The Inter-American Foundation (IAF) is an independent foreign assistance agency of the United States government that provides grants to grassroots organizations in Latin America and the Caribbean. The IAF responds to innovative, participatory and sustainable self-help development projects proposed by grassroots groups and supporting organizations, many involving rural and indigenous populations. It also encourages partnerships among community organizations, businesses, and local governments, directed at improving the quality of life for poor people and strengthening democratic practices. During fiscal 2002, the IAF awarded 50 new grants worth $15 million. All projects share two traits--they are directed at building capacity for sustainable activity once the support period is over, and they aim to improve constituents' well-being by engaging their own efforts, resources, and initiative. Local economic development, corporate social investment and responsibility, and building democracy from the grassroots are a focus for most grants. Grants provide access to credit, technical assistance, training, and access to technology for projects related to agriculture and food security, small business development, community leadership and development, and environmental issues. About 17 percent of grants focus specifically on education. A few grants support evaluation of previous grants for the purpose of learning more about the local development process. Projects funded for 12 individual countries and 2 regional initiatives are described in country reports. New directions in funding and evaluation efforts are described. Efforts to disseminate the lessons learned from funding grassroots development include various publications, an online newsletter, a Web site, news releases, and several conferences. A final section explains how to apply for an IAF grant. (TD)