Several years ago, we set ourselves the ambitious task of transforming the U.S. Agency for International Development (USAID) into the world’s premier development agency—a modern development enterprise that could represent the best of American ideals abroad, while advancing the safety and prosperity of Americans at home. Our mission has remained unchanged: to advance broad-based economic growth, democracy, and human progress in developing countries.

By expanding opportunity and reducing instability, this work also keeps America safe and energizes the global economy.

Under the strong leadership of President Obama and Secretary Clinton, USAID has made real progress in harnessing the power of American generosity and ingenuity to improve human welfare worldwide. We call this approach “open source development,” and it reflects our desire to literally open development to problem solvers everywhere—from universities to non-governmental and faith-based organizations to private sector partners. Working together, we can unlock the expertise of a vast community and solve some of the greatest development challenges of our time.

USAID FORWARD REFORM AGENDA

To meet this mission with renewed capacity, we embarked on an ambitious set of reforms called USAID Forward. This effort was aimed at making the working closely with countries and regional missions to produce multi-year Country or Regional Development Cooperation Strategies to better align our resources with the development plans of our partners’ countries. By September 2013, 90 percent of our missions will have these strategic plans in place. We are increasingly working with new communities and strengthening existing partnerships to create conditions where our assistance will no longer be necessary.

When we partner with developing country institutions, we use sophisticated tools to assess their financial management capacity and safeguard U.S. resources. For example, the failure of Malawi to pass our financial management risk assessment in 2011 led the new President Joyce Banda to begin to take steps to strengthen Malawi’s systems, including elevating the position of the Auditor General.

In Afghanistan, we partnered directly with the Ministry of Health to build it into an institute capable of serving its people and sustaining results beyond our assistance. Our investments helped expand access to basic services from only 9 percent to 64 percent of the country, leading to the largest increase in life expectancy and largest decreases in maternal and child mortality of any country in the world in the last decade.

We have taken the lead in strengthening monitoring and evaluation and setting a standard for high quality evaluations by January 2013. To ensure this data is publicly available, we have built an accessible Web site—and accompanying mobile phone apps—where our evaluations and records are easy to read and share. To recapture USAID’s strong legacy of delivering progress through science, technology, and innovation, we have launched three Grand Challenges in Development to generate groundbreaking solutions to save lives at birth, get all children reading, and power agriculture through clean energy. We have received around 500 applications per challenge, with almost 50 percent of innovations coming from developing and emerging economies.

Through our Development Innovation Ventures, we invite problem solvers everywhere to contribute a cost-effective and cutting-edge idea that could scale to reach millions. More than 65 percent of these winners have never done business with USAID before, and many are generating new solutions to prevent electoral fraud, expand access to credit for underserved populations, or maximize the impact of migrant remittances.

Launched last year, our partnership with the National Science Foundation is connecting research fellows with their counterpart scientists in 25 countries in the developing world. We have recently built on this program to launch a similar partnership with the National Institutes of Health, encouraging more researchers and doctors to focus on the goal of ending preventable child death. We will also host 55 American Association of the Advancement of Science Fellows at USAID this year—the largest number of any federal agency.

Ultimately, the success of each of these reforms relies on our ability to proactively support our staff and ensure opportunities for them to apply their creativity and expertise in advance of our mission.

With bipartisan support of Congress, USAID has increased its total Foreign Service staff by over 70 percent in the past three years. A major strategic realignment of staff to priority countries has led to near-complete fill-rates in Afghanistan, Pakistan, South Sudan, and elsewhere in Africa.

We continue to work hard to meet serious performance and management challenges across the Agency. As the statement by the Office of Inspector General reports, we face challenges across six areas, including performance management and reporting, sustainability, and implementation and procurement. For example, we need to do a better job measuring and reporting accurate, evidence-based results across all our priorities, an effort that our new evaluation and monitoring policy is helping to strengthen. We have also taken steps to address the challenge of ensuring that these results are sustained after our project ends.

We created a new Project Design Sustainability Analysis tool, which presents a series of focused questions on subjects like local capacity and financial costs to help missions maximize sustainable outcomes. We also continue to face challenges in implementing programs and activities in high-risk environments. In August, we lost USAID Foreign Service Officer Regaei Abdelfattah, who died in a terrorist attack while working on a project to help local communities in Afghanistan improve governance and expand economic opportunities.

