US foreign aid cuts leave a funding gap that private donors are unlikely to fill

Charitable organizations that relied on U.S. foreign assistance are looking to different private and public donors now that the Trump administration suspended nearly all foreign aid contracts.

Past giving patterns suggest such a lifeline is unlikely. The United States was the world's largest single funder of foreign aid, and neither other governments nor private foundations are in position to fill the gap, according to program executives, aid researchers and nonprofit workers.

Experts in international development say that along with lost funding, the administration's dismantling of the U.S. Agency for International Development deprives the field of political leadership and expertise that will be difficult to replace.

The Trump administration initially froze foreign aid, but has since laid off most USAID employees while ending more aid contracts and grants. Trump adviser and billionaire Elon Musk, who is overseeing the administration's work to cut government spending and downside the federal workforce, has called USAID a criminal organization.

“The American people delivered a mandate for President Trump to root out inefficiencies across the federal government,” a State Department spokesperson said, adding that U.S. Secretary of State Marco Rubio, was working “to ensure taxpayer resources are being used to make America safer, stronger, and more prosperous.”

Experts agree the international humanitarian assistance system has essentially operated on the back of U.S. benevolence. What seems like the sudden end of that era has shut down life-saving programs around the world and triggered an existential crisis for the international development sector.

Could private donors fill the gap?

No, the numbers do not add up.

The U.S. accounted for $64 billion, or 28% of the $223 billion in official development assistance that governments provided in 2023, according to the Organization for Economic Co-operation and Development. Also known as overseas aid, those funds could go directly to other countries, to humanitarian aid, to fund the work of the United Nations or to help refugees.

Private organizations and individuals would essentially need to double their gifts to make up for USAID cuts: private donations that crossed borders totaled $70 billion in 2020, the most recent year of available data in the Global Philanthropy Tracker from Indiana University Lilly Family School of Philanthropy.

Even if all private donors gave twice as much, coordinating their activities would be a major task, and it's unclear what organization would take that on.

Rob Nabors, the North America director for the Gates Foundation, described the scale of the challenges facing nonprofit groups that focus on global health.

“There is no foundation — or group of foundations — that can provide the funding, workforce capacity, expertise, or leadership that the United States has historically provided to combat and control deadly diseases and address hunger and poverty around the world,” Nabors said in a statement.

What about other countries?

The world's richest countries agreed at the United Nations in 1970 to spend 0.7% of their gross national product on development aid. Few countries ever reached the target, and many now are pulling back from it.

In recent years, other major donor countries announced cuts to their foreign assistance spending, including Sweden, the Netherlands and the United Kingdom. Budget constraints were cited for some of the reductions, and others came after the election of conservative governments, some of which see the aid as wasteful or not in line with their national interests.

Susan Appe, a University at Albany associate professor of public administration and policy, has researched how nonprofits deal with the changing whims of international donor countries.

She said local organizations may try to win funding from their own governments, earn income from their activities, increase the contributions of philanthropists in their own countries or to get support from diaspora communities.

“These adaptive strategies or coping mechanisms do take time to cultivate,” Appe said, which is not possible when funds are suddenly cut off.

What are the criticisms of foreign aid?

The U.S. cuts have brought new attention to efforts to reform how foreign aid works.

Critics within the field saw dependence on major donors countries, mostly the U.S. and in Europe, as one problem among many. They argued that foreign assistance was too inflexible, too top down, had too many intermediaries and never enough money.

For example, there was a major push within international development circles to “localize aid." That meant giving more money directly to countries or local organizations instead of having governments make large grants to international nonprofits that subcontracted with smaller organizations.

Nilima Gulrajani, principal research fellow at the London-based think tank ODI Global, has led a project over the last year to reimagine the foreign aid system.

“Everyone knew a rethinking was needed. It was clear even before all these cuts,” Gulrajani said. “But it’s now taking on an urgency that it didn’t have, and unfortunately, the collateral damage in the process will be the most vulnerable” people.

Through a series of dialogues called, “Donors in a Post-Aid World,” her project asked: Why should the richest countries give foreign aid at all?

In October, a small group of participating donor countries, researchers and activists suggested paring down to the most basic arguments for foreign aid: focusing on extreme poverty, on shared interests like mitigating climate change and managing global health, and then reforming how development aid works.

Given the cuts in Washington, progress in those areas now seems ambitious, Gulrajani said.

“It is very unlikely that any of these donors are going to pick up or fill the holes that have been left,” she said of other wealthy countries. “Not only is that very hard to do given the size of the hole, but I also think there is a sense that the pullback from the U.S. has just done untold damage to the sector overall.”

Will the undoing of USAID provide a fresh start?

Few critics of the foreign aid sector have welcomed the consequences of the Trump administration's cuts.

For example, the nonprofit Unlock Aid has argued that too much U.S. foreign aid spending goes through large contractors in Washington and that USAID was not doing enough to hold them accountable for achieving results.

Unlock Aid has proposed more cooperation with beneficiary countries to allow them to help set priorities and stricter transparency requirements for grantees.

“I think that those who care about foreign aid investments need to put together an inspiring vision for what a new future can look like that Americans can get behind,” said Walter Kerr, the co-executive director of Unlock Aid.

In February, Unlock Aid was one of several organizations that launched emergency fundraisers to benefit organizations that lost USAID funding. It's already collected $600,000 and recommended initial grants.

“It’s very difficult to have a conversation about reform while life-saving programs that people depend on are interrupted," Kerr said.

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