What’s next for global development funding in 2025

As 2025 shapes up to be a pivotal year for institutional aid — marked by sharp contractions and shifting strategies — the latest Devex Pro Funding live conversation unpacked what recent developments mean for the future of development organizations. A recent leaked document supplied to the U.S. Congress revealed that up to 86% of USAID awards have been canceled, although analyses suggest that the monetary amount of awards canceled may be lower. These unpredictable changes have left implementing organizations scrambling for answers — and for alternatives. But as the session revealed, there’s no single fix. What’s happening with U.S. institutional funding? • USAID’s shutdown has led to a freeze in new awards, with over 5,000 projects canceled. • The U.S. State Department, the Millennium Challenge Corporation, the Centers for Disease Control and Prevention, and U.S. Department of Agriculture may potentially remain as more stable funders in the short term — although details are scarce there, too. • Expect mergers and closures among U.S. implementing partners as they grapple with reduced pipelines. European aid: Slow erosion or strategic pivot? Europe isn’t stepping in to fill the U.S. gap — and in many cases, it's shrinking too. • Germany’s latest news showed it is moving forward with cuts to its aid budget, though it spared its development ministry, BMZ, from a merger with the foreign ministry. • While the EU publicly said it “cannot fill the gap” left by U.S. aid cuts, internal analysis seen by Devex revealed that Brussels is assessing where it might step in — particularly on global health, migration, and fragile states — even as it plans a €2 billion reduction in development spending. • The Netherlands, Belgium, France, Sweden, and Switzerland are all reducing official development assistance, or ODA, one way or another. • The big picture: Europe’s cutting of development aid and diverting to a growing focus on migration, security, and economic diplomacy probably means fewer resources for traditional development efforts. MDBs and DFIs: Still underused, still essential Multilateral development banks, or MDBs, and development finance institutions, or DFIs, remain a crucial but complex source of funding. • MDBs such as the World Bank, the Inter-American Development Bank, the African Development Bank, and many other regional ones disburse billions of dollars annually — but organizations need to engage early, reviewing procurement pipelines and building relationships both at the institution and at the government levels. • DFIs are looking for sectoral expertise and local insights in the markets they plan to expand to — areas where NGOs can add value. • Organizations can position themselves as partners in pipeline development, technical assistance delivery, or environmental, social, and governance, or ESG, strengthening. Philanthropy: Big talk, mixed signals Philanthropy is currently viewed as a potential bright spot — but can it scale? • In 2022, major philanthropies contributed $11 billion — more than some donor governments, but just 5% of global ODA. • There’s growing interest in trust-based philanthropy — long-term, unrestricted grants — with the MacKenzie Scott model leading the way. • Some philanthropic donors have indicated they will spend more in response to U.S. and European aid cuts. But it’s not yet clear how much extra will be raised. • Advocates are urging philanthropies to mobilize more of their endowments, not just their 5% payout, through impact investing and blended finance. Emerging donors and new dynamics • China and India are increasingly active as funders, but access remains opaque and highly bilateral. • Emerging donors in the Gulf and across Asia are expanding their giving, with potential for more localized engagement. • Diaspora giving and remittances are also on the rise, offering untapped opportunities — especially when paired with digital infrastructure and local partners. Where to go from here? The key takeaway? There’s no silver bullet. Organizations need to rethink their positioning — not just as grantees, but as technical partners, policy shapers, and co-creators of value across a more fragmented and competitive funding ecosystem. Want more briefings like this? Let us know — and stay tuned for upcoming live conversations on how to engage with Norfund, Lever for Change, Co-Impact, and many others.