We continue to work closely with the Department of State to coordinate on security and ensure that our staff remains safe and can effectively carry out our mission worldwide.

DELIVERING MEANINGFUL RESULTS

Over the past year, we have applied a model of open-source development to deliver meaningful results for the American people and those in greatest need around the world. Although this letter only focuses on specific initiatives, USAID is delivering results across a range of development priorities, from expanding access to clean water, to safeguarding our planet’s biodiversity, to improving quality of education, especially for women and girls.

Feed the Future Initiative

Launched in 2009 by President Obama, Feed the Future is the U.S. Government’s global hunger and food security initiative. Designed to help unlock agricultural growth and transform economies, the presidential initiative works to improve the incomes of smallholder farmers, particularly women, in coordination with partner country-led development plans.

Although the initiative is still in its early days, we are beginning to see significant results, as well as evidence of the cost-effectiveness of those impacts. Thanks to a recently completed cost-benefit analysis of Feed the Future investments in six focus countries, we know that our projects are delivering a rate of return that averages 22 percent—with a range from 11 percent to 148 percent.

In October, we released the first Feed the Future Progress Report, which showcases these early results, including helping 1.8 million people adopt improved technologies or management practices. We have also reached 8.8 million children through nutrition programs that have reduced anemia, support community gardens, and treat acute malnutrition.

With support from Feed the Future, rice farmers in Senegal are planting an improved seed variety and have gone from having a rice deficit—actually needing to purchase additional rice to feed their families—to producing a surplus. In two seasons, we have seen a growth from 114 farmers using this new rice to 5 thousand farmers. We have also seen sales jump from $12 thousand to $365 thousand.

In Bangladesh, we helped more than 400 thousand rice farmers increase yields by 15 percent through the more efficient use of fertilizer, leading to the first-ever rice surplus in the country’s poorest state. To bring these results to an even greater scale, we helped design the New Alliance for Food Security and Nutrition, a significant new model of partnership that brings private sector companies and developing countries together to expand investment opportunities in African agriculture.

Launched by President Obama ahead of this year’s G8 Summit, the New Alliance aims to lift 50 million people in sub-Saharan Africa out of poverty in the next decade. So far, more than 70 global and local companies have committed more than $4 billion to expand seed production and distribution, establish small-scale irrigation systems, and source food for global supply chains.

Humanitarian Response and Resilience

Drawing on lessons learned during last year’s food crisis in the Horn of Africa—as well as decades of experience responding to disasters—USAID is pioneering a fundamental new approach to help communities strengthen their resilience in the face of crises. For example, we established Joint Planning Cells to bring our humanitarian assistance and development experts together to create long-term solutions.

Today, we are utilizing this approach in the Sahel, where a devastating combination of drought, violence, and displacement placed 18 million people in 8 countries at risk of food security.

Thanks to our early warning systems, we began responding as early as last November and have reached more than 3.2 million people with assistance. At the same time, we are investing in the resilience of local communities, helping families plant highly-nutritious, drought-tolerant trees, and farmers improve water management and soil fertility to re-green their lands.

In the Middle East, USAID is responding to the humanitarian crises that have put hundreds of thousands at risk in Yemen and Syria. We are focusing on quick-impact programs in Yemen that deliver results against the most critical challenges facing the nation, as it navigates early stages of democracy. Our humanitarian assistance has helped feed nearly 1.2 million Yemeni people, even as we are training nearly 5 thousand farmers in good crop production and livestock management practices so their communities will not have to rely on food aid.

In Syria, we are helping provide food, water, and medical care to more than 975 thousand individuals, as well as providing humanitarian aid to help the more than 300 thousand people who have fled the violence into neighboring countries.

Global Health and the Call to Action

Building on our Nation’s long legacy of bipartisan leadership in global health, the Global Health Initiative is bringing disease-specific communities together to advance new, comprehensive solutions to saving lives and alleviating suffering.

In 2011, over 10 million children were reached with nutrition programs, 58 million people were protected from malaria through bed nets and spraying, 84 million women had access to voluntary family planning, and millions of children were protected against killer diseases by vaccines. In June, USAID joined the United Nations Children’s Fund (UNICEF) and the Governments of India and Ethiopia in hosting a Call to Action to accelerate progress and end preventable child death within a generation.

