Clive Tatenda Makumbe & Mary Chikwanda in Zimbabwe
United States (USAID): The United States, historically the world’s largest aid donor, has seen recent moves to scale back foreign assistance. In 2023, U.S. official development assistance (ODA) was about $55.3 billion (the highest among donors). However, political shifts have brought proposals for drastic cuts. Early 2025 saw signals of an aggressive rollback: advisers to President Donald Trump (upon taking office in 2025) even talked of “feeding USAID into the wood chipper,” boasting about gutting the agency.
While Congress ultimately controls the budget, such rhetoric translated into swift executive actions freezing funds. Global health programs were especially hit: tens of billions of dollars for HIV treatment, polio eradication, and other health services were suddenly eliminated or suspended.
The scale of U.S. cuts has been described as “swift and brutal,” with clinics shuttering in some countries and critical grants terminated. This marks a sharp reversal for a donor that provided an estimated $12–15 billion annually to global health alone. Beyond health, U.S. humanitarian and development funding is being reconsidered, and the policy focus is shifting: more resources are being redirected to domestic and defense priorities, and foreign aid is under heavy scrutiny. In short, American aid is experiencing a significant contraction in both funding and scope, with official announcements emphasizing “national security comes first” and deep cuts across development programs.
United Kingdom (UK Aid): The UK’s aid budget has undergone major retrenchment in recent years. In 2020, the government announced a “temporary” reduction of its foreign aid commitment from 0.7% to 0.5% of gross national income (GNI), citing pandemic-related fiscal strain. This cut took effect in 2021 and led to aid spending dropping from £15.2 billion in 2019 to £11.4 billion in 2021. Despite a modest rebound to £12.8 billion in 2022, aid has not returned to previous levelscommonslibrary.parliament.uk.
In fact, recent policy moves signal further cuts ahead. In February 2025, Prime Minister Keir Starmer announced that the UK will slash the aid budget from 0.5% to 0.3% of GNI by 2027 (a reduction of roughly £6 billion annually) in order to fund a boost in defense spending. This decision – effectively capping UK ODA at its lowest share of national income since the 1990s, has been met with domestic and international alarm.
Humanitarian groups warned the cut would “damage UK influence” and “cost lives”, calling it a betrayal of the country’s pledge to the world’s poorest. Notably, Britain’s aid had already been under pressure: as of 2023, nearly 28% of the UK’s ODA was being spent domestically on refugee support (up from just 3% in 2016).
This means fewer pounds reaching programs overseas. The UK’s aid portfolio has also been restructured – the Department for International Development was merged into the Foreign Office in 2020, and aid strategy is now tied more closely to diplomatic and trade objectives. The official stance maintains that the cuts are temporary and that the 0.7% target will be restored when fiscal conditions allow, but current forecasts do not expect a return to 0.7% until after 2029.
In summary, the UK has sharply pulled back its aid spending, reprioritized funds for domestic use and Ukraine (now a top recipient), and signaled a more defensive posture in its international engagement.
The Netherlands (Dutch Aid): The Netherlands, long a strong supporter of development aid (historically near the 0.7% GNI target), is likewise implementing significant cuts. A new conservative coalition government formed in late 2023 announced plans to decouple aid from GNI and reduce ODA substantially. In September 2024, it was revealed that the annual development budget would be structurally cut by €2.4 billion from 2027 onward, which would bring Dutch aid down from ~0.62% of GNI in 2024 to only 0.44% of GNI by 2029. Even before that, incremental cuts are underway: previously planned increases for 2025 and 2026 were canceled, and about €350–€550 million will be trimmed in those years.
Official announcements by the Dutch government emphasize a new approach of “focusing on the Netherlands’ interests” and making civil society partners less dependent on government funding. One of the first steps is an overhaul of NGO cooperation grants, with the budget for NGO partnerships to drop dramatically – from the current €1.4 billion framework to only around €390–€565 million for 2026–2030. Over a five-year period, roughly €1 billion less will go to civil society programs. Dutch officials argue this will streamline aid by funding fewer advocacy activities and focusing on areas “the Netherlands excels at,” such as HIV/AIDS prevention, women’s entrepreneurship, and human rights protection.
Nonetheless, the cuts mark a retreat: the Netherlands is poised to fall well below its past ODA contributions. Like the UK, Dutch aid policy is shifting to explicitly tie aid to economic and security interests at home. Other European donors are enacting similar austerity in aid – for instance, Belgium has trimmed its development budget by 25%, France has announced a 35% aid slash, and Switzerland plans to shut down several country programs by 2028.
