U.S.-funded international groups don’t have to report fraud

Topline: The State Department did not have consistent oversight requirements for $5.7 billion it contributed to the United Nations and other international organizations in 2024, according to an audit released by the agency’s inspector general on Jan. 15.

Key facts: State Department policy recommends that all contributions to international organizations require the recipients to follow U.S. law and executive orders, avoid sending money to terrorist organizations and undergo regular audits.

The inspector general reviewed 18 contributions the U.S. made and found the policy was applied “inconsistently.” For example, some grants did not require the recipients to report fraud or comply with U.S. audits. Oftentimes, the State Department relied on “non-binding commitments” to obtain financial information about how U.S. grants were spent. That included U.S. officials using friendships and “individual relationships” with UN workers to ask for documents.

If there is staff turnover or relationships deteriorate, financial information may be inaccessible in the future, “potentially increasing the risk that waste, fraud, abuse, and prohibited conduct may go undetected,” according to the inspector general.

The State Department’s grants had much weaker oversight language than grants from the U.S. Agency for International Development or the European Commission, a branch of the European Union. USAID and EU grants generally required fraud checks and audit compliance.

USAID has now mostly merged with the State Department, but they were separate agencies during the audit.

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Background: The oversight issues concerned “voluntary” international funding, as opposed to the $3.6 billion in “assessed” funding the U.S. was required to send to the UN and other international groups to maintain its membership.

The State Department also had limited oversight of the assessed funding, but that was impossible to avoid. UN rules and diplomatic immunity bar the U.S. from obtaining “detailed information” about how its membership dues are used, according to the audit.

The State Department sent a total of $9.3 billion to 131 international organizations in 2024. Nearly half of the money came from the Bureau of Population, Refugees, and Migration.

Summary: Identifying fraud is not always easy, but merely requiring recipients of U.S. grants to report all fraud is a simple step towards safeguarding taxpayer funds

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