When the U.S. government created the United States Agency for International Development (USAID) in 3 November 1961, it built on a legacy of previous development-assistance agencies and their people, budgets, and operating procedures. USAID's predecessor agency was already substantial, with 6,400 U.S. staff in developing-country field missions in 1961. Except for the peak years of the Vietnam War, 1965–70, that was more U.S. field staff than USAID would have in the future, and triple the number USAID has had in field missions in the years since 2000.

Although the size of the development-assistance effort was not new, the 1961 decision to reorganize the government's main development-assistance agency was a landmark in terms of institutional evolution, representing the culmination of twenty years' experience with different organizational forms and procedures, in changing foreign-policy environments.

The new structure created in 1961 "proved to be sturdy and durable". In particular, the U.S. government has maintained since then "the unique American pattern of placing strong resident aid missions in countries that [the U.S. was] helping."

The story of how the base for USAID's structure was built is described below, along with an account of changes that have been made since 1961.

Background

The realization that early industrializers like the United States could provide technical assistance to other countries' development efforts spread gradually in the late 1800s, leading to a substantial number of visits to other countries by U.S. technical experts, generally with official support by the U.S. government even when the missions were unofficial. Japan, China, Turkey, and several Latin American countries requested missions on subjects like fiscal management, monetary institutions, election management, mining, schooling, roads, flood control, and urban sanitation. The U.S. government also initiated missions, particularly to Central America and the Caribbean, when it felt that U.S. interests might be affected by crises like failed elections, debt defaults, or spread of infectious disease.

U.S. technical missions in this era were not part of a systematic, government-supported program. Possibly the closest approximation to what U.S. government development assistance would become was the China Foundation for the Promotion of Education and Culture, established by the United States in 1924 using funds provided by China as reparations following the "Boxer" conflict. The foundation's activities ranged widely and included support for development of a leading Chinese university, Tsinghua University.

A notable early example of U.S. government foreign assistance for disaster relief was its contribution to the 1915 Committee for Relief in Belgium headed by Herbert Hoover, to prevent starvation in Belgium after the German invasion. After World War I in 1919, the U.S. government created the American Relief Administration, also headed by Hoover, which provided food primarily in Eastern Europe.

Between the two world wars, U.S. assistance to low-income countries was often a private initiative, including the work of private foundations such as the Rockefeller Foundation and the Near East Foundation. The Rockefeller Foundation, for example, assisted the breeding of improved maize and wheat varieties in Latin America and supported public health initiatives in Asia.

The coming of World War II stimulated the U.S. government to create what proved to be permanent, sustained foreign aid programs that evolved into USAID. U.S. development assistance focussed initially on Latin America. Since countries in the region were regularly requesting expert assistance from U.S. cabinet departments, an Interdepartmental Committee on Cooperation with the American Republics was established in 1938, with the State Department in the chair, to ensure systematic responses.

More ambitiously, the U.S. subsequently created an institution that for the first time would take an active role in development assistance programming: the Institute of Inter-American Affairs (IIAA), chartered in March 1942. The institute was the initiative of the Coordinator of Inter-American Affairs, Nelson Rockefeller, the future vice president of the United States, whose family financed the Rockefeller Foundation. IIAA's 1,400 employees provided technical assistance across Central and South America for economic stabilization, food supply, health, and sanitation. The U.S. Department of Agriculture's Office of Foreign Agricultural Relations (OFAR) also began during the war to assist Latin American countries in food production. U.S. benefits included development of sources for raw materials that had been disrupted by the war.

IIAA's operational approach set the pattern for subsequent U.S. government technical assistance in developing countries, including ultimately USAID. In each country, a program comprising a group of projects in a given sector – health, food supply, or schools – was planned and implemented jointly by U.S. and local staff working in an office located in the developing country itself. In IIAA's case the offices were called "servicios".

After the end of the war in 1945, IIAA was transferred to the State Department. Based on positive evaluations from the U.S. Ambassadors in Latin America, the State Department succeeded in getting congressional authorization to extend IIAA, initially through 1950 and then through 1955. OFAR continued to operate separately until 1954 and the Smith-Mundt Act of 1948 also supported technical assistance in agriculture.