In aggregate, the scale of reductions across traditional donors is significant: one analysis warns that aid cuts planned by about 10 major donor countries could cause global aid to fall by 25% by 2027 if all are implemented. The stage is thus set for a markedly smaller aid envelope from Western governments in the coming years.
Global and Regional Impacts of Aid Cuts
Overall Impact on Aid-Dependent Regions: The pullback by big donors is already being felt on the ground in many developing countries. According to the OECD, “fragile and least developed countries have had their development assistance cut drastically.” ODA to Sub-Saharan Africa shrank by 7.8% in 2022 compared to 2021, even as needs in that region continued to grow. Moreover, funding targeted for peacebuilding and conflict prevention – often crucial in fragile states – has dropped to its lowest level in 15 years. These reductions hit places that can least afford it: fragile countries like Mali, Somalia, South Sudan, and Yemen (which together account for over 70% of the world’s extreme poor) are seeing vital programs scaled back.
A Save the Children analysis projected that recent UK aid cuts alone would affect over 55 million people worldwide through reduced health, education, and food security support (particularly in Africa and the Middle East). In humanitarian contexts, budget cuts are already translating into “fewer mouths fed, fewer clinics open.” The World Food Programme warns that “every one percent cut in food assistance risks pushing more than 400,000 people towards the brink of starvation.” This grim arithmetic means that a 10% funding cut could endanger 4 million additional people, illustrating how even modest reductions can have life-or-death consequences.
Africa: Africa is arguably the region most exposed to donor aid fluctuations. Many African nations rely heavily on external support for health, agriculture, and education. The UK’s retrenchment has directly impacted numerous African countries – the UK government reports that from 2019 to 2023, bilateral aid to Africa fell from £1.7 billion to £1.2 billion.
Almost all major African recipients of UK aid saw sharp drops. For example, UK assistance to Ethiopia fell from £299 million in 2019 to £164 million in 2023; Nigeria from £237 million to £95 million; Kenya from £121 million to £41 million; and Sudan from £93 million to £51 million. Perhaps most dramatically, aid to Pakistan (in South Asia but formerly one of the largest recipients of UK aid) plummeted from £305m to just £69m, which also affects development outcomes in Pakistani communities. On the African continent, reductions in UK funding have forced the closure of some programs supporting girls’ education, water and sanitation, and humanitarian relief in conflict areas.
The retrenchment of U.S. global health aid delivers another blow to Africa. The United States has been the primary funder of HIV/AIDS treatment (through PEPFAR), malaria control, and child health initiatives across Africa. With U.S. global health assistance now abruptly curtailed, countries in East and Southern Africa are scrambling. Many have an extraordinary dependence on U.S. aid for their health sector, as shown below.
In Uganda, for instance, PEPFAR provides antiretroviral therapy to 1.4 million people – the majority of those on treatment. In countries like Mozambique, Malawi, Zambia, and Liberia, U.S. bilateral health aid has in recent years been equivalent to over 50% of their entire government health expenditure (and in some cases far more).
The broader development agenda in Africa is also at risk. Major infrastructure and poverty-reduction programs, often co-funded by European donors, are being scaled down. For instance, the Netherlands has been a key supporter of sexual and reproductive health services in Africa; its aid cuts mean fewer resources for family planning and maternal health in countries like Mozambique and Ethiopia. Local NGOs across Africa that used to receive Dutch or British grants for civil society strengthening or human rights work are seeing those funding streams dry up.
In West and Central Africa, France’s 35% aid budget slash is likely to affect Francophone countries, many of which are dealing with conflict and instability, as Paris reconsiders its commitments. The cumulative impact in Africa is a significant funding gap for everything from healthcare and food aid to education and gender-based violence prevention. African governments, many already facing debt distress, have limited capacity to fill these gaps domestically.
Asia: Across South and East Asia, traditional aid flows are also contracting, though impacts vary. In South Asia, the withdrawal of both UK and U.S. aid looms large. As noted, Pakistan’s UK assistance has been cut by ~75% over four years, jeopardizing programs in areas like girls’ education and climate resilience (Pakistan was a major climate aid recipient). Afghanistan – already facing a humanitarian catastrophe – is extremely vulnerable to donor retrenchment. Afghanistan was one of the most aid-dependent countries in the world; prior to 2021 much of its health, education, and infrastructure budget was externally funded. U.S. aid to Afghanistan has been largely frozen since the Taliban takeover, and now any remaining health programs supported via global health funds are imperiled. The chart above shows Afghanistan had the highest reliance on U.S. global health aid (over 300% of its government health spend).
