After the aid cuts: What's next for INGOs?

In late April, Christian Aid — a faith-based organization headquartered in the United Kingdom — announced a major shift. Instead of delivering programs through country offices, the organization would be channeling support to local groups; instead of allocating funding toward its own projects, it would prioritize partnerships with national organizations through five regional hubs. “We’re talking about our future role being that of a catalyst, connector, and convener,” said the organization’s CEO, Patrick Watt. “So not being known for what we deliver, necessarily, but being known for what we help to make happen as part of broader movements of change.” It was a transformation that took a year of preparation, and one that began well before the collapse of the largest donor in the world — the U.S. Agency for International Development. But now, nearly every international organization has been forced to recalibrate — and for many, that’s meant accelerating toward changes they were already attempting to make. “We're in this situation now, so we can either lament and navel-gaze, or we could think: okay, how can we get through this?” said Rachel Wilkinson, the director of programs at the International Civil Society Centre, a Berlin-based organization that focuses on supporting civil society groups through convening, collaborating, and innovating. “And how can we use this crisis to kickstart some innovative ideas?” For Christian Aid, that’s localization — the same trend last year, many predicted would drive the future of the sector. For organizations, it’s a look toward mergers and acquisitions, along with other types of restructuring, to stay afloat. Save the Children, Mercy Corps, and CARE are looking at ways to streamline their workflows, while FHI 360 has narrowed its priorities to work in fewer sectors. There’s a clear catalyst for these changes: aid cuts. Over the last seven months, the U.S. government has cut tens of billions of dollars in foreign aid, and in March, Secretary of State Marco Rubio announced that his office had slashed 83% of USAID’s programs. Countries across Europe have cut their budgets, too — and the U.K. is planning to reduce its aid spending to its lowest level in more than 25 years. The loss of U.S. government funding is less of a momentary blip and more of a longer-term reckoning, explained Elizabeth Campbell, the executive director of ODI Global Washington. “I just don't see a scenario where the money comes back, and if the money doesn't come back, no other donor in the world is going to replace that money,” said Campbell, who served as a former deputy assistant secretary at the State Department’s Bureau of Population, Refugees, and Migration during the Biden administration. “That means the system will change — dramatically and permanently.” The context For decades, international nongovernmental organizations — or INGOs — have been at the center of foreign aid. Thirty years ago, aid groups were in their golden age, with their numbers increasing by 42% from 1990 to 2000, according to Sarah Bush and Jennifer Hadden, associate professors at the University of Pennsylvania and Brown University, respectively, and co-authors of the book “Crowded Out: The Competitive Landscape of Contemporary International NGOs.” Year after year, these organizations expanded in both their reach and influence, bringing in tens of billions of dollars annually. But by 2010, that began to change, Hadden explained, identifying three key trends that reshaped the aid landscape. First, criticism of INGOs began to mount, and between sexual abuse scandals and questions about the colonialization of aid, INGOs’ reputations began to suffer. By 2021, respondents of the Edelman Trust Barometer reported that they had more trust in businesses than they did nonprofits. Second, restrictions on their activities began to grow; by 2024, countries such as Georgia, Kyrgyzstan, India, and Russia had passed “foreign agents” laws that targeted nonprofits receiving money from abroad. And finally, INGOs saw their resource base begin to shrink. The explosion of organizations in the 1990s meant that, naturally, funding became scarce, and in their book, Bush and Hadden noted that some NGO-dense geographies — such as Haiti — were soon deemed a “republic of NGOs.” Crises such as COVID-19, the war in Ukraine, and the crisis in Gaza pulled funding away from underresourced emergencies, and by last year, a funding squeeze rippled across the aid sector. At the same time, localization took on new weight. The aid sector in the global north recognized that for the work of development to succeed, leadership needed to come from the countries where the work was done. Donors agreed, with USAID attempting to push more of its own money toward local groups. None of these changes were lost on INGOs, and increasingly, organizations began exploring better ways of working: finding more cost-effectiveness and streamlining their operations. But even so, the move toward new models was slow — and by 2025, the foundation supporting an already-shaky aid sector collapsed. “These three trends that have been going on for the last 15 years or so kind of culminated in the second Trump administration,” said Hadden. “We are now probably