[Questions Concerning Whether National Endowment for Democracy Complied With National Endowment for Democracy Act]

Pursuant to a congressional request, GAO provided a legal ruling as to whether the National Endowment for Democracy, in providing grant funds to subgrantee organizations, complied with the National Endowment for Democracy Act in fiscal year (FY) 1984. The Endowment was created to use private sector initiatives to promote democratic institutions overseas. It was determined that: (1) the authorization language bound the Endowment in its distribution of grant funds, even though the actual appropriation levels were less that the full amount anticipated; (2) the Endowment's disposition of grant funds did not comply with the statutory earmark language; (3) it was not necessary to recover the FY 1984 funds that were provided to non-earmarked subgrantees, because there was no alternative source of funding; and (4) since the first half of FY 1985 funds were already allocated, the Endowment should ensure that allocations to the earmarked organizations for the second half of the fiscal year are in amounts sufficient to fulfill the requirements of the legislation.