Without that aid, basic services for millions of Afghans (vaccinations, TB treatment, etc.) are in peril, compounding an already severe crisis. In Southeast Asia, countries like Myanmar and Bangladesh (which host large refugee populations) have seen donors reduce or redirect funds. The UK cut bilateral aid to Bangladesh by more than half between 2019 and 2023, even as the Rohingya refugee situation continued. Aid groups warn that in Cox’s Bazar (the world’s largest refugee camp), food rations have been cut due to insufficient donor funds, raising malnutrition risks.
Elsewhere in Asia, middle-income countries have largely graduated from needing basic development aid, but targeted programs (such as climate adaptation or human rights initiatives) feel the pinch. Yemen and Syria in West Asia/Middle East stand out as conflict zones heavily reliant on aid – both saw sharp funding reductions from the UK and others. UK assistance to Yemen, for example, dropped from £260m in 2019 to £101m in 2023. This occurred even as Yemen suffered one of the world’s worst humanitarian crises, causing outrage among humanitarian agencies. Syria’s aid from the UK was halved in that period as well.
Such cuts in protracted crises mean that fewer families receive food baskets, hospitals run out of supplies, and efforts to rebuild schools and water systems stall. Middle Eastern and North African countries have in fact overtaken sub-Saharan Africa as the region with the greatest humanitarian need (largely due to new wars in 2023–24), yet European aid to MENA is not keeping pace. For instance, donor fatigue is apparent in Syria, and appeals for the Syrian crisis were barely half-funded last year. In Lebanon, which hosts Syrian refugees and now faces spillover from the Gaza war, Switzerland’s decision to end development programs by 2028 will remove support that helped provide water and education in vulnerable communities.
Latin America and the Caribbean: Latin America has generally become less aid-dependent over the past two decades, but pockets of high need remain – particularly in Central America, the Caribbean, and for crisis situations. U.S. aid cuts are a concern here: programs aimed at stabilizing Central America (Guatemala, Honduras, El Salvador) and addressing root causes of migration have been reduced or uncertain in recent years. A freeze or cutback in those funds undermines efforts to improve governance, security, and livelihoods in the Northern Triangle. In Haiti, which struggles with political turmoil and cholera outbreaks, U.S. health assistance (which has provided over half of Haiti’s healthcare funding in the past) is critical; any reduction directly translates to fewer vaccinations and medical services for Haitians
European donors have relatively smaller footprints in Latin America, but Spain, the EU, and others do fund development in parts of the region. The UK’s aid to the Americas was modest already (£120m in 2020) and has been cut further (to around £45m in 2022). This mainly affects the Caribbean and some South American countries that received climate or economic development aid. For example, climate resilience projects in Caribbean island states are receiving less UK support now, at a time when hurricane damage is increasing. Global health programs in Latin America are also feeling the strain: initiatives to combat diseases like Zika, dengue, and COVID-19 recovery efforts counted on international support. As Europe slashes budgets, health NGOs in countries like Brazil and Bolivia report fewer grants for vaccination campaigns and research.
At a health center in Brazil, for instance, children receiving the new dengue vaccine rely on programs funded by international donors and foundations. Global health groups warn that without sufficient donor aid, scaling up new vaccines and maintaining disease control in Latin America will falter – a setback for regional public health progress.
Middle East and North Africa: The MENA region’s aid needs have surged due to conflicts in Yemen, Syria, and more recently Gaza. Yet traditional donor support is not rising accordingly – in fact, some donors are diverting funds elsewhere. As noted, Yemen and Syria saw major cuts from the UK and others. In late 2023 and 2024, the humanitarian crises in Gaza and Sudan prompted emergency appeals, but funding fell short.
The United Nations had to scale back planned assistance because donor pledges were insufficient. Gaza in particular, facing a devastating conflict, needs massive relief aid; however, with European budgets squeezed, much of the burden fell on regional donors and the U.S. (which itself is juggling multiple crises). Refugee-hosting countries like Jordan and Lebanon are receiving less development aid for long-term needs of refugees (education, infrastructure) as donors concentrate only on life-saving aid.
