The Inter-American Foundation (IAF) is an independent U.S. government agency that provides grants to Latin American communities to foster economic development. Since 1972, when it commenced operations, the IAF has awarded more than 4,900 grants worth more than $680 million. During much of this time span, the foundation was targeted by Republican administrations either to help serve as a tool for American foreign policy or to reward campaign donors.

Congress created the Inter-American Foundation (IAF) in 1969 as an alternative to large foreign assistance programs, such as the U.S. Agency for International Development (USAID). Whereas the USAID distributed six- and seven-figure grants to foreign governments around the world, the IAF was charged with providing smaller amounts to non-profits and non-governmental organizations that worked directly with poor communities in Latin America. Lawmakers wanted the IAF to be an independent source of help for struggling parts of Latin America through grassroots projects that could lead to healthier social and economic conditions. To do this, the IAF was not placed under the authority of any particular federal office, and its leadership consisted of a seven-member board appointed by the President.

During its first decade, the foundation led a quiet existence, as it distributed hundreds of small grants each year to projects in Central and South America. But with the election of President Ronald Reagan in 1980, the IAF’s political independence was threatened. By 1983, Reagan had replaced the majority of its board with political appointees whose mission was to turn the independent foundation into a tool of the administration’s aggressive foreign policy. Reagan’s appointees immediately fired the foundation’s president, Peter Bell, and the search committee created to find a replacement for Bell included a shadowy figure, William Doherty, who had worked with the CIA in Latin America. The committee and board eventually settled on a Republican politico from San Diego, Deborah Szekely, who had run unsuccessfully for Congress in 1982.

Things only got worse for the IAF in 1986 when Reagan appointed another board member, Thomas Pauken, a former Army intelligence officer during the Vietnam War. Pauken’s selection alarmed IAF supporters throughout Latin America who feared the appearance of an intelligence agent would destroy the foundation’s credibility. Another IAF board member of Reagan’s, Richard McCormack, tried pushing the agency in the direction of helping the Contra rebels, a U.S.-backed guerilla movement trying to overthrow the Marxist government in Nicaragua.

After Reagan left office and his appointees eventually were replaced, the IAF resumed a less controversial operation, at least until a controversy arose involving biopiracy. Loren Miller, director of the International Plant Medicine Corporation in California, had traveled to Ecuador looking for new plants to base medicines on. He came across a medicinal vine that had been used as a sacred plant in the Amazonian basin since the pre-Columbian era. Without asking the local community, Miller took a sample back with him to the U.S. to create a new line of drugs. He acquired a patent on the plant without first improving or cultivating the vine in any way.

In response to Miller’s actions, the Coordinator of the Indigenous Organizations of the Amazon Basin (COICA), which represents indigenous people in the Amazon region, publicly denounced the patent. This organization then issued a public resolution proclaiming Miller to be an “enemy of indigenous peoples.” In stepped the IAF, which publicly defended Miller and claimed COICA’s actions constituted an attack on an American citizen. The IAF demanded an apology or else the foundation would cease all support to the organization. Observers were stunned by the foundation’s strong-armed approach. The matter was resolved in 1999 when the U.S. Patent and Trademark Office canceled Miller’s patent after a reevaluation was requested by the COICA, the Amazon Alliance for Indigenous and Traditional Peoples of the Amazon Basin and lawyers at The Center for International Environmental Law.

During the administration of President George W. Bush, the IAF was again subjected to politicized board appointments. Bush rewarded two fundraisers with posts on the IAF board: Roger Wallace and Jack Vaughn. Both men were substantial contributors to Bush’s 2000 election. Wallace served under Bush’s father, George H.W. Bush (see former Chairman, Inter-American Foundation); Vaughn is a Texas oilman. A third Bush appointee, Adolfo Alberto Franco, a conservative Cuban-American who once worked for late U.S. Senator Jesse Helms (R-North Carolina), held a number of staff positions at the IAF before joining its board. All of Bush’s selections to the IAF were recess appointments, allowing them to serve without Senate confirmation.

Inter-American Foundation Strays into an Intellectual Property Minefield (ETC Group)

SourceWatch: Inter-American Foundation during the Reagan era

Foundation founders: Reagan takes over Inter-American Foundation (New Internationalist)

The Inter-American Foundation (IAF) is an independent U.S. government agency whose mission is to assist the poor in Latin America and the Caribbean. The foundation does this by providing grants to non-governmental organizations and local non-profits that conduct educational, social and economic programs. Since commencing operations in 1972, through 2010, it awarded 4,920 grants worth more than $665 million.

The IAF is governed by a nine-person board of directors appointed by the President. Six members are drawn from the private sector and three from the public sector. The board is assisted by an advisory council. A president, appointed by the board, serves as the IAF’s chief executive officer, managing a staff of 47 employees based in Arlington, Virginia. The IAF is organized into three offices; Executive, which houses the Office of the President, General Counsel and External Affairs; Operations, which manages Evaluation, Financial Management, Publications, Human Resources and Information Management; and the Program Office, which manages the grant program.

Many IAF grants have supported grassroots organizations such as agricultural cooperatives or small, urban enterprises. Other grants have been awarded to larger, intermediary organizations that provide grassroots groups with credit, technical assistance, training, and marketing assistance. IAF grants have been primarily in the area of agriculture and food production followed by small enterprise development, education and training, eco-development, and community services. The IAF gives preference to organizations that have not received direct funding from other U.S. government agencies, such as USAID, and to applications that demonstrate a strategy for forming partnerships with private and public sector institutions.