As a result, more than 150 governments—including the United States— have signed a pledge to end preventable child death. We helped form a major new interfaith partnership, and over 290 faith leaders from organizations around the world have committed to promoting 10 healthy behaviors critical to child survival. The Call to Action also helped forge more than 20 new partnerships with private sector companies. For example, we are partnering with mobile telecommunications companies, like Intel, Vodafon, and Qualcomm, to empower community health workers with cutting-edge mobile technologies.

In September, UNICEF released a progress report showing that—for the first time—fewer than 7 million children are dying from preventable diseases. We will continue to work closely across all these partnerships to reduce child mortality to 20 deaths per 1 thousand births in every country in the world by 2035. Achieving this goal will save an additional 5.6 million children’s lives every year.

Democracy, Human Rights, and Governance

Across the world, we are strengthening democracy, human rights, and governance, with a special emphasis on marginalized populations, including women, youth, and individuals with disabilities.

In February, we launched our new Center of Excellence for Democracy, Human Rights, and Governance, designed to become a core evidence-based resource in the field and strengthen our Agency’s culture of data and evaluation.

We also continue to work across North Africa and the Middle East to help realize the democratic aspirations of the Arab Spring. In Yemen, our support of the nation’s National Dialogue process is helping bring representatives of diverse social and political groups together to define the future of their government and country. For example, we are helping the Ministry of Human Rights hold forums across the country to engage women and youth in the process, and we launched a training academy on the political process and constitutional reforms for roughly 165 civil society organizations.

FINANCIAL REPORTING AND REPRESENTATION

The Agency Financial Report (AFR) is our principal report to convey to the President, Congress, and the American people our commitment to sound financial management and stewardship of public funds. USAID remains committed to effective governance and financial integrity and take seriously the responsibility to which we have been entrusted. To that end, we continue to work to improve our financial management and internal controls.

This year, USAID received a qualified audit opinion. We acknowledge the conclusions of the audit report and have prepared a management plan to address two material weaknesses as well as six significant deficiencies identified by the audit. In addition, the auditor concluded that the Federal Information Security Management Act (FISMA) significant deficiency related to management’s implementation of its information security policies and procedures represented a lack of substantial compliance with the Federal Financial Management Improvement Act (FFMIA). Recognizing this as an issue, we are actively working to improve our information management systems while pursuing critical national security objectives in high threat environments. We will continue to invest resources effectively and efficiently to address these issues and ensure improved oversight of our funds.

We worked with the auditor to ensure that the financial and summary performance data included in this AFR are complete and reliable in accordance with guidance from the Office of Management and Budget. The Independent Auditor’s Report, including the reports on internal control and compliance with laws and regulations, is located in the Financial Section of this report. Issues on internal controls, identified by management, are discussed in the Management Assurances section of this report. I hereby certify that the financial and performance data in the FY 2012 AFR are reliable and complete.

With the support of Congress, senior officials in the U.S. Government have made a significant commitment to development through appropriations that have more than doubled since 2001. USAID recognizes that with additional resources come additional responsibilities.

We are committed to managing these appropriations in a transparent and accountable fashion as we carry out a mission that reflects the generosity of the American people and improves the lives of millions worldwide.

CONCLUSION

Once primarily led by large aid agencies and institutions, development today includes a diverse and creative community of grassroots activists, corporate chief executive officers, local change agents, and many others who bring unique ideas and new expertise to the mission of global development. Our Agency is increasingly on the forefront of efforts to engage this wide pool of creativity and dedication, channeling it toward measurable and meaningful impact.

In the fall of 2012, we launched a new online platform called USAID Fall Semester to help young Americans deepen their engagement with our Agency. The site includes new opportunities and resources tailored just for students on key issues like food security, global health, and democracy and human rights. As part of this effort, I visited a number of colleges and universities around the country, and spoke with students about their ideas for making the world a better place. Wherever I went, students expressed a deep understanding of the importance of development to our own country’s security and prosperity.

Today, our efforts to harness the ingenuity of our young people build on more than 50 years of engaging the American people and serving their interests by improving the lives of people everywhere. The challenge for us moving forward will be to focus the vast potential of the development community on achieving profound results at a greater scale than ever before.