This threatens to destabilize these hosts further. Even relatively stable countries in MENA – e.g. Tunisia, Morocco, Egypt – are seeing European development programs scaled back or delayed, especially those funded by countries like the Netherlands and Sweden that are cutting aid. This could slow economic reform support and job creation efforts in North Africa, potentially exacerbating unemployment and migration pressures.
Humanitarian Funding Gaps: Across regions, one of the clearest impacts of donor retreat is the widening humanitarian funding gap. Global humanitarian appeals are routinely under-funded, but the shortfall has reached record levels. In 2023, only 45% of the UN’s humanitarian funding requirements were met – the first time in over a decade that less than half of needed funds were secured.
And 2024 looks worse: as of late year, only 43% of the required $50 billion had been funded. The UN was forced to prioritize aid to fewer people – targeting 197 million out of 323 million in need – simply because donors would not cover the full scope of needs. Even with this triage, by November 2024 only 116 million people had actually received aid, meaning millions were left without support. Traditional top donors like the UK have dramatically pulled back in humanitarian contributions: the UK’s share of global humanitarian financing plunged from 9.5% in 2019 to just 2.9% in 2023 as a result of its budget cuts and reallocations.
Other European donors also reduced humanitarian aid in 2023. The consequence is that crises in Africa (e.g. drought in the Horn of Africa, conflict in the Sahel) received far less aid than required, forcing agencies to cut food rations and scale down vaccination campaigns. In mid-2024, only 18% of the funding needed for people in war and crisis had been received by mid-year, a “vast shortfall” according to the Norwegian Refugee Council.
UN officials have issued dire warnings: the head of UN OCHA (the emergency relief agency) said the funding crisis is so severe that the agency is laying off 20% of its staff worldwide, undermining coordination of relief efforts. In summary, donor aid cuts are translating into program disruptions and funding gaps in every region – from African clinics without medicine, to Middle Eastern refugees without food or shelter, to Latin American communities losing development projects. The ripple effects include stalling of economic progress, and in the worst cases, heightened instability as unmet needs mount.
Emerging Alternative Funding Models and Sources
With traditional donors pulling back, the global development community is looking to alternative funding models and sources to fill the void. While none of these alone can fully compensate for lost bilateral aid, together they represent a diversifying landscape of development finance.
1. Philanthropic Foundations and Private Donors
Private philanthropic foundations have become increasingly prominent in global development. Large foundations – such as the Bill & Melinda Gates Foundation, Ford Foundation, Wellcome Trust, and others – are pouring resources into health, agriculture, and education initiatives worldwide. In 2023, the Gates Foundation alone disbursed about $7.7 billion in charitable support, an amount on par with or exceeding many countries’ aid programsgatesfoundation.org. Foundations have been particularly active in global health: indeed, private philanthropy is now the second largest source of funding for health and reproductive health globally (around $17 billion), after the U.S. government.
These actors have stepped up in response to government shortfalls. For example, when U.S. funding for family planning was cut under a previous administration, a consortium of foundations and donor countries launched the SheDecides initiative to help fill the gap, with significant contributions from philanthropies (and countries like the Netherlands). Foundations are also investing in innovation – funding R&D for vaccines, climate-smart agriculture, and digital learning tools that might otherwise struggle for public funding.
However, while private giving is significant, it is not a panacea. As one expert noted, “Philanthropy will never replace public aid, but it can be a powerhouse if we use it right.” Foundations often have flexibility to target high-impact niches or pilot projects, but they generally do not fund large-scale basic services for years on end (something traditionally done by government aid). Still, in this era of aid cuts, philanthropic actors are expanding their role. More high-net-worth individuals from both the Global North and South are committing funds to development causes.
There’s also growth in corporate philanthropy and CSR (corporate social responsibility) investments in developing countries, such as tech companies funding digital education or pharmaceutical firms donating medicines. During urgent crises, we’ve seen philanthropy act faster than governments at times – e.g. private donors gave generously to COVID-19 response and to Ukraine humanitarian relief via online portals. In sum, philanthropic capital is helping to bridge some funding gaps.
Initiatives like the Global Fund and Gavi (vaccine alliance) receive hundreds of millions from foundations. New collaborative efforts are emerging too: over 78 major funders signed a “Meet the Moment” pledge to increase grants when public funds are cut. Nonetheless, the scale of philanthropy (tens of billions per year) remains smaller than global ODA (hundreds of billions), so it complements but cannot fully replace government aid.
