The U.S. International Development Finance Corporation, or DFC, is one of the few areas of bipartisan consensus in development in the U.S. today — yet it’s inching dangerously close to a cliff. The agency’s current authorization expires Oct. 6, and despite broad support in Congress, a flurry of proposals, and two years of talks, lawmakers have yet to extend the agency’s life.
Meanwhile, the Trump administration has a proposal that would significantly revamp DFC, expanding its exposure to $250 billion from $60 billion, allowing investments in high-income countries, increasing equity investments, and reducing oversight thresholds. Adva obtained a copy of that plan, which the administration shared with lawmakers last month.
But without a reauthorization, any changes are a moot point because the agency will cease to function. And even if it’s ultimately reauthorized, all of this uncertainty might make private sector clients skittish and hurt the agency’s reputation.
“It would be such a travesty, because it is actually something everyone agrees on,” William Henagan, a research fellow at the Council on Foreign Relations, tells Adva, adding that “it's a tremendous failure of leadership that we can't simply reauthorize it.”
At this stage, a temporary extension in lieu of a full reauthorization seems the likely path, sources tell Adva. But lawmakers will have to weigh the various proposals and come to some compromises. Here’s what’s in the Trump proposal:
• Raise DFC’s total exposure or maximum portfolio size from $60 billion to $250 billion. That’s far higher than other proposals, so it is to be determined if Congress would go for it.
• Allow DFC to invest in high-income countries where the U.S. president certifies that they further national security and foreign policy objectives. That would take DFC away from its original intended focus on lower-income countries.
• Create an equity revolving fund — potentially capitalized with $3 billion — that would allow DFC to keep and reinvest any equity-related profits.
• Raise the threshold for having to notify Congress about investments from those worth $10 million to transactions over $100 million. Lawmakers might balk at giving up that much oversight, but some proponents say increasing the threshold could help speed up the agency’s work.
• Give the agency more flexibility in hiring.
Read: Trump has big plans for DFC as reauthorization deadline looms
ICYMI: Trump’s DFC nominee stresses dual mandate of U.S. development finance
The United Kingdom slashed its funding to Africa by nearly 12% this year — a dramatic cut of around £184 million ($245 million) — and more reductions are coming for countries in crisis, including the occupied Palestinian territories and Sudan, according to figures released last week by the country’s Foreign, Commonwealth & Development Office.
While FCDO has maintained its commitment to the World Bank’s International Development Association, many in the aid sector are sounding the alarm about what lies ahead.
“The world’s most marginalised communities, particularly those experiencing conflict and women and girls, will pay the highest price for these political choices,” says Gideon Rabinowitz, director of policy and advocacy at Bond. The ONE Campaign echoes those concerns, warning that “a year from now we will have plummeted over the cliff edge of far deeper cuts,” says Adrian Lovett, ONE’s executive director for the U.K., Middle East, and Asia Pacific.
Behind the numbers lies the bigger story of how the U.K. is redefining its global role. Aid to women and girls, a long-standing priority, is falling by 42%, while health spending will drop by almost half. Despite the government’s stated focus on poverty, the Center for Global Development criticized the imbalance. “Africa — home to over two thirds of those in extreme poverty — will receive under half of FCDO’s country and regional budget,” says Ian Mitchell, senior policy fellow and co-director of the Europe program at CGD.
With the aid budget set to shrink even further in the next few years, development advocates are pushing for greater transparency and consistency — and for the government to honor its commitments where the need is greatest.
Read: What FCDO will spend its money on this year
There’s newfound energy and a growing suite of tools for the private sector to invest in a development sector hobbled by massive aid cuts. From Sevilla’s recent Financing for Development conference, aka FfD4, to boardrooms across the world, investors and institutions are crafting new pathways to drive impact while also making money.
In 2023, multilateral development banks and DFIs mobilized a record $87.9 billion in private capital — a 24% jump from the year before, though still far from the trillions once envisioned, our colleague Elissa Miolene writes.
