Layoffs trickle in as industry braces for budget cuts

News of job losses in the development sector is trickling in as NGOs and contractors prepare for a Trump administration budget, which could reportedly see foreign aid spending slashed by as much as 37 percent. President Donald Trump’s outline budget, details of which emerged at the end of last month, is calling for massive foreign development assistance cuts, alongside plans to increase defense funding by $54 billion. The U.S. Agency for International Development and the State Department stand to lose the most, likely resulting in programs being eliminated and major staff cuts. Even though bipartisan opposition to the proposed cuts is already mounting and Congress is likely to revise down the cuts, as reported by Devex, the development community is still likely to be hit hard. That has led to nervousness in the sector, which has been accentuated by a series of staff cuts recently announced at National Democratic Institute, Management Sciences for Health, and Inclusive Security, Devex has learned. “[Development] organizations know very well that cuts of this magnitude will be very destabilizing and destructive to their efforts,” Scott Morris, senior fellow at the Center for Global Development, told Devex. And while he is hopeful Congress will be able to reduce the cuts, he said maintaining current levels of development spending would be a “herculean task.” Furthermore, job losses are not the only indicator of belt tightening within the industry, according to InsideNGO CEO Tom Dente. He pointed to the recent merger of two major USAID contractors — International Resources Group and RTI International, as reported by Devex — as an example of a strategic response from NGOs to the budget uncertainty. “Many organizations feel they are in a holding pattern until new budget is made public and we are seeing leaders anticipating funding cuts or shifts and responding by developing proactive contingency plans with a strategic mindset,” he said. Contingency efforts include a “renewed interest in managing our costs more effectively and ensuring resources and investments have the most impact,” Dente said, as well as greater collaboration and communication among NGOs on issues such as the recently revised executive order on visas from six Muslim-majority countries and how to safeguard federal awards, he said. Ultimately, these are “resilient organizations and resilient leaders,” he said. An organization that has seen major job cuts is Inclusive Security, which works with women in peacebuilding activities and recently laid off its entire advocacy team, Devex has learned. Director Jacqueline O’Neill said the organization is undergoing a “significant transition” and said that “the uncertainty resulting from the shift in the political climate was one of several contributing factors.” A former employee, who wished to remain anonymous due to the sensitivity of the subject, said that while the change in administration was not the main reason for the downsizing, it undoubtedly affected Inclusive Security and would continue to impact it and other similar groups going forward. “I think this is a very interesting time for advocacy groups like mine who got so used to operating in a friendly environment. Now we are in a hostile one and there’s a lot of catching up and shock happening,” the ex-employee said. While women’s participation groups such as Inclusive Security have operated under “hostile” administrations before, it has never been this difficult, they said. “These next couple of years will see a lot of organizations of all sizes losing staff but also having to completely rethink their strategies, which could mean cuts and streamlining and other programmatic adjustments,” they added. Last month, NPR reported that World Relief was to lay off one-fifth of its staff and close five offices as a result of the Trump administration's cap on the number of refugees allowed to enter the country. However, not all NGOs said the job cuts were linked to uncertainty over the future foreign aid budget. The democracy NGO National Democratic Institute — which receives approximately half of its funding from USAID and a further 30 percent from other U.S. government agencies — announced cuts to staff at the end of last week. However, Jerry Hartz, director of communications at NDI, said the timing was unrelated to the budget proposal and told Devex funding for democracy has been declining in recent years. "Every year around this time, which is half way through our budget cycle, we have to determine how we can maximize our program goals around the world. Reductions are never an easy decision," he said. Earlier this year, the Arlington-based health NGO Management Sciences for Health laid off as many as 70 staff, Devex learned. A former employee who lost their job as part of the downsize said the cuts were the result of MSH’s overreliance on USAID funding, which had stalled. The former worker, who also spoke to Devex anonymously, said USAID’s “slackness” predated the new administration. Jordan Coriza, a spokesperson for MSH, said the cuts were part of the organization’s bid to create a “leaner, more streamlined home office to support our worldwide programs.” Stay tuned to Devex for more news and analysis of what the Trump administration means for global development. Read more coverage here and subscribe to The Development Newswire.