2. South–South Cooperation and Emerging Donor Countries
Emerging economies in the Global South are increasingly important development partners, a trend that could partially offset declines from the traditional Western donors. South–South cooperation typically involves countries like China, India, Brazil, Turkey, Gulf states (e.g. Saudi Arabia, UAE, Qatar), and others in the developing world providing aid, loans, or technical assistance to other developing countries. While their approach often differs from OECD aid (focusing more on infrastructure, trade, or mutual benefit projects), these flows have grown rapidly.
China is the most significant: through its Belt and Road Initiative (BRI) and other programs, China has provided an estimated $50–100+ billion in development finance across Asia, Africa, and Latin America over the past decade. Surveys indicate China now works with more recipient country leaders than any other non-traditional donor – “China has been the front-runner… working with more leaders and countries than other South-South providers.” Chinese aid (often delivered as concessional loans for infrastructure) has built roads, ports, hospitals and more. In Africa, China has funded major railway and energy projects; in Asia, it has supported agriculture and public health (for example, building a disease control center in West Africa).
Other emerging donors are also expanding their footprint. Turkey has become a notable humanitarian donor – for several years it was among the top aid providers largely due to hosting millions of Syrian refugees and providing aid to neighbors. By 2024, Turkey and India were identified as “emerging contenders” in development cooperation, each working with leaders from 50+ countries on various initiatives.
India provides lines of credit for infrastructure in Africa, training programs for other developing countries, and grants in its neighborhood (South Asia). It frames this as solidarity among developing nations. Brazil has shared its expertise in tropical agriculture and public health (e.g. supporting Lusophone African countries), though budget constraints have limited its aid in recent years. Gulf States like Saudi Arabia, the UAE, and Qatar have also upped their development assistance – for instance, Saudi and UAE have given sizable grants and oil aid to countries like Yemen, Egypt, and Pakistan, and are major funders of Islamic Development Bank initiatives.
While emerging donors do not typically label their flows as “aid,” their contributions are substantial – and critically, many have pledged to continue or increase support even as Western donors retreat. For example, China’s government has publicly affirmed its commitment to South–South aid and even created a dedicated South–South Cooperation Assistance Fund. The challenge is that some South–South financing comes as loans, which can add to debt burdens, and it may not cover social sectors as much as traditional aid. Nonetheless, countries in Africa, Asia, and Latin America are increasingly looking to each other – and to partners like China/India – for development financing to fill gaps left by the West’s pullback.
3. Multilateral Development Banks and Institutions
Multilateral development banks (MDBs) such as the World Bank, African Development Bank, Asian Development Bank, and others are expected to take on a greater role as bilateral aid falls. These institutions can marshal large-scale financing, especially in the form of concessional loans and grants to low-income countries. In fact, during recent crises (e.g. the COVID-19 pandemic), funding from multilateral institutions increased significantly even as bilateral aid declined. For example, the World Bank’s International Development Association (IDA) – the fund for the poorest countries – ramped up its disbursements in 2020–2021 to help countries cope with COVID, with emergency fast-track loans and grants. Moving forward, MDBs are pursuing an “Evolution Roadmap” (in the case of the World Bank) to expand lending capacity for global challenges.
This includes plans to increase co-financing and leverage capital markets, so that every $1 of shareholder (donor) funding can catalyze several dollars of new lending. The idea is that MDBs can do more with less donor money by using guarantees and new equity to raise debt. Already, there are calls for the World Bank to implement an “urgent expansion of grants and concessional loans” via facilities like the IDA Crisis Response Window to help countries facing sudden aid shortfalls. Such measures could provide stop-gap financing to countries hit by abrupt donor exits (for instance, IDA could step in to fund a health program that lost U.S. support, at least temporarily).
In parallel, multilateral funds and UN agencies are seeking more direct budget support. Institutions like the Global Fund to Fight AIDS, TB, Malaria, Gavi (the Vaccine Alliance), and UN agencies (UNICEF, UNDP, WFP, etc.) rely on donor contributions – several of which have been cut. To compensate, they are lobbying other countries and the private sector. The World Bank has also created innovative trusts like the Global Financing Facility (for maternal/child health) which blends donor, government, and private money to sustain health systems.