“Right now, growth markets account for 15% of all energy investment, infrastructure investment, globally — outside of China,” says Lucy Heintz of the investment firm Actis. “That’s a pretty small number when you think about the enormous opportunity.”
Heintz attributed the disconnect, in part, to risk perception, particularly in countries that haven’t yet put the right enabling policies in place to build investor confidence.
But the shift isn’t just about hard infrastructure. It’s also about measuring — and monetizing — outcomes. “It’s a nice expression of somebody saying, ‘I’m prepared to win if you win,’” says Marisa Drew of Standard Chartered Bank.
And the conversation about the private sector’s role in development finance was “a much more honest, realistic discussion” than in the prior Financing for Development summit, Shari Spiegel, director of the Financing for Sustainable Development Office at the U.N. Department for Economic and Social Affairs, said on the latest episode of our This Week in Global Development podcast.
“Trillions don’t matter if they go in the wrong direction,” Spiegel said, stressing that private capital can’t replace public finance, but can complement it when deployed with the right incentives, structures, and expectations. The hope, she said, is “not about privatizing a public agenda” but forging a clearer framework to “align those profits with public goals.”
Read: How is the private sector thinking about development? (Pro)
Listen: The next steps after FfD4, and how UN programs are affected by aid cuts
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As the Gates Foundation plans to sunset by 2045, it is doubling its giving — to the tune of $200 billion over the next two decades — and prompting a flurry of questions from development groups eager to know: How can we partner with Gates?
The answer, according to CEO Mark Suzman, lies in measurable outcomes and hard-nosed practicality. “If there isn’t a way to make [projects] at a price point and at a timeline that’s going to be useful and usable within low- and middle-income countries, I don’t care how good the idea is, we’re not going to be funding this,” Suzman told Devex President and Editor-in-Chief Raj Kumar in a one-on-one briefing.
The foundation is narrowing its focus to three categories: maternal and child health, controlling infectious diseases, and boosting economic opportunity — with a tight eye on impact and sustainability. “If there’s one word … it’s catalytic,” Suzman said. “Can we use our innovation to capitalize a different way of doing things that is going to be sustainable without us?”
But that catalytic approach also comes with conditions: deep involvement, strict alignment with Gates' goals, and long-term thinking. “If you’re going to be a partner with the Gates Foundation, expect us to be a very engaged partner,” Suzman explained.
And while the foundation continues to push innovation, it’s also stepping into advocacy amid shrinking global aid — a shift Suzman acknowledged is urgent. “We may win the occasional battle, but at the moment, we’re losing the war of our hearts and minds,” he said, calling for a political renewal of support for health and development.
By 2045, Suzman hopes the landscape will be transformed — and philanthropy more robust. “We are, at the moment, the world’s largest philanthropy by payout … but we don’t want that to remain the same.”
Read: Gates CEO on what the next 20 years hold, and what it means for partners (Pro)
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On Thursday, at 9:30 a.m. ET, we’ll be looking at how to get funding from the Global Gateway, the premier funding stream from the European Union.
And on Friday, at 10 a.m. ET, we’ll be discussing African health independence with Dr. Jean Kaseya, director-general of the Africa Centres for Disease Control and Prevention.
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World Bank President Ajay Banga’s high-profile visit to Mozambique underscored the lender’s push to fast-track development — and attract private capital — through a $6.4 billion hydropower project, even as questions swirl about political legitimacy and long-term impact. [Bloomberg]
As humanitarian needs outpace traditional aid systems, new financing models — blending public and private capital, sharing risk, and centering dignity — offer a path to more flexible, sustainable, and impactful support in a world of protracted crises and climate shocks. [World Economic Forum]
In the face of shrinking aid budgets and persistent development financing gaps, one issue remains underappreciated: How we finance sanitation — specifically products, services, and infrastructure such as toilets, and collection, transport, and treatment of waste — and in what currency. [Devex Opinion]