Answer:
There are two major problems with foreign aid.
The first is that it tends to involve solutions that are developed and implemented by outside actors with little input from communities. Providing solutions to problems that don't exist, or providing the wrong solutions to problems that do exist, are great ways to waste money. Unfortunately, aid structures tend to operate in a way that create disincentives for seeking out community input. Aid actors typically need to present a fully-formed project plan to be considered for funding, yet aid actors need initial funding in order to determine needs and create a locally tailored and sustainable project. It's a vicious cycle that feeds on ignorance.
That leads to the second problem: a lack of monitoring and evaluation. It's only in the last ten years or so that major international institutions like the World Bank have even begun including monitoring and evaluation in project plans, much less prioritizing it. Without M&E, it's impossible to learn what actions and processes are effective, and which cause more problems. That international development in the modern sense has been happening for some 50+ years (and by some evaluations for some 100+ years before that), but only 10 of those have involved any sort of mass movement to evaluate effectiveness, is likely a major reason that so many major aid projects have not seen the intended results.
As a result of these two major issues (as well as other systemic problems within the development community), aid projects have, in some cases, done a great deal of harm.