Furthermore, new MDBs have emerged: the Asian Infrastructure Investment Bank (AIIB), funded by China and others, and the New Development Bank (NDB) set up by BRICS countries, provide additional development finance (though mainly to middle-income countries so far). Regional development banks (African, Asian, Inter-American) are looking to scale up climate financing and are urging richer members to use guarantees or paid-in capital to expand lending. There is momentum at the G20 and UN level for innovative use of IMF Special Drawing Rights (SDRs) – i.e. wealthy countries recycling their IMF reserve assets to MDBs, which can then lend to developing countries. This could potentially unlock tens of billions in new financing without traditional aid budgets.
In summary, while traditional grant aid stagnates, MDBs are leveraging their balance sheets to provide loans/grants at greater volumes. They won’t fully replace lost grants (loans must be repaid), but for many infrastructure and budget support needs, cheap loans from the World Bank or regional banks are a vital alternative. Multilateral institutions also bring coordination advantages and technical expertise that can help maximize the impact of limited funds. Moving forward, one can expect greater reliance on MDB financing for big-ticket development projects (like energy, transport, climate adaptation), with bilateral aid focusing on niche areas like humanitarian aid or education that MDB loans can’t easily cover.
4. Innovative Finance Mechanisms (Impact Bonds, Blended Finance, etc.)
The development community is increasingly experimenting with innovative financing mechanisms to mobilize new resources and make existing funds go further. One such tool is the Development Impact Bond (DIB) – a results-based financing model where private investors provide upfront funding for a program and donors (or governments) repay the investors (with a return) only if predefined outcomes are achieved. Over the past decade, dozens of impact bonds have been launched in various sectors (education, health, employment) and countries. As of 2021, there were 221 social and development impact bonds across 37 countries, with about $421 million in upfront investment mobilized for social programs. Examples include a DIB in India that financed education for girls (with improved learning outcomes triggering payments from outcome funders), and a humanitarian impact bond for physical rehabilitation in conflict-affected countries run by the ICRC. While the total sums are still small relative to traditional aid, impact bonds have “proven the concept” that tying funding to results can attract private capital for development. Moving forward, institutions are looking to scale this model for larger programs – for instance, exploring outcome-based bonds for climate resilience or gender equality projects.
Blended finance is another key approach. Blended finance means using a mix of public/development funds and private investment to support projects, often by de-risking investments that would otherwise be too risky for commercial financiers. For example, a development agency might provide a partial guarantee or junior equity in a fund, encouraging private investors to fund infrastructure in an emerging market. This approach gained popularity as a way to bridge the multi-trillion-dollar SDG financing gap by “crowding in” private capital. However, results so far have been mixed – a Center for Global Development review found that the high hopes for blended finance have not materialized at scale: “expectations that blended finance would expand sharply to narrow the financing gaps have not been met.”
The volume of blended finance transactions has remained relatively flat in recent years, and many deals are concentrated in a few sectors (like renewable energy) and middle-income countries. That said, there is renewed interest in improving blended finance models, especially for climate action. Initiatives like Climate Finance Partnerships and SDG Bonds fall under this umbrella. For example, green bonds and sustainability bonds issued by governments or corporations allow investors to fund climate and development projects, often with backing or certification by public entities.
The International Finance Facility for Immunization (IFFIm) is an early innovative mechanism that front-loaded donor pledges by issuing bonds for vaccination programs – an approach that could potentially be adapted for other sectors. In an era of aid cuts, donors are urged to use their limited funds more “strategically,” for instance, by allocating aid dollars as guarantees or first-loss capital in blended vehicles so that each aid dollar unlocks several private dollars. Blended finance, if effectively scaled, could help maintain momentum on infrastructure, SME development, and climate projects that might otherwise stall for lack of funding.
5. Digital Fundraising and Crowdfunding
The digital revolution has opened new channels for grassroots financing of development and humanitarian efforts. Organizations large and small are increasingly turning to online fundraising, crowdfunding platforms, and social media campaigns to tap into individual donors worldwide. In the wake of aid cuts, this has become more than a niche trend – it’s a critical source of flexible funding for many NGOs. Platforms such as GoFundMe, GlobalGiving, Kickstarter (for social causes), and others allow projects to raise thousands or even millions from concerned citizens across the globe.
