Foreign Assistance Act & USAID

The Foreign Assistance Act of 1961 is the foundational law governing U.S. foreign aid — authorizing development assistance, economic support, military training, humanitarian relief, and other programs through which the United States spends approximately $50 billion annually to advance its foreign policy interests abroad. The U.S. Agency for International Development (USAID), created alongside the Act, is the primary agency implementing civilian foreign assistance programs in over 100 countries — complementing defense spending on security cooperation.

Current Law (2026)

Legal Authority

• 22 U.S.C. § 2151 — Policy (development cooperation reflects U.S. commitment to human rights, democratic governance, and economic growth; emphasis on basic human needs — food, health, education)
• 22 U.S.C. § 2151a — Agricultural development (President authorized to furnish assistance for agricultural development in rural areas of developing countries)
• 22 U.S.C. § 2151b — Population planning and health programs (recognizes that poor health and uncontrolled population growth vitiate development; authorizes health and family planning assistance)
• 22 U.S.C. § 2291 — International narcotics control (international drug trafficking is among the most important U.S. foreign policy objectives; authorizes counter-narcotics assistance to foreign governments)
• 22 U.S.C. § 2304 — Human rights and security assistance (the U.S. shall promote human rights; no security assistance to any government engaging in a consistent pattern of gross human rights violations, unless the President certifies extraordinary circumstances)
• 22 U.S.C. § 2346 — Economic Support Fund (when special conditions require, economic support may be provided to countries in amounts that wouldn't be justified solely on development grounds — recognizing strategic importance)
• 22 U.S.C. § 2347 — International Military Education and Training (President authorized to provide military education and training to foreign military and civilian personnel on a reimbursable basis where feasible)

How It Works

The Foreign Assistance Act divides aid into two broad streams: development assistance (Part I, administered primarily by USAID) and security assistance (Part II, administered by the Departments of State and Defense).

Development assistance targets basic human needs in some of the world's poorest countries. Programs include agricultural development in rural areas, population and health programs (including HIV/AIDS, maternal health, and family planning), basic education, clean water and sanitation, energy development, environmental sustainability, and democratic governance. USAID implements these programs through grants to local organizations, contracts with implementing partners, and direct government-to-government cooperation.

Security assistance includes the Economic Support Fund (ESF), International Military Education and Training (IMET), Foreign Military Financing (FMF, related to defense spending), and international narcotics control programs. ESF provides economic aid to countries of strategic importance — historically concentrated in the Middle East (Israel, Egypt, Jordan) and countries where the U.S. has significant security interests. IMET trains foreign military officers at U.S. military schools, building professional relationships and promoting democratic civil-military relations.

The human rights condition (§ 2304) is one of the Act's most significant provisions. It prohibits security assistance to any country whose government engages in "a consistent pattern of gross violations of internationally recognized human rights" — including torture, cruel treatment, prolonged detention without charges, and denial of life or liberty based on political views or identity. The President can waive this restriction by certifying that extraordinary circumstances exist, but the waiver must be reported to Congress.

Counter-narcotics assistance (§ 2291) authorizes programs to help foreign governments combat drug production and trafficking. This includes equipment, training, intelligence sharing, and crop eradication and alternative development programs, primarily in Latin America, Central Asia, and Southeast Asia.

Congressional oversight of foreign aid is extensive. Annual appropriations set spending levels for each account, and numerous country-specific and program-specific conditions and restrictions reflect congressional foreign policy priorities. The President must notify Congress before obligating funds for many programs.

How It Affects You

If you're a U.S. taxpayer trying to understand where foreign aid money goes, the 2025 USAID dismantling provides a stark answer: the visible costs of cutting it. USAID spent approximately $50 billion annually — less than 1% of the federal budget — on programs ranging from HIV/AIDS treatment (PEPFAR: 20+ million people on antiretroviral therapy), malaria prevention (nets, treatment, insecticide), agricultural development, clean water systems, democracy promotion, and disaster relief. When the Trump administration placed USAID staff on administrative leave in February 2025 and terminated $60+ billion in contracts and grants with 48-hour notice, the immediate consequences were measurable: treatment interruptions for HIV patients in Africa, shutdown of food security programs feeding millions in conflict zones, and abrupt termination of contractor operations in Ukraine, Gaza, and elsewhere. PEPFAR was partially restored after international outcry; many other programs remain suspended. The foreign aid debate in 2026 is less about the policy arguments (humanitarian vs. strategic, effectiveness vs. waste) and more about the practical question of what happens when you stop. Track current USAID program status at usaspending.gov (foreign assistance spending data) and reliefweb.int (humanitarian funding tracking).

