Major INGOs are cutting jobs. What’s gone wrong?

Last month, two major international NGOs announced significant layoffs. The International Rescue Committee, with a total revenue of $1.34 billion and staff of 14,000, said it was cutting around 10% of the staff it funded from unrestricted revenue. In practice, that is likely to mean several hundred jobs, mostly in its head office. Meanwhile, more than 500 jobs are also on the line in the central and regional offices of Save the Children International, the largest INGO in the United Kingdom, which together with its member nonprofits has a total revenue of $2.5 billion and around 25,000 staff. The news follows on the heels of similar issues at the International Committee of the Red Cross, which said that it was planning 4,000 redundancies late last year. And there are rumors of similar issues at other INGOs, while large United Nations humanitarian agencies such as the World Food Programme are also struggling with funding. So what’s going on? Why are big aid and development organizations facing problems at the same time? And what are the implications for staff and for the communities involved in the organizations' programs? Funding environment First and foremost, the humanitarian environment has been extremely volatile. In 2019, before the pandemic, the U.N. Office for the Coordination of Humanitarian Affairs, or UNOCHA, reported that 132 million people were in need of support, and the funding needed was $21.9 billion. This year, that has risen to nearly 300 million people, and $46.4 billion. Humanitarian spending had been rising steadily for years to meet this challenge, only to fall off a cliff in 2023, when total spending tracked by UNOCHA fell by $7 billion year-on-year, or around 17%. This is largely down to the United States, by far the largest aid funder according to UNOCHA figures, which increased aid in 2022 only to reduce it again in 2023. And it does not look likely that aid will increase in 2024. The factors mentioned above will have affected different INGOs to greater and lesser extents. Those that are more focused on humanitarian emergencies are likely to be worse affected because funding for this field is more volatile. Rapid growth, rapid reductions IRC and SCI, however, seem to have been among the more severely affected INGOs, with several similarities in the two organizations’ positions. Both IRC and SCI have grown rapidly in recent years, partly in the wake of huge increases in humanitarian spending by major donors, driven by the COVID-19 pandemic and the war in Ukraine. But as funding for those crises has receded, less money is expected to flow into the sector. With rapid growth, it is not uncommon for a number of problems to emerge. As organizations grow in size, they may not be able to scale up financial skills fast enough to manage the money effectively. And in particular, problems come when having to scale up and scale back down. “In periods of growth, people take their eye off the ball when it comes to cost recovery models,” said Tim Boyes-Watson, who runs Fair Funding Solutions, a consultancy in the U.K. that supports NGOs to make funding sustainable and locally led. “They may get less cost-conscious because they will have more money for overheads, because these are fixed costs whereas program costs are variable. “And then they don’t realize that when income falls, the shrinking variable program costs will mean they recover much less indirect costs to cover those fixed overhead costs.” In the recent situation, another problem has been cost increases. In many cases, grant agreements would have been signed before inflation hit double-digit levels in many parts of the world, meaning that the amount of money disbursed couldn’t cover what was originally agreed on, and INGOs have been left to cover shortfalls with their own cash. The causes of the cuts That’s not to say that both organizations have faced exactly the same issues. At IRC, CEO David Miliband was explicit in blaming rising costs, a reduction in unrestricted funds, and a failure of internal systems to keep pace. SCI leaders acknowledged to Devex that a financial shortfall and rising costs played a part in the organization’s decision to make redundancies, while emphasizing that the cost-cutting in central and regional teams is being driven by the need to get more money to its country offices. SCI leaders said they had been able to maintain levels of unrestricted funding, but that the redundancies were part of a longer-term plan. In both cases, however, the reaction of staff members who spoke to Devex has been strikingly similar. Anger at poor communication. A feeling that there is one rule for bosses and another for ordinary workers. Accusations of institutional inequality and unfairness. In both cases, staff members also expressed concerns that management was out of touch with their concerns, especially over the war in Gaza, where there is a belief that management has taken too soft an approach to placate international donors. And in both cases, there are questions about the focus on growth. The two organizations have both expanded rapidly over recent years, leading to questions — both from their own staff members and from outsiders in the sector — over whether they have grown too quickly. At IRC, anger has focused more on Miliband himself, and particularly his $1.25 million salary, which is roughly double that of leaders at competitor organizations. In a statement to The Mail On Sunday, a U.K. newspaper, IRC acknowledged that it had not gotten everything right, and said Miliband had accepted a pay cut this year but stressed how the organization had tripled in size under his leadership. At SCI, there may be a deeper level of anger at the way the organization is run. Devex spoke to several former and current staff members at SCI, who spoke on condition of anonymity because they were concerned about their future employment prospects. Staff members at several levels — from senior individuals in head office to those at a country level — said that the organization had become too focused on raising money instead of serving the needs of program recipients, and that SCI had gone through several rounds of reorganization without seeing clear benefits. This disquiet resulted in a letter from staff members saying they had lost trust in the leadership. That letter, now signed by over 350 staff members, calls for greater staff representation, increased transparency, and an independent review of structural and financial decisions over the last five years. It is particularly critical of communication from leadership. A staff survey accompanying the letter showed that most staff members did not consider they had had sufficient ability to influence an internal consultation, and that most were concerned that they had not been listened to. Should INGOs have been better prepared? One question among the global development community is whether both INGOs should have been ready for these shifts in funding, and had more comprehensive plans in place to respond, without putting jobs at risk. These changes have the potential to severely impact staff well-being, particularly for workers in the global south who have less of a social safety net. Janti Soeripto, CEO of Save the Children US, told Devex that it was common to see the organization increase and decrease the number of employees in any given country, depending on the level of crisis that it faced. (Devex President and Editor-in-Chief Raj Kumar serves on the board of Save the Children US.) “In a lot of our countries, this waxing and waning of organization structures happens naturally, as a matter of course,” Soeripto said. She highlighted the situation in Bangladesh, where at one stage SCI employed around 1,800 people at the height of the Rohingya crisis, but had moved over time to having many fewer staff members. But current and former staffers told Devex the most recent cuts were emblematic of internal uncertainties. They said that SCI has been wrestling with its internal structures for years, with several waves of restructuring, and that this was just the latest. They also question how fair it is to compare the loss of project staff members — who expect to be employed for limited periods — to head office staff members who might expect to have greater permanence. What next? UNOCHA figures so far this year indicate that for INGOs and others delivering aid, the cash crunch in humanitarian funding will continue. For those in need of aid, this is a disaster. Funding is already insufficient to meet growing humanitarian and development needs, and it seems likely, given recent reductions in U.S. humanitarian spending and widespread cuts among Northern European donors, from the Netherlands to Sweden to Germany, that less will be delivered in the future. For the wider sector, there remain questions over the INGO model. Observers question how effective a financing model that comes with cycles of boom and bust can be. They also warn that it is easy for INGOs to become focused on growth for its own sake, rather than to serve people in need of support. At the same time that rapid growth has taken place at IRC and SCI, there is a widespread call for local leadership, with agencies themselves saying they need to reduce their balance sheets and make space for local leaders, and repeated calls for donors and large implementers to honor the Grand Bargain promise to deliver more through local organizations. But in a time of crisis, it is far from clear that the models currently exist to deliver sufficient funding through local NGOs rather than international organizations and U.N. agencies. While there is a clear belief that these models should exist — and that results would be better for all parties involved if they did — there has been little success in setting them up. For IRC and SCI, in particular, it is clear that major challenges remain. Both organizations face dissatisfaction and distrust among staff members, who openly question whether their own organizations’ structures are best for delivering their mission, leaving leaders with major communication and strategy challenges ahead.