Is this the end of aid as we know it?

Official development assistance, or ODA, is falling for the first time in years. It reached a peak of $223.45 billion in 2023, but fell back to $207.6 billion in 2024. The Organisation for Economic Co-operation and Development, or OECD, is predicting a similar or greater drop this year. The immediate cause is a shifting political situation, most dramatically in the United States — where President Donald Trump has moved to decimate the aid budget since his inauguration in January — but also elsewhere, with cuts taking place across many Western donors. At the same time, the aid model has increasingly come under fire for perceived inefficiencies and inequitable power dynamics. Is this the beginning of the end of aid, as some headlines have declared? It’s unlikely to be quite that dramatic, according to experts who spoke to Devex — but it’s still a significant turning point. While the experts predicted that aid spending would continue in some form — and might even rebound in the long term — it will look very different than before. Is this different from past dips? ODA has been on a steady growth trajectory for decades. Spending in 1973 stood at $43.72 billion, in constant 2023 prices. Fifty years later, that figure had more than quintupled. Even so, there have been fluctuations over the years. For example, ODA fell for several years following the end of the Cold War, and there was also a notable drop after 2005, when figures had been briefly boosted by debt relief. Could the current moment be just another blip? Lee Crawfurd, a senior research fellow at the Center for Global Development, is optimistic that it could be. In a recent article, he noted that although public support for aid in the top donor countries of the U.S., Germany, U.K., and France has been falling, it remains above 50% — except in the U.K. — according to data from the Development Engagement Lab. “In the current climate it’s hard to imagine us going straight back to the peak of aid from a few years ago,” he told Devex. Yet even with the cuts, there is still a significant amount of money going into the system, he pointed out. OECD, the body tasked with tracking global ODA flows, is projecting that by 2027, ODA will have fallen back to 2020 levels. That would indicate a drop of around 20% in just five years — but it would still mean around $175 billion in ODA that year. “The claims for the ‘end of aid as we know it’ are overblown. [Even] if we’re back to the levels of aid that we had 15-20 years ago, it may be less money but it’s clearly not nothing,” said Crawfurd. In his view, the cuts are driven by economic stagnation following the 2008-2010 global financial crisis, which has been followed by a surge in far-right and populist right-wing politics. “It’s harder to be generous when people feel pinched. So I’m hopeful that as rich economies rebound and people feel more comfortable we'll see increased support for aid in the future,” he said. ‘An existential moment’ Yet even if aid spending ultimately rebounds, many observers see this moment as more than just a blip. Last year, the four biggest ODA donors all cut their aid budgets. It was the first time this had happened in 30 years — and all are expected to do the same again this year. “The size of these cuts and their convergence over 2024-2025 far exceed what we have seen in earlier periods,” said Nilima Gulrajani, principal research fellow at ODI Global who leads the think tank’s Donors in a Post-Aid World project. “This is more than a blip driven by a fiscal crisis, this is an existential moment for the sector itself,” she said. That’s because of the context in which the cuts are happening. First, the political consensus around aid in key donor countries appears to be crumbling. In the U.K., for example, aid previously had broad cross-party support but has now been subjected to cuts by both major parties. And the remaining aid budget has increasingly been shifted to address issues of domestic concern such as migration, with much of the money remaining in the U.K. Second, there has been growing momentum behind critiques of the aid system, even among those who support it in principle. Critics argued that while aid has had some positive impact, it is often inefficient, with vast sums of money being swallowed by intermediaries before it ever reaches the countries it’s intended for; that many programs fail to prioritize the real needs of communities; and that it perpetuates dependency, enabling donor countries to exert undue influence in recipient countries. Georgetown University associate professor Ken Opalo laid out this argument in Semafor earlier this year. “There are lots of examples of how aid has helped improve human welfare at scale around the globe,” he wrote. “No impartial observer would deny this progress.” Yet, he went on, the old system “was ultimately not good enough to help these countries grow and achieve structural economic change.” Fatema Sumar, adjunct lecturer at Harvard Kennedy School and executive director of the Harvard Center for International Development, agreed that the current cuts are different to those of the past. “It could be [another blip], but I don’t think that’s the full story,” she said. “The past downturns happened in a different geopolitical and economic context. Today, critiques of the aid industry are stronger, domestic political pressures are sharper, and recipient countries themselves are demanding more dignity and agency. So even if we see a rebound in aid volumes, the model of business-as-usual is unlikely to return.” In other words, while this may not be the end of aid, it likely heralds major changes to the existing model. What happens next? Opalo and Gulrajani both predict that aid will continue but at lower levels. Exactly how that money will be spent has not yet emerged from the dust of the old system. For Opalo, donor countries are likely to use “whatever aid is left (both bilateral and multilateral) to more nakedly advance their narrow foreign policy goals and geopolitical agendas,” a trend that has ramped up in recent years. More optimistically, Gulrajani believes that “a new rationale and purpose” will emerge for what remains of publicly funded aid in the long run, focused on extreme poverty, global public goods, or structural transformation — themes that have emerged from conversations between development professionals under the Donors in a Post-Aid World project. Public money will also primarily be used “to crowd other actors in,” she said. Building on this, aid experts including Gulrajani recently laid out a new vision of aid to Devex that would be more focused, delivered via pooled funds with compulsory contributions from all countries, and disbursed primarily to governments and other local players. But if aid flows are going to be permanently reduced, at least some of the gaps will need to be filled from other sources, such as the private sector, tax, and trade. In the short term, this will be a painful transition for countries that previously relied on aid. The sudden withdrawal of the U.S. — by far the world’s biggest donor — “has left next to no opportunity for a managed and orderly exit that allows real consideration of domestic policy alternatives in aid-receiving countries,” said Gulrajani. As a result, the immediate impact of the cuts has been high — with food left rotting in ports and medical supplies abruptly cut off. Despite U.S. Secretary of State Marco Rubio’s claim that “No one has died because of USAID [cuts],” researchers calculate that millions of lives have been put at risk. In the long term, some of the damage will subside as new sources of funding are found and new systems established. But it won’t be straightforward. Alternative sources of funding are more accessible to some countries than others, Gulrajani warned, and some of the most vulnerable countries will struggle to fill the gaps. It’s also not a like-for-like replacement, so some areas of development may find it easier than others to attract money from non-ODA sources. “Some SDGs will fare better than others … Like any other public policy arena, there will be winners and losers,” she said. Nonetheless, many are hopeful that this transition will ultimately give lower-income countries more control over their own development. “Aid was never meant to be permanent,” said Harvard’s Sumar. “We should see this as a moment to accelerate the shift toward other drivers of development: trade, investment, remittances, and most importantly, the talent and potential of people themselves.” This is an extension of what is already happening, she said. “The evidence is clear: while aid plays a role, it has never been the primary driver of sustained poverty reduction. Remittances now outstrip aid globally — reaching nearly triple the amount and going directly to households in need. Beyond that, sustained economic growth fueled by trade liberalization, [foreign direct investment], and structural reform has been the true engine of lifting populations out of poverty.” Aid may well still play a role, but it will become less and less central to development, according to Sumar. “The real challenge is not how many dollars are in the aid pipeline, but how we use this moment to redefine development,” she said.