needs more staff, clear strategy, and stronger oversight to succeed.
Critical Operational Gaps
The report identifies critical shortfalls across more than ten functional areas that are necessary to achieve the Administration’s stated goal of foreign assistance that makes the U.S. safer, stronger, and more prosperous, including:
- Missing Strategic Framework: State has yet to articulate a coherent vision for how development and humanitarian assistance will be integrated with diplomacy.
- Gaps in Planning Functions: Critical Program Office functions have been eliminated, with no clarity on who will lead strategic planning or manage country-level portfolios and funding pipelines.
- Need for Budget Skills: State needs capacity to evaluate strategic tradeoffs across regions and sectors.
- Limited Technical/Sectoral Experience: Technical expertise is necessary for a range of functions including program planning and design and engaging the private sector. State, however, has limited development technical expertise. For example, only 50 of USAID's nearly 1,000 Global Health staff were brought over to manage a similar budget from last year’s.
- Inadequate Acquisition and Assistance Capacity: While State is well set up to procure embassy construction and management services and make small grants, the department has insufficient personnel with the necessary skills, certifications, and experience to manage large, complex foreign assistance programs.
- Need for New Compliance and Risk Management Approaches: State needs staff who can work with partners to problem solve, support project performance, and prevent waste, fraud, and abuse; absorbing more assistance will also require State to evolve its framework for risk management.
- Withdrawal of DFC Support: USAID staff had served as activity managers for U.S. International Development Finance Corporation deals, with functions including coordination, due diligence, and reporting; these positions have been eliminated.
- Need for Expanded Monitoring, Evaluating, and Learning: Staff are needed to ensure management, collection, analysis, and use of high-quality program data (including data on cost effectiveness), and to support continuous program learning and performance quality assessment.
- Regression in Transparency: State will need to take on reporting roles previously managed by USAID and reinstate or replace key reporting platforms, including the currently defunct Development Experience Clearinghouse that housed all USAID evaluations and other program documents.
- Coordination Risks: Decentralizing decision-making across regional bureaus without adequate coordination mechanisms can result in short-term projects that lack strategic focus. More capacity for coordination of humanitarian assistance with the Department of Defense and with other donors and local actors will be necessary for long-term success.
Call for Action
MFAN leaders, representing a bipartisan coalition of international development and foreign policy practitioners, call on Congress to:
- Require the Under Secretary of Foreign Assistance, Humanitarian Affairs, and Religious Freedom to release a new international assistance framework and plan that covers all aspects of foreign assistance integration, including program capabilities, staffing requirements, and oversight mechanisms
- Schedule hearings on staffing plans, operational capacity, and risk mitigation strategies
- Plan to examine specific operational gaps or failures in real-time
As Congress moves ahead with Fiscal Year 2026 Appropriations, which reject the draconian level of cuts to foreign assistance recommended by the Administration, and begins action on a State Department reauthorization bill updating the agency’s foreign operations infrastructure, they must require the State Department to address these gaps.
Bipartisan Aid Experts Agree on Critical Prerequisites for State’s Success
This report on State’s operational readiness reinforces the advice of bipartisan experts reflected in MFAN's July report, "Consensus Principles & Recommendations for the Future of U.S. International Assistance." That analysis, signed by former Republican and Democratic officials, identified critical prerequisites for any successful reorganization of foreign assistance.
The July report cautioned that effective reform required five key elements:
- Creating programs that provide clear returns for the U.S. while delivering development benefits to partner countries
- Empowering the Under Secretary to eliminate bureaucratic silos and coordinate across offices
- Ensuring adequate budget and staffing levels
- Developing comprehensive strategies with metrics
- Maintaining flexible contract and grant mechanisms while strengthening private sector engagement
About MFAN
MFAN is a bipartisan reform coalition comprising international development and foreign policy practitioners, policy advocates, and experts from the U.S. and the Global South.
The full report is available here. MFAN experts are available for interviews.