For example, when official funding for a refugee relief operation was slashed, NGOs launched online appeals that raised emergency funds from the public to keep services running. UN agencies have also embraced direct digital fundraising: the World Food Programme’s “ShareTheMeal” app enables smartphone users to donate small amounts that cumulatively fund meals for vulnerable communities; to date it has funded over 220 million meals. UNICEF and UNHCR likewise run campaigns on social media targeting individual givers, especially during high-profile crises (e.g. the Syria appeal, or more recently appeals for victims of natural disasters). These efforts help mitigate funding shortfalls – for instance, after the 2021 UK aid cuts to Yemen, a coalition of NGOs organized a crowdfunding campaign to support Yemen’s health clinics, raising a portion of what was lost.
Crowdfunding for development projects is also being supported institutionally. The United Nations Development Programme (UNDP) even set up a Crowdfunding Academy to train nonprofits in running effective online campaigns. This reflects a recognition that tapping the “wisdom of the crowd” can raise not just money, but also awareness and engagement. In communities with a large diaspora, digital fundraising has been particularly powerful: diaspora members abroad often contribute to projects like building schools, hospitals, or providing disaster relief in their home countries via online platforms.
Similarly, social enterprises and startups in developing countries have used crowdfunding to fundraise for impact projects (for example, a clean water startup in Kenya raising funds on Kickstarter). Digital finance innovations like cryptocurrencies have also been trialed – some NGOs received crypto donations when other funds were unavailable, though this is still a small slice of funding. Moreover, there’s growth in micro-donations and peer-to-peer giving through services like Patreon or community-focused apps, enabling sustained giving for causes.
While digital fundraising will not fill multi-billion dollar gaps, it serves as a lifeline for specific projects and local initiatives. It also embodies a more democratized form of aid, where concerned global citizens directly support causes without government intermediaries. However, it comes with challenges: donor fatigue can set in, and not all causes garner equal attention (those with viral appeal may overfund while less “visible” crises languish). Still, as traditional aid contracts, the development sector is likely to further invest in engaging the public. The goal is to build a broad base of support to maintain humanitarian operations and community development – essentially crowdsourcing development finance at the margins.
Implications for Long-Term Development Goals and Humanitarian Responses
The retrenchment of major donor aid has profound implications for the achievement of long-term development goals and the capacity to respond to humanitarian crises. The world is midway through the Sustainable Development Goals (SDGs) timeline (2015–2030), but progress was already off-track – and these funding cuts threaten to further derail it. In fact, the UN’s development watchdogs report that none of the 17 SDGs are likely to be fully met by 2030 at the current pace. A significant factor is the financing gap: even before the recent cuts, there was an estimated $2.5 trillion annual financing shortfall for the SDGs in developing countries. Now, with donors scaling back, that gap is widening when it should be narrowing.
Undoing of Development Gains: Years of progress in reducing poverty, improving health, and expanding education are at risk of reversal. UN Secretary-General António Guterres warned in late 2023 that “aid cuts threaten to undo gains in development.” We are already seeing this: global extreme poverty had been declining for two decades, but the combination of COVID-19 and conflict pushed poverty rates up in some regions. Aid cuts amplify this by removing one of the buffers that help the poorest. For example, without adequate funding, vaccination rates may fall – leading to resurgences of diseases like measles or polio. Education programs that helped get girls into school (a key driver of long-term development) are being curtailed, which could leave a generation of children, especially girls in fragile states, without education. Aid-supported improvements in infrastructure (roads, water, power) will slow, affecting economic growth prospects.
Perhaps most worryingly, in fragile and conflict-affected states, reduced development assistance can fuel instability. Research published by the United Nations University highlights that many fragile states (home to 73% of the world’s extreme poor) are now receiving less aid, which could “put [them] on a trajectory of renewed instability and underdevelopment,” potentially sparking or prolonging violent conflicts. When disenfranchised youth see development projects halted and job prospects dim, the appeal of extremist groups or armed movements may rise – a classic case of development reversal feeding insecurity.
Strain on Humanitarian System: On the humanitarian front, the implications are already dire. The “new normal” is chronic underfunding of emergency appeals. As noted, barely 43% of needed humanitarian funds were available in 2024. This translates directly into suffering: the UN had to cut food assistance for millions of refugees and displaced people because of funding shortfalls. In East Africa, ration cuts in refugee camps have left families with perhaps 60% of minimum caloric requirements. In conflict zones like Yemen and Syria, aid agencies have scaled back health clinics, meaning many communities have no access to care. The UN’s ability to respond to new emergencies is also hampered. For instance, when the war in Gaza and an earthquake in Afghanistan both occurred in late 2023, there was simply not enough surge funding – robbing Peter to pay Paul, agencies diverted funds from other crises to meet the most urgent needs.
