Using the Social Statement in Your Congregation
10 Myths & Realities of Foreign Aid
Handout #6

Adapted from "Legislative Backgrounder," March 1995, a publication of the Lutheran Office for Governmental Affairs

How much do American taxpayers spend on foreign aid each year?
Where is the money going and what does it do?

Here are ten myths about foreign aid - and the realities - that every American should know.

MYTH 1 The United States spends a huge part of its budget - at least 20 percent - on foreign aid.
Reality: Less than 1 percent of the federal budget is spent on foreign aid. Over the past decade, according to the U.S. Agency for International Development (AID), foreign assistance has been cut by a third - from more than $19 billion in the mid-1980s to less than $13 billion in fiscal Year 1994. The current AID budget for humanitarian and development programs is $6.5 billion - or one half of one percent of the federal budget. (See chart 1.) Chad 1

MYTH 2 Even with recent reductions, the United States remains the most generous nation in the world when it comes to foreign aid.
Reality: In total dollars, the U.S. ranks second to Japan in foreign economic and development assistance. But in terms of its gross national product (GNP) allocated for foreign aid, the U.S. ranks last among 21 industrialized nations. (See chart 2.) The average American taxpayer spends less than 16 cents a day in federal taxes on AID's humanitarian and development programs.

MYTH 3 Foreign aid provides no economic benefits to the United States.
Reality: By promoting the economic growth of developing countries, foreign aid is one of the most effective tools we have to increase U.S. exports and create jobs at home. During the past decade U.S. exports to developing countries have more than doubled - from $71 billion in 1986 to $180 billion in 1993 - and now represent nearly 40 percent of total U.S. exports. Every additional $1 billion in exported goods results in 20,000 new U.S. jobs.

MYTH 4 Foreign aid is a welfare give-away program. Once on the dole, developing nations remain on it forever.
Reality: Since 1962, more than two dozen countries - from Botswana to Uruguay - have graduated from foreign aid assistance programs and become U.S. trading partners. One prominent example is South Korea, which currently imports three times as much in U.S. goods each year as it received in U.S. aid during the entire decade of the 1960s.

MYTH 5 Most foreign aid is spent in foreign countries.
Reality: Much of the foreign aid budget is spent in the Untied States. For example, roughly 90 percent of food aid is spent on U.S. goods and services. In addition, millions of foreign aid dollars to programs that specifically promote investment and export opportunities for U.S. businesses.

MYTH 6 Foreign aid doesn't work. Conditions in the developing world are as bad as they ever have been.
Reality: Actually development assistance has produced enormous, tangible results over the past three decades. Since 1960, in developing countries, infant mortality rates have fallen by half, life expectancy has increased from 46 years to 63 years and primary school enrollment has increased from 48 percent to 78 percent. Foreign aid programs also play a critical role in helping to increase agricultural production and to expand the availability of safe drinking water.

MYTH 7 Foreign aid only enables corrupt dictators to stay in power.
Reality: The United States is no longer using foreign aid to prop up dictators in hopes of countering Soviet influence in the developing world. In fact, AID is in the midst of a major overhaul. AID is closing 23 missions overseas to streamline its operations. In addition, AID is relying increasingly on private voluntary organizations to deliver services directly to communities at the grassroots level. An estimated $1.5 billion in foreign aid now goes to these private non-profit agencies to address basic human needs such as literacy, health care, family planning and jobs.

MYTH 8 The poor are bad credit risks. You can't loan them money. They wouldn't be able to pay it back R E A L I T Y Small loans to the poorest of the poor constitute one of the great success stories of the developing world. In Bangladesh alone, the Grameen Bank has loaned over $1 billion in small loans to over 2 million people, mostly women in small villages. The payback rate is over 95 percent. Nearly half of the Bank's long-term borrowers 46 percent - are no longer living in poverty. Versions of the Bangladesh experiment have succeeded in scores of nations around the world including the United States. Today there are over 200 microenterprise programs throughout the United States.

MYTH 9 The developing world's problems are not our problems.
Reality: Increasingly, the major problems  we face at home - job security, random violence, AIDS, drug abuse, infant mortality - are global Economic Aid Donors Compared problems affecting everyone. Take pollution, for example. Americans now spend nearly $100 billion a year to curb toxic emissions in the United States, but within the next 15 years, America's air will be polluted mostly by emissions from other nations. That's why combating pollution abroad is becoming increasingly important here at home.

MYTH 10 Americans don `t care about the developing world. There is no constituency to support foreign assistance to these countries.
Reality: Each year millions of Americans demonstrate their support for the developing world through their contributions and voluntary efforts to help several hundred private U.S. -based relief and development organizations like the American Red Cross and the Salvation Army. In 1993, 390 of these agencies raised over $4 billion in private funds and received an additional $1.5 billion from the federal government. This level of support reflects the traditional hallmark of the American people and its elected government to be generous to those who are in need, not only at home, but throughout the world.

"Myths and Realities' was produced by InterAction and adapted from earlier versions by Bread for the World and World Vision. InterAction is the nation's largest coalition of US-based development, relief and refugee-assistance agencies.

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