In addition to giving out grants, the IAF has impacted Latin American communities through international partnerships it has formed with other philanthropic organizations.

RedEAmérica, which the foundation helped form, is a network of corporations, non-governmental organizations, and other organizations that support social responsibility programs at the grassroots level. Also, the IAF partnered with the International Guarantee Fund of Switzerland to create the Latin American International Guarantee Fund, which supports microfinance institutions in Central America. Furthermore, the agency is a founding member of the US Mexico Border Philanthropy Partnership that supports four border community foundations. It also had a matching endowment grant with CEMEFI (Mexican Center for Philanthropy) that helps numerous Mexican community foundations.

USAID Inspector General Audit of IAF FY 2009 and 2010 (pdf)

From the Web Site of the Inter-American Foundation

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The Inter-American Foundation (IAF) distributes its funding across a wide spectrum of economic and social development projects and organizations in Latin America. The three areas that receive the most IAF funding are food production/agriculture, education/training, and enterprise development, according to a FY 2009 and 2010 audit by the USAID Inspector General (pdf).

In FY 2010, the IAF’s budget was $29.1 million, which came from $23 million in appropriations, supplemented by $5.9 million from the Social Progress Trust Fund for development grants and $156,000 in carry-over funds. Of this total, approximately 60% of IAF expenditures went toward grants. The remainder was spent on personnel (19%), other program activities (16%), operating services (2%) and rent (3%). In that fiscal year, 75 grants were awarded, in addition to amended awards to 46 organizations awarded in prior years, distributed across 21 countries. This breakdown was provided by the USAID Inspector General’s audit for FY 2009 and 2010 (pdf).

According to the IAF Congressional Budget Justification FY 2013 (pdf), the IAF awarded $14.9 million in grant funding in FY 2011, which included 61 new grants in the total amount of $12.4 million. The largest areas of investment were agriculture/food production ($5.9 million), education/training ($3.9 million), and enterprise development ($2.4 million).

The latest information on who has received IAF grants covers the years through 2011, according to IAF’s grant recipient Web page. Grantees in 2011 were based in the following countries:

• Argentina
• Bolivia
• Brazil
• Colombia
• Costa Rica
• Dominican Republic
• Ecuador
• El Salvador
• Guatemala
• Haiti
• Honduras
• Mexico
• Nicaragua
• Panama
• Paraguay
• Peru
• Uruguay

Examples of IAF grants:

• Fundación Alternativa 3, Estrategias de Desarrollo Comunitario (A3)

$260,350 over two years: Working with four grassroots organizations, A3 expands its program of economic development and microcredit to reach an additional 690 families in four communities of Greater Buenos Aires and trains the staff of Comunidad Organizada Unidos para Crecer (Crecer), a nongovernmental organization, to apply its approach to micro-lending in other communities.

• Asociación de Mujeres Afroecuatorianas “Timire del Futuro” (AMATIF)

$34,000 over one year: AMATIF develops a plan to promote women’s leadership, manage community-owned natural resources and agricultural production, ensure a more reliable food supply, increase income and otherwise improve the quality of life for more than 400 women in Ríos Santiago, Cayapas and Onzoles, Esmeraldas. More than 2,500 other residents benefit indirectly from this planning process.

• Asociación Amigas del Sol (ADS)

$90,460 over three years: ADS coordinates the construction of 165 solar ovens offering economic, environmental, health, and safety advantages. The indigenous women in southwestern Guatemala who learn to build them also benefit from training in topics ranging from entrepreneurial skills to health care.

• ALTERNATIVA, Centro de Investigación Social y Educación Popular (ALTERNATIVA)

$260,000 over three years: ALTERNATIVA offers technical assistance and training for 440 recyclers, micro-entrepreneurs, community leaders and municipal authorities. It expects to strengthen the recyclers’ organizations, increase recyclers’ income and work with all participants to address solid-waste management in three districts of metropolitan Lima and in the province of Callao.

IAF Caught Funding President’s House

In December 2007, the U.S. Agency for International Development’s Inspector General (IG) issued an audit of Inter-American Foundation (IAF) activities. The IG reported that in one instance, the IAF may have paid for the construction of a home for the president of an IAF grant beneficiary. The report did not state which organization or grant was involved in the matter.

The IG reported that the home cost $6,000 to construct, and that IAF officials insisted that another donor paid for it. The IAF was unable, however, to provide “clear or conclusive evidence” that the house was funded by the other donor organization, “nor could it provide proof that members of the local community agreed with this

construction.”

IG auditors labeled this disturbing fact a potential “abuse” of IAF funds. They further concluded that the appearance of impropriety or conflict of interest may lead the public to believe “that high-ranking officials of grantees can receive unreasonable personal benefits from Foundation resources.”

In response to the IG’s findings, the IAF replied that it did not consider the matter “abusive or conflict of interest.” Foundation President Larry Palmer argued that the matter must be viewed in the “context” of grassroots development activity in Latin America. “Community or grantee leaders are often members of the very beneficiary population the project is designed to assist and by whom it is implemented,” wrote Palmer. “In such cases, it is very reasonable that leaders of the grantee organization, or their family members, might benefit from project activities. This reality does not necessarily imply that any abuse or conflict of interest has occurred.”

2007 audit by the USAID Inspector General (pdf)