The Inter-American Foundation, or IAF, is an independent agency of the United States government that funds community-led development in Latin America and the Caribbean. It was created through the Foreign Assistance Act of 1969 as an alternative to traditional foreign assistance that operates government-to-government on a much larger scale. The IAF receives its funds through annual appropriations by Congress. Until 2019, the agency also received annual reflows from the Social Progress Trust Fund administered by the Inter-American Development Bank consisting of repayments on U.S. government loans extended under the Alliance for Progress to various Latin American and Caribbean governments. Since beginning operations in 1972, the IAF has awarded more than 5,700 grants worth more than $940 million.
Beginnings
With his articles in Foreign Affairs and his book The Engines of Change, Harvard professor George C. Lodge significantly influenced the intellectual climate that led to the passage of the IAF's enabling legislation. Most notably, Lodge wrote that poverty was the greatest threat to U.S. interests in the Americas. In “U.S. Aid to Latin America: Funding Radical Change,” which appeared in Foreign Affairs in July 1969., he urged creation of an “American Foundation [to] find and fund the engines of change which work directly to revolutionize Latin American social and political structures.” Lodge was appointed to the IAF's founding board of directors in 1971.
Representative Dante B. Fascell (D-Fla.) was the architect of the legislation to establish the Inter-American Social Development Institute (ISDI), which would later be renamed the Inter-American Foundation. The ISDI represented a redesigned form of foreign aid to channel development assistance directly to grassroots and civil society groups in developing countries. Congress designed the agency with a unique characteristic: gift authority, the ability to accept and channel contributions to its grantees: “[The IAF] may accept money, funds, property, and services of every kind by gift, device, bequest, grant, or otherwise, and make advances, grants, and loans to any individual, corporation, or other body of persons, whether within or without the United States of America, or to any government or governmental agency, domestic or foreign, when deemed advisable by the Foundation in furtherance of its purposes."
According to the OECD, The United States’ total official development assistance (ODA) (USD 55.3 billion, preliminary data) increased in 2022, mainly due to support to Ukraine, as well as increased costs for in-donor refugees from Afghanistan. ODA represented 0.22% of gross national income (GNI).
Congress enacted a bill with bipartisan support on December 30, 1969, that established ISDI as Part IV of the Foreign Assistance Act. On September 21, 1970, the Senate confirmed the candidates for the board of the agency: Augustin Hart, Jr., George C. Lodge, Charles A. Meyer, John Richardson, Jr., and John A. Hannah. Another two candidates were added on October 17, 1970: Governor Luís A. Ferré and Charles W. Robinson. The board's first act was to commission a study of development assistance headed by Irving Tragen to develop the agency's model. On March 16, 1971, William M. Dyal was sworn in as the agency's first Executive Director, and the agency officially began operating. The agency had received the $50 million designated in its initial authorization from other foreign assistance agencies by June 28, 1971.
In his Second Annual Report to the Congress on United States Foreign Policy on February 25, 1971, President Nixon set forth the administration's vision of the agency as follows: “The need is for innovative ideas and programs, particularly from non-governmental sources, which are more directly responsive to social problems as perceived by the people of the region. To meet this need, we created in 1970 the Inter-American Social Development Institute. Directed by a board with a majority from the private sector, the new Institute will provide funds primarily to non-governmental organizations in the U.S. and Latin America--such as universities, credit unions, and foundations--to help them share their expertise.”On August 3, 1971, the House Foreign Affairs Committee passed a legislative amendment changing the name of the agency from the Inter-American Social Development Institute to the Inter-American Foundation. In 1973, the IAF partnered with the Inter-American Development Bank to use up to $10 million annually in regional currencies from the U.S. government-funded Special Progress Trust Fund, an arrangement that was periodically renewed through 2019.