The humanitarian landscape has changed.

Summary

Since 2024, the global humanitarian and development aid landscape has undergone a profound and rapid contraction, driven primarily by significant cuts in official development assistance (ODA) from major donor governments. The United States Agency for International Development (USAID) experienced an unprecedented operational shutdown beginning January 2025, with over 80% of its programmes terminated within weeks, triggering a cascade of funding shortfalls and programme closures worldwide. Other key donors, including European countries, have also reduced aid budgets, compounding the crisis.

This seismic funding shift has forced NGOs and UN agencies into crisis management mode, with widespread layoffs, programme suspensions, and operational retrenchment. Vulnerable populations, especially children, women-led organisations, and local actors, have borne the brunt of these cuts, with millions losing access to essential health, nutrition, education, and protection services. While some organisations like Médecins Sans Frontières (MSF) have been less affected due to their private funding models, most humanitarian actors face radical operational downsizing and strategic reorientation. The medium- and long-term implications include a shrinking humanitarian sector, increased reliance on innovative financing, and existential challenges for large NGOs such as Save the Children, which, although not facing immediate extinction, must adapt to a drastically altered funding environment.

Full Analysis

  1. Background and timeline of funding cuts: Global official development assistance (ODA) declined by 9.3% in real terms in 2024 to USD 209.8 billion, marking the start of a downward trend after years of relative growth [E1][E7].
    • The OECD projected further reductions of 9–17% in 2025, with bilateral aid to least developed countries potentially falling by up to 25%, and sub-Saharan Africa by up to 28% [E1].
    • The most dramatic event was the effective closure of USAID’s overseas operations starting 20 January 2025, when the Trump administration imposed a 90-day freeze on nearly all US foreign aid, responsible for approximately USD 40 billion annually [E1][E5].
    • By early March 2025, about 83% of USAID’s global programmes (5,200 of 6,200) were terminated, with USD 54 billion in multiyear contracts and USD 4.4 billion in State Department grants eliminated or transferred [E1][E5].
    • This rapid dismantling led to layoffs of roughly 1,600 USAID staff, furloughs for 4,200, and targeted reductions of 2,000 US-based employees, severely disrupting aid delivery [E1][E5].
    • Other major donors, including European countries, also cut aid budgets in 2024–2025, with the EU announcing a humanitarian aid budget of €1.9 billion for 2026, reflecting constrained resources amid growing needs [A8].
  2. Scale and relative size of the funding shock: USAID’s programme terminations represented a 92% cut in multiyear contract awards, a scale unprecedented in recent humanitarian history [E1].
    • The US remained the largest donor in 2024, providing USD 63.3 billion (30% of total DAC ODA), so its cuts had outsized global impact [E1].
    • UN humanitarian funding from the US dropped from up to USD 17 billion in prior years to just USD 2 billion for 2026, causing a USD 500 million shortfall in the UN core budget and triggering approximately 3,000 job losses (20% of the UN regular workforce) [E2][E8].
    • Health funding, particularly for malaria and HIV/AIDS programmes, collapsed by up to 60% from 2022 peak levels, with disruptions in over half of surveyed endemic countries [E4][E6].
    • Sector-wide, local and international NGOs reported workforce reductions of up to 50%, with many forced to suspend or close programmes [E1][A3].
  3. Operational impacts on NGOs and UN agencies: NGOs reacted swiftly to the funding shock, implementing large-scale layoffs, furloughs, and programme suspensions. The International Rescue Committee (IRC) cut thousands of staff globally and reduced senior pay by 20%, with US government funding comprising 42% of its 2025 budget [E1][A3].
    • Save the Children International faced immediate impacts across more than 40 countries, with closures of five country offices (Sri Lanka, Poland, Brazil, Georgia, Liberia) and over 2,300 staff affected. By early 2026, 11.5 million people, including 6.7 million children, were impacted by funding cuts, leading to cessation of life-saving operations [A4][A5][A6].
    • UN agencies experienced hiring freezes and structural downsizing. UNICEF reported that 90% of surveyed women-led and local organisations had been financially affected, with nearly half anticipating closure within six months, severely impacting gender-based violence and protection programming [A7][A11].
    • The Danish Refugee Council terminated approximately 2,000 staff (25% of its workforce), and the Norwegian Refugee Council suspended activities in 20 countries due to aid suspension [E3][A10].
    • Some UN agencies, such as IOM and UNHCR, faced significant staffing risks, with up to 600 UNHCR positions at risk, while others resorted to hiring freezes rather than layoffs [E2].
    • Health programmes for diseases like tuberculosis and malaria faced severe disruptions, with some countries reliant on USAID for over 20–30% of funding now experiencing service interruptions [E4][E6].
