Alternative Sources of International Aid

The U.S. Agency for International Development (USAID) has found itself in the eye of the recent government downsizing storm. On inauguration day, the President issued the Reevaluating and Realigning United States Foreign Aid executive order calling for a 90 day pause in U.S. foreign development assistance. Since then, funds allocated by Congress have stopped flowing to the agency and 2,000 staff members have been fired, with up to thousands more placed on leave. The administration has also announced plans to dismantle the agency altogether. 

Thus far, legal challenges have done little to stop the turn of events. Despite an initial waiver for life-saving humanitarian assistance, non-governmental organizations (NGOs) the world over have been cut off from grant monies and are struggling to provide essential services. Hospitals have been forced to turn away critically ill patients, soup kitchens in war-torn countries have shuttered, and HIV clinics have run out of lifesaving antiretroviral drugs. What can these organizations do to keep their doors open? 

At this uncertain juncture, it is critical to start exploring alternative funding sources. What follows is a brief exploration of USAID’s work and other types of funders that may help to bridge at least some of the budgetary gaps NGOs are experiencing.

Background on USAID

The Founding of USAID

What many might not know is that USAID was created in part as an effort to streamline the federal bureaucracy. Following WWII, the success of the $13.3 billion Marshall Plan in rebuilding the war-torn European continent paved the way for Harry S. Truman’s Four Point Program to provide financial and technical assistance to developing countries and the creation of multiple government departments and agencies to administer this aid. In 1