If you work for an NGO, implementing partner, or contractor that executes U.S. foreign assistance programs, the 2025-2026 environment represents an existential threat to your organization's funding model. USAID funded thousands of organizations — from large implementers like International Rescue Committee, Catholic Relief Services, and Chemonics to small local NGOs in recipient countries — through a combination of contracts and cooperative agreements. The February 2025 stop-work orders affected virtually all USAID-funded activities simultaneously. Organizations that received USAID funding now face: contract termination claims for unrecoverable costs (allowable under FAR Part 49), litigation over whether 48-hour notice violated statutory and contractual requirements, and the practical challenge of shutting down programs mid-implementation in fragile states. If your organization received USAID funding, your rights on termination for convenience are governed by FAR Part 49 and your specific contract terms — organizations are generally entitled to allowable costs incurred through the termination date. The InterAction network (interaction.org) and USAID's contract management resources are tracking ongoing developments. The DFC (Development Finance Corporation, dfc.gov) remains active as an alternative vehicle for U.S. development engagement, though with different programming focus.

If you're a human rights advocate or legal organization seeking to use foreign assistance law to constrain security cooperation with abusive governments, 22 U.S.C. § 2304 (the Leahy Law) is your primary statutory tool. Section 2304 prohibits security assistance (military training, equipment, financing) to government security forces that have committed gross human rights violations — unless the President certifies extraordinary circumstances. A parallel Leahy provision in the Defense Department authorization applies to Defense-funded security cooperation. These provisions have been invoked to restrict assistance to specific military units in Colombia, Bangladesh, Mexico, and elsewhere. To use the Leahy Law: document credible allegations of gross human rights violations by specific named security force units; submit evidence to the State Department's Bureau of Democracy, Human Rights, and Labor (DRL), which maintains the vetting database; or engage your congressional representatives to request holds on security assistance pending Leahy review. The Center for Justice and Accountability (cja.org), Human Rights Watch (hrw.org), and Amnesty International (amnesty.org) maintain expertise on Leahy Law use and current restrictions.

If you're a researcher, policy analyst, or journalist covering U.S. foreign assistance, understanding what's actually been cut versus what's been claimed to be cut requires primary source research. USAID spending data is published quarterly at foreignassistance.gov (now folded into usaspending.gov under the State Department) and includes obligation and disbursement data by country, sector, and implementing partner. The Trump administration's stop-work orders and contract terminations reduced obligations (legal commitments to spend) in 2025, but many congressionally appropriated funds remain obligated under law even if executive agencies refuse to spend them — the constitutional tension between executive impoundment authority and the Impoundment Control Act (ICA) is the central legal battleground. Courts in 2025 issued multiple injunctions ordering the administration to release appropriated foreign assistance funds. The DFC's pivot toward strategic investments (critical minerals, energy security, infrastructure in the Indo-Pacific) represents a different theory of foreign assistance — returns-on-investment rather than development grants — worth tracking separately at dfc.gov/our-impact.

State Variations

Foreign assistance is exclusively federal. States have no role in foreign aid policy or implementation, though state-based universities and organizations may receive USAID grants and contracts.

Implementing Regulations

• 22 CFR Part 201 — USAID rules on source, origin, and nationality (procurement restrictions, waiver authority)

• 22 CFR Part 216 — Environmental procedures for USAID programs (environmental impact assessment, categorical exclusions)

• 48 CFR Part 752 — USAID Acquisition Regulation (AIDAR) Solicitation Provisions and Contract Clauses (72 sections — the USAID-specific clause library supplementing FAR Part 52 for all USAID-funded contracts; authority: 22 U.S.C. § 2381; USAID's acquisition rules occupy Title 48, Chapter 7):

  USAID's contracting clause framework is shaped by foreign assistance law requirements that have no FAR equivalent — the requirement that funds flow only to eligible countries, the partner vetting system for counterterrorism screening, and the source/nationality rules that restrict procurement to approved countries. Key clauses:

  • § 752.204-70 / § 752.204-71 — Partner Vetting Pre-award Requirements and Partner Vetting: implement the partner vetting system for counterterrorism background checks; contractors and key personnel must be vetted through USAID's Partner Vetting System (PVS) before award; subcontractors and key subcontract personnel above specified thresholds must also be vetted; the vetting clause flows down to subcontracts; vetting failures can block award to otherwise-qualified offerors (see companion USAID Partner Vetting page)
  • § 752.225-70 — Source and Nationality Requirements: the operationalization of the source/origin restriction in USAID contracts; goods and services procured with USAID funds must originate from the United States, the recipient country, or other USAID-eligible countries; "source" refers to the country from which an item is shipped; "nationality" refers to the citizenship or incorporation of the contractor; the clause requires USAID Contracting Officer approval for any procurement from an ineligible source; waivers are available for local procurement or regional development purposes but require written justification
  • § 752.226-70 — Trade, Investment, and US Jobs/Workers' Rights: contractors performing trade or investment promotion activities with USAID funds must assess the impact on U.S. jobs and certify compliance with host-country labor laws; reflects congressional interest (since the 1980s "additionality" debates) in ensuring USAID programs do not undermine U.S. economic interests
  • § 752.222-70 / § 752.222-71 — Disability Policy and Nondiscrimination: require contractors to ensure that USAID-funded programs do not discriminate against persons with disabilities and comply with USAID's disability policy; nondiscrimination clause (MAY 2024) reflects Biden-era updates to USAID nondiscrimination requirements and covers race, color, religion, sex, national origin, disability, age, and sexual orientation
  • § 752.219-70 / § 752.219-71 — USAID Mentor-Protégé Program: USAID runs its own mentor-protégé program separate from the SBA program; large prime contractors may enter mentor-protégé agreements with small, disadvantaged, women-owned, or HUBZone small businesses; agreements must be approved by USAID's Office of Small and Disadvantaged Business Utilization; mentors receive evaluation credit in future USAID competitions
  • § 752.252-70 — Representations Regarding Certain Telecommunications Equipment: requires offerors to disclose whether they use telecommunications equipment from specified Chinese companies (Huawei, ZTE, Hytera, Hikvision, Dahua) — an AIDAR implementation of Section 889 of NDAA FY2019

  The AIDAR clause set governs billions of dollars in annual USAID contracts across the development, humanitarian, health, and democracy sectors. The source/nationality clause (§ 752.225-70) and partner vetting clauses (§§ 752.204-70/71) are the most compliance-intensive for implementing partners — particularly NGOs working in conflict-affected areas where local procurement and local partners are operationally necessary. Recent rulemaking: 89 FR 4209 (January 2024) — comprehensive AIDAR update revising partner vetting procedures, updating source/nationality guidance, and adding Section 889 telecommunications equipment representations.

• 22 CFR Part 140 — Prohibition on Assistance to Drug Traffickers (14 sections — the implementing rules for Section 487 of the Foreign Assistance Act (22 U.S.C. § 2291f), which bars U.S. foreign assistance to foreign individuals, entities, and government agencies that have been convicted of drug trafficking or knowingly assist drug traffickers; authority: 22 U.S.C. § 2651a, 22 U.S.C. § 2291f):

  • § 140.1 — Purpose: implements FAA § 487, which directs the President to take "all reasonable steps" to ensure U.S. foreign assistance does not reach convicted drug traffickers; authority delegated by Executive Order 12163 to the Secretary of State, and further delegated to the Assistant Secretary for International Narcotics and Law Enforcement Affairs (INL)
  • § 140.3 — Definitions: "convicted" means found guilty by a court of competent jurisdiction in a drug trafficking case; "assistance" covers all foreign assistance provided under the Foreign Assistance Act and the Arms Export Control Act — including development aid, security assistance, FMF, IMET, ESF, and narcotics-related assistance itself; "covered countries" are those in which INL maintains a Country Narcotics Coordinator
  • § 140.4 — Applicability: the restriction applies to (a) foreign government entities, (b) multilateral institutions and international organizations, (c) scholarship and participant training recipients, (d) other NGOs and private individuals, and (e) intermediate credit institutions; the Secretary of State may exempt categories or individuals for national security or foreign policy reasons
  • § 140.6 — Foreign government entities: the Country Narcotics Coordinator at each embassy is responsible for reviewing available information on narcotics convictions among proposed assistance recipients; if a drug trafficking conviction is identified, the CNC coordinates with the proposing agency to withhold, suspend, or terminate the assistance; the government entity must be notified and given an opportunity to respond through diplomatic channels
  • § 140.8 — Scholarship and participant training recipients: individuals proposed for U.S.-funded scholarships, fellowships, or training programs (including IMET military training) must be screened; if a drug trafficking conviction exists, the individual is removed from the program; the rule applies to programs hosted in the U.S. as well as third-country training programs
  • § 140.9 — NGOs and private individuals: private voluntary organizations, for-profit contractors, and individual consultants proposed as assistance recipients or implementers must be screened; screening is conducted through U.S. law enforcement databases coordinated by INL; individuals with drug trafficking convictions are barred from receiving or implementing U.S. foreign assistance
  • § 140.12 — Interagency review: if the assistance-providing agency (e.g., USAID) disagrees with the CNC's determination to withhold assistance, the agency may request interagency review; the review is coordinated through INL and may escalate to senior State Department officials; the process is designed to prevent INL's narcotics law enforcement focus from unnecessarily blocking development programs with legitimate counterparts
  • § 140.13 — Notification: when assistance is withheld, the foreign entity or individual must generally be notified of the determination and given an opportunity to respond, unless disclosure would compromise law enforcement sources and methods or endanger personnel
  • § 140.14 — Special procedures for U.S. entities: additional procedural protections apply when a U.S. entity, U.S. citizen, or U.S. permanent resident is proposed for debarment under Part 140 — the due process requirements are heightened compared to foreign entities, including written notice, opportunity to submit a response, and access to a review mechanism before assistance is finally terminated

