In January 2003, President George W. Bush asked Congress for $15 billion to fund international AIDS programs in developing countries under the President’s Emergency Plan for AIDS Relief, or PEPFAR. One tenth of the money was to be spent on children whose parents were victims of AIDS. Most of this money would go to Africa, home to some 12 million such children who for nearly two decades had been all but forgotten by their own governments, as well as by foreign donors such as the US.

The new money is part of a welcome trend. Rich governments and private donors now spend some $6 billion a year on international AIDS programs, twenty times more than they did a decade ago. Funding is also increasing for programs to help what are known in aid circles as “orphans and vulnerable children,” or OVCs. These are children who lack parental care because their parents have died of AIDS or are too sick to look after them. The OVCs category also includes the relatively small number of such children who are HIV-positive themselves.1 Roughly $600 million will be spent on aid programs for OVCs in 2005, and this is predicted to triple by 2007.

While this is good news in many respects, it may also be cause for concern. As foreign aid budgets rise, they tend to become more political and sometimes less effective. I worked in Uganda during the early 1990s when the country’s HIV infection rate was at its peak, with some two million people infected. In response, foreign donors were pouring money into the country, but it wasn’t always clear whether it was going to the right places. European and American consultants came and went from the airport and their brand-new sport utility vehicles churned up the narrow lanes of slums and villages across the country. They hired servants and guards and drivers and translators and set up offices in newly renovated buildings in Kampala’s genteel suburbs. Ugandans tended to greet them with outward courtesy and inward skepticism. In private discussions they wondered why the aid workers were spending so much money on offices and vehicles and staff residences that were palatial by local standards, when so many Ugandans were sick and poor and hungry.

The Ugandans were right to wonder. At least 60 percent of US foreign aid funding never leaves the US, but is instead spent on office overhead, travel, procurement of American-made cars, computers, and other equipment, as well as salary and benefit packages so generous that just one of them would be enough to feed, clothe, and educate hundreds of African children for years.2 Some of the money that arrives in Africa is well spent, but much of it is wasted on ill-conceived projects designed by foreign technocrats with little sense of African realities. In the high-stakes scramble for funding, the best projects—those that truly meet the needs of local people so that they can eventually support themselves—are often overlooked. People used to joke…