  4. Notable exceptions and alternative funding models: Médecins Sans Frontières (MSF) was largely insulated from government funding cuts due to its reliance on private donations, allowing it to maintain operations despite the broader aid shock [A3][E1].
    • Some NGOs have begun pivoting towards impact investing and innovative financing to diversify income streams and reduce dependence on volatile government aid budgets, as exemplified by Save the Children’s recent strategic shifts [A4].
    • European Union humanitarian funding, while reduced, has sought to maintain commitments and explore private sector partnerships to fill gaps [A8][A9].
    • However, these alternative funding sources remain insufficient to fully compensate for the scale of government aid reductions [A6][A15].
  5. Consequences for aid delivery and affected populations: Millions of vulnerable people lost access to essential services, including health, nutrition, education, and protection. Save the Children estimated 8–12 million people supported by its programmes were affected, with thousands of aid worker jobs threatened [A1][A5].
    • UNICEF projected a 24% drop in international education aid compared with 2023, potentially leaving an additional 6 million children out of school by 2026, with girls’ education facing a 28% reduction [A7][A11].
    • Health impacts include delayed or cancelled insecticide-treated net campaigns for malaria prevention, risking millions of lives, especially children under five [E4].
    • Gender-based violence and protection programmes, often led by women’s organisations, faced disproportionate funding cuts, threatening the safety and rights of women and girls in crisis contexts [A7][A14].
    • Food aid distribution was disrupted, with over USD 489 million worth of food aid at risk of spoilage due to logistical and staffing challenges [E1].
    • Conflict-affected areas such as South Sudan and Sudan saw worsening humanitarian conditions amid funding shortfalls, with millions pushed into catastrophe [A12][A13].
  6. Short-term implications for the NGO sector: Immediate operational retrenchment, including programme closures and staff layoffs, has reduced the scale and scope of humanitarian response globally [E1][A3].
    • Local and women-led organisations, often more dependent on smaller grants, face existential risks, with many anticipating closure within months [A7].
    • NGOs have had to prioritise core life-saving activities, often at the expense of longer-term development and resilience-building programmes [A6][A15].
    • Competition for scarce funds has intensified, increasing pressure on NGOs to demonstrate impact and efficiency rapidly [A4].
  7. Medium-term implications and sectoral adaptation: NGOs are exploring diversification of funding sources, including impact investing, private philanthropy, and partnerships with the private sector, to reduce reliance on government aid [A4].
    • There is a growing emphasis on localisation and supporting community-led responses, partly driven by funding constraints and the need for cost-effective programming [A2].
    • Organisations face strategic decisions to adapt, shrink, or risk closure, with some downsizing permanently or merging to survive [A15].
    • UN agencies are likely to continue structural downsizing and prioritise core mandates, with potential reductions in peacekeeping and humanitarian operations [E2][E8].
    • Operational challenges include maintaining staff morale, managing donor expectations, and navigating political pressures amid shrinking budgets [A4]
  8. Long-term implications and existential risks: Large NGOs such as Save the Children are not currently facing existential extinction but confront radical changes in scale, staffing, and programme scope [A4][A6].
    • Continued funding volatility threatens the sustainability of protracted humanitarian operations, especially in complex crises requiring long-term engagement [A6].
    • The sector risks fragmentation, with well-funded private donors and organisations like MSF operating alongside under-resourced local actors, potentially undermining coordination and equity [A3][E9].
    • There is a risk of reversing decades of development and health gains, with modelling suggesting millions of excess deaths by 2030 if funding trends persist [E4][E6].
    • Humanitarian principles and neutrality may be challenged as organisations adapt to new funding realities and political pressures, echoing historical shifts seen in mid-20th century humanitarianism [E9].

Limitations and uncertainties

  • Precise financial figures and staffing losses for many NGOs, including Save the Children beyond estimates, remain incompletely quantified, limiting full impact assessment.
  • Detailed timelines and partial waivers for humanitarian versus development programme cuts are unclear, complicating operational planning.
  • Medium- and long-term projections for NGO financial resilience, adaptive strategies, and existential risks are not yet available in comprehensive data form.
  • Data on compensatory funding from private donors or alternative governments is limited, leaving uncertainty about the sector’s capacity to offset government aid reductions.

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