  Part 140 is one of the lesser-known but operationally significant restrictions embedded in all U.S. foreign assistance programs. Every assistance-proposing agency — USAID, State, DOD, Treasury — must conduct Part 140 screening for proposed recipients. In practice, INL maintains a database of drug trafficking convictions and coordinates screening through the embassy Country Narcotics Coordinator process. The restriction creates compliance obligations for contractors implementing USAID programs who must conduct due diligence on sub-grantees and subcontractors operating in countries where drug trafficking is prevalent. Part 140 intersects with USAID's partner vetting system (48 CFR § 752.204-70) and the U.S. government's counterterrorism vetting rules — together creating a layered screening regime for foreign assistance recipients.

Pending Legislation

• HR 7307 — Would require the State Department and USAID to publish rules for disposing of unused foreign aid supplies. Status: Introduced.
• HR 7271 — Would require a report estimating deaths tied to USAID stop-work orders. Status: Introduced.
• HR 6196 — Would reorient foreign aid toward local leadership and ease language and cost-share barriers for recipient organizations. Status: In committee.

Recent Developments

USAID and U.S. foreign assistance have been subject to intense political debate. The Trump administration's initial term sought significant cuts to foreign aid budgets and restructuring of USAID. The Biden administration restored funding levels and emphasized climate, global health, and democracy programs. The second Trump administration has pursued dramatic reductions in USAID staffing and programs through executive orders. Congressional appropriations have generally maintained bipartisan support for core foreign aid accounts, including global health (PEPFAR), humanitarian assistance, and security cooperation. See also Foreign Aid & International Development for the broader policy context. The Arms Export Control Act governs the security assistance component of foreign aid. The relationship between foreign aid and great power competition — particularly with China's Belt and Road Initiative — has reframed the debate, with growing bipartisan interest in development finance as a strategic tool.

• USAID closed (July 1, 2025): The Trump administration placed virtually all USAID staff on administrative leave in February 2025, terminated most USAID contracts and grants ($60B+ terminated), and formally closed the agency on July 1, 2025, folding remaining functions into the State Department. Secretary of State Rubio was named acting USAID administrator. Courts issued temporary restraining orders against parts of the termination, but the practical effect was a near-complete halt in USAID operations. Partners ranging from PEPFAR implementers in sub-Saharan Africa to development contractors in Ukraine lost funding with 48-hour notice. An estimated 10,000+ local staff at USAID-funded programs were displaced globally.
• PEPFAR survival and global health programs: PEPFAR — the President's Emergency Plan for AIDS Relief, supporting HIV/AIDS treatment for 20 million+ people globally — was preserved in reduced form after initial funding halts caused treatment interruptions in some programs. Congress passed continuing resolutions that maintained PEPFAR funding; Trump ultimately exempted PEPFAR from the broader USAID shutdown. The disruption — even a few weeks of treatment interruption — can contribute to drug-resistant HIV strains. Other global health programs (malaria, tuberculosis, maternal health) faced deeper cuts.
• Congressional authority and foreign aid impoundment: The USAID terminations raised constitutional questions about presidential authority to impound congressionally appropriated funds. Courts found the administration had illegally withheld congressionally appropriated foreign assistance and ordered disbursement. The Gann v. State Dept. and related cases tested the Impoundment Control Act's application to foreign aid. The administration's position — that the President has inherent authority to decline to spend appropriated funds — conflicted with the ICA's explicit requirement to spend appropriated amounts.
• DFC and strategic foreign investment: The U.S. International Development Finance Corporation (DFC), created in 2018 as a replacement for OPIC, survived the USAID dismantling. The Trump administration reframed DFC as a strategic economic competition tool against China's Belt and Road Initiative — funding infrastructure, critical minerals, and energy projects in developing countries with U.S. strategic interest. DFC commitments shifted from Biden-era climate and development focus to extractive industries and security-adjacent investments in Latin America, Africa, and Indo-Pacific.