Over time, this erodes the humanitarian principle of impartial aid based on need; instead, aid might go to those crises that are politically or media salient, while “quieter” disasters (say a drought in southern Africa) get neglected. Aid cuts by the UK and others have also forced agencies to freeze longer-term recovery projects. Humanitarian efforts increasingly stop at Band-Aid solutions because there isn’t funding for reconstruction, livelihoods, or disaster risk reduction. The resilience of vulnerable communities is thus undermined, making them even more susceptible to the next shock. It is a vicious cycle: less development aid can lead to more humanitarian crises, and less humanitarian aid means those crises worsen, undermining development further.
Global Development Agenda and Partnerships: The funding reductions have also shaken confidence in global partnerships. Developing countries are questioning the reliability of traditional donors and may seek alternative alignments (e.g. with China or within South-South blocs). Trust in promises has eroded – for example, the target of 0.7% GNI for aid, long championed in global fora, seems increasingly hollow as even its staunchest proponents backtrack. This could weaken collective endeavors; for instance, climate finance commitments of $100 billion a year from rich to poor countries are intertwined with aid budgets, and shortfalls there endanger climate mitigation and adaptation efforts. Already, some climate funds remain under-capitalized, impeding projects that would help countries cope with climate change (another SDG linkage).
On a positive note, the crisis is forcing a rethink of aid effectiveness and sustainability. With less money, there is pressure to ensure every dollar has maximum impact. Donors emphasize focusing on priorities (as the Netherlands is doing by concentrating on certain themes), and eliminating duplication. There’s also a renewed push for localization – directing funding to local organizations in developing countries, which can build capacity and potentially reduce costs. If done well, this could mean more resilient local systems in the long run (for example, empowering African CDC and public health institutions to take charge, rather than relying on donor-funded NGOs). However, localization also requires initial investment in capacity, which is hard when budgets are tight.
Meeting the SDGs and Beyond: The implications for the SDGs are stark. Goals related to poverty (SDG1) and zero hunger (SDG2) are most directly affected: hunger is on the rise again, and extreme poverty has likely increased in fragile pockets. SDG3 (health) could see child mortality reductions stall or reverse if immunization and maternal health programs lose funding. SDG4 (education) is jeopardized by cuts to education aid – fewer schools built, fewer scholarships, and in humanitarian crises, many children staying out of school. Goals on gender equality (SDG5) face setbacks as programs combatting gender-based violence or boosting women’s economic opportunities lose support (e.g. the UK cut funding for some girls’ education and sexual violence prevention initiatives in Africa). Even infrastructure (SDG9) and climate action (SDG13) are indirectly hit since a portion of climate finance and sustainable infrastructure funding comes via ODA channels.
To mitigate these impacts, the international community will need to innovate and cooperate more than ever. This includes harnessing the alternative funding sources discussed: encouraging philanthropies to align with global goals, leveraging MDB financing for SDG-related investments, and mobilizing private capital for sustainable development. Some advocates call for new international taxes or solidarity levies (like a financial transaction tax or carbon pricing mechanisms) that could fund global public goods and make up for aid declines. Others stress the importance of domestic resource mobilization – helping developing countries increase their own tax revenues and manage debts, so they are less aid-dependent over time. Indeed, building self-sufficiency is crucial given that aid flows are uncertain. For humanitarian response, reforms are being debated to make funding more predictable, such as pooled funds and insurance-based approaches that automatically release money when triggers (e.g. a famine early warning) are hit.
In conclusion, the significant cuts by USAID, UK Aid, Dutch Aid and other traditional donors mark a pivotal moment for the future of donor aid. The immediate fallout is being felt across regions in the form of disrupted programs and unmet needs. However, this challenge is also spurring adaptation: new actors and mechanisms are rising to fill gaps, from billionaire philanthropists to neighboring countries helping each other and innovative financial tools.
The long-term success of these alternatives will determine whether the global development and humanitarian community can weather the loss of some traditional funding pillars. Without a doubt, achieving the ambitious global development goals will require reimagining the aid architecture to be more resilient and diversified. As one development expert lamented, “The door is just closing on aid everywhere we look” – but as that door narrows, windows of opportunity are opening for those willing to collaborate and innovate in the quest to support the world’s most vulnerable populations.