In January 1949, President Truman, responding to advice from staff who had worked with IIAA, proposed a globalized version of the program as the fourth element of his overall foreign policy – "Point Four". The purpose of the program was to provide technical knowledge to aid the growth of underdeveloped countries around the world. After a lengthy debate, Congress approved Point Four in 1950 and the Technical Cooperation Administration (TCA) was established within the Department of State in September 1950 to administer it.

After an initial attempt to operate in the mode of the old Interdepartmental Committee and to merely coordinate programs of other agencies (such as IIAA), TCA adopted an integrated implementation mechanism in November 1951. In an approach that was greatly expanded after 1953, some early technical assistance projects were implemented by U.S. universities under contract to TCA. University project staff in some cases helped perform administrative functions in TCA missions that were in the process of being set up.

Evolving organizational linkages with the State Department

Foreign aid has always operated within the framework of U.S. foreign policy and the organizational linkages between the Department of State and USAID have been reviewed on many occasions.

In 1978, legislation drafted at the request of Senator Hubert Humphrey was introduced to create a Cabinet-level International Development Cooperation Agency (IDCA), whose intended role was to supervise USAID in place of the State Department. Established by executive order in September 1979, it did not in practice make USAID independent.

In 1995, legislation to abolish USAID was introduced by Senator Jesse Helms, the chairman of the Senate Foreign Relations Committee, who aimed to replace USAID with a grant-making foundation. Although the House of Representatives passed a bill abolishing USAID, the measure did not become law. To gain congressional cooperation for his foreign affairs agenda, President Bill Clinton adopted in 1997 a State Department proposal to integrate more foreign affairs agencies into the department. The "Foreign Affairs Agencies Consolidation Act of 1998" (Division G of PL 105-277) abolished IDCA, the Arms Control and Disarmament Agency, and the United States Information Agency, which formerly maintained American libraries overseas. Although the law authorized the president to abolish USAID, President Clinton did not exercise this option.

In 2003, President Bush established PEPFAR, the President's Emergency Plan for AIDS Relief, putting USAID's HIV/AIDS programs under the direction of the State Department's new Office of the Global AIDS Coordinator.

In 2004, the Bush administration created the Millennium Challenge Corporation (MCC) as a new foreign aid agency to provide financial assistance to a limited number of countries selected for good performance in socioeconomic development. The MCC also finances some USAID-administered development assistance projects.

In January 2006, Secretary of State Condoleezza Rice created the Office of the Director of U.S. Foreign Assistance ('F') within the State Department. Under a director with the rank of deputy secretary, F's purpose was to ensure that foreign assistance would be used as much as possible to meet foreign policy objectives. F integrated foreign assistance planning and resource management across State and USAID, directing all USAID offices' budgets according to a detailed "Standardized Program Structure" comprising hundreds of "Program Sub-Elements". USAID accordingly closed its Washington office that had been responsible for development policy and budgeting.

On September 22, 2010, President Barack Obama signed a Presidential Policy Determination (PPD) on Global Development. (Although the Administration considered the PPD too sensitive for release to the public, it was finally released in February 2014 as required by a U.S. court order. The Administration had initially provided a fact sheet to describe the policy.) The PPD promised to elevate the role of development assistance within U.S. policy and rebuild "USAID as the U.S. Government's lead development agency." It also established an Interagency Policy Committee on Global Development led by the National Security Staff and added to U.S. development efforts an emphasis on innovation. To implement the PPD's instruction that "USAID will develop robust policy, planning, and evaluation capabilities," USAID re-created in mid-2010 a development planning office, the Bureau of Policy, Planning, and Learning.

On November 23, 2010, USAID announced the creation of a new Bureau for Food Security to lead the implementation of President Obama's Feed the Future Initiative, which had formerly been managed by the State Department.

On December 21, 2010, Secretary of State Clinton released the Quadrennial Diplomacy and Development Review (QDDR). Modeled after the military's Quadrennial Defense Review, the QDDR of 2010 reaffirmed the plan to re-build USAID's Foreign Service staffing while also emphasizing the increased role that staff from the State Department and domestic agencies would play in implementing U.S. assistance. In addition, it laid out a program for a future transfer of health sector assistance back from the State Department to USAID. The follow-on QDDR released in April 2015 reaffirmed the Administration's policies.