going to enter a period of retraction, and see that NGOs need to become leaner, and [need to] work together to survive in these tough times.” Shifting priorities For FHI 360, the impact was immediate. Overnight, the international aid agency saw dozens of its USAID contracts get canceled — and within months, FHI 360 had experienced a revenue loss of $400 million, the organization’s head, Tessie San Martin, told Devex. By August, the organization’s workforce had been slashed by half — and with those losses, FHI 360 was forced to rethink its strategy. Projects tied to education and peacebuilding took a hit, San Martin said, with the latter thematic area being cut away from FHI 360’s portfolio entirely. Instead, the organization is now focusing on three thematic areas: global health security, economic resilience, and crisis response. “I’d be lying to you if I said everything continues as it was. Obviously not — we’re smaller, and there are a lot of things that we used to do that we don’t need to do anymore,” she added. “Anytime that happens, it’s an opportunity to rethink everything from top to bottom.” A similar situation has played out at Save the Children, which lost 70% of its U.S. government-funded awards this year. The organization was forced to let go of 3,000 of its staff, amounting to about 40% of its workforce. And in the wake of those losses, Save the Children has been calculating its own remake. “We've really taken the opportunity to shake it all up and say: ‘Okay. Forget what we had,’” said Janti Soeripto, Save the Children’s chief executive officer. “What do we need in order to be successful in the future?” That meant reprioritizing on what the organization does best, Soeripto explained — and slimming down the group’s focus to health, education, and protection for children between the ages of 0 to 10. “That doesn't mean that we don't do anything else, but there are other organizations who do [things like] livelihoods, sometimes better, frankly,” she added. “And I think we should be humble enough and honest enough to recognize that.” Both San Martin and Soeripto mentioned a renewed focus on artificial intelligence, and how working with AI could make programs more efficient over time. They also both mentioned the private sector and how engagement with corporations is more important than ever before. For Save the Children, that means exploring new blended finance opportunities, Soeripto said; for San Martin, that means elevating workforce development programs in both the United States and across the world. “These are operational model changes that were already happening,” said Soeripto. “And now we really have to, to some extent, put them on steroids.” Another push toward localization For Christian Aid, transformation has meant doubling down on localization. Christian Aid was lucky: The organization had been working toward its organizational transformations well before this year’s foreign aid cuts, giving them time to restructure their operations before the collapse of USAID shattered the sector. “What Christian Aid has, which gave us some time to think this through, is a quite reliable base of voluntary funding from our supporters in the U.K.,” said Watt, who added that the organization’s full transformation will be complete by next April. “So we weren’t forced to jump into a hasty restructure. We were able to think more fundamentally about a future model.” The same is true for ADD International, a disability rights organization based in the U.K. ADD’s journey began in 2021, around the same time that Mary Ann Clements became co-chief executive officer of the organization. Ever since, ADD has gone from implementing its own programs to handing the reins to local groups, with its last headquarters-led projects set to end by next year. “We had asked activists: what do you really want from ADD?” said Clements. “Time and again, they said: ‘we want more flexibility, we want funding for the things we want to do — not the things that you and other donors tell us you want us to do.’ We heard that, and reimagined ourselves.” Instead of implementing projects themselves, the organization began to focus on participatory grantmaking, implementing its first pilot approaches in Tanzania and Sudan in 2023. As a result, Clements said ADD was less affected by the global aid cuts than other organizations, “precisely because we had already started to change our model.” “We realized that us having a lot of people, and doing a lot of things, was something that I think we knew — theoretically — was against a lot of the principles that are at the heart of equitable development,” she added. That locally-led approach was something noted by Soeripto, too. Last year, Devex profiled a consortium in South Sudan — the Local Response Pooled Fund — that was helping funnel money toward grassroots nonprofits in the country. At the time, LRPF had been supported both financially and technically by Save the Children. But one year later, the consortium was in a totally different place. Today, LRPF is a fully registered, independent funding mechanism, one that doesn’t need Save the Children’s financial support to continue operating. From 2021 to 2024, LRPF channeled $1.7 million to 35 national organizations, the consortium’s head, Rombek Rombek, wrote in a recent blog post. Today, LRPF has nearly fully staffed its secretariat and secured an office space to continue its work. “It's bad enough that [the aid cuts] happened, but now we have to use it for good, and make sure that we're clear on our role: where do you really need an international NGO?” said Soeripto. “Sometimes, we need to get out of the way.” To be clear: localization wasn’t easy before USAID’s fall, and it’s far from easy after. For years, USAID was a localization champion, explained Dylan Mathews, the chief executive officer of Peace Direct — and now, the rest of the sector is feeling the gap. Last year, USAID channelled 11.2% of eligible funding to local organizations, up from 9.6% one year prior. It was far from the agency’s once-lofty target: before President Donald Trump returned to office, USAID had hoped to get a quarter of that funding to local groups by 2025. But now, those ambitions have been abandoned along with USAID — and many local organizations haven’t been able to survive the last few months. “Before, organizations were trying to grasp the enormity of the [localization] issue, but they at least had funding to enable them to think strategically. They weren't firefighting,” Mathews told Devex. “The problem now is that we're trying to transform in the midst of a financial crisis, and that means that the imperatives for change are different.” Streamlining efficiencies For many INGO heads, the future isn’t just about stepping away. It’s about coming together and reducing inefficiencies — those that, for years, have led to duplication across the sector. Soeripto said that Save the Children, Mercy Corps, and CARE are now working together to collaborate on emergency surge — the process of deploying people quickly to a disaster zone — with the hope of using one platform to pool staff, deploy resources, and immediately respond to a crisis. “Everybody’s surging people in when emergencies happen, whether that be manmade or natural,” she said. “But we do it in a very fragmented way. If we do it together, it's faster, more efficient, more effective.” The three organizations are also looking at collaborating on accountability methods — for example, consolidating phone lines to help affected communities know where to turn with questions — and streamlining evidence and research for similar programming. “It’s possible that we could see this as a chance for more effective models to emerge, and that the organizations that do manage to survive are leaner and more nimble,” said Bush of the University of Pennsylvania. “Even though the near-term is quite pessimistic, perhaps in the medium or longer term, there’s perhaps an opportunity for innovation, and for expanded impact.” In the latest survey from the Accountability Lab and Humentum, more than one-third of organizations affected by the aid freeze were considering a restructure as of May 2025 — and by early August, more than 150 groups had signed up for a new program offered by the Accountability Lab: Civil Strength Partners, a service to help organizations think through mergers, acquisitions, and other solutions to stay afloat. San Martin is hesitant about full-on mergers — combining two distressed organizations into one larger distressed organization, she said, doesn’t make either group whole. But still, FHI 360 is looking toward new partnerships, and how strategic alliances with donors, organizations, social enterprises, or corporations might bring the nonprofit to the next level. For FHI 360, that diversification is critical, as in 2024, the organization’s budget was nearly 85% funded by the U.S. government, according to FHI 360’s financial reports. “We all knew that we needed to change, and now we all have to change,” said San Martin. “And so, that’s the gift, and that’s how I look at it. This has been an accelerant to the things that had to happen already.” For many, that also means leveling up collaboration not just with other INGOs, but with local partners — and drilling back down into localization with accelerated effect. “The sector will look smaller, with organizations choosing to close, thinking to merge, and going toward different models,” said Lena Bheeroo, the head of anti-racism and equity at Bond, a membership organization of U.K.-based charities. “But this is not a moment where our values will be lost as we move toward an unknown future.” Earlier this month, 43 chief executive officers at U.K.-based NGOs signed a letter titled “change in our sector is inevitable — and in many respects, welcome.” The letter urged organizations to “seize this moment to help shape a future that acknowledges the role that racism and colonialism have played in shaping the international development sector to date.” The letter — which was coordinated by Bond — represented a moment of self-reflection for the sector, Bheeroo said, and signaled that despite the past year’s upheaval, organizations hadn’t forgotten about the commitments they’d made to localization, power shifts, and beyond. “I think we are going to see quite significant shifts taking place in the INGO landscape over the next few years,” said Christian Aid’s Watt. “I don’t think the old system of big aid is coming back — and I also think it’s probably a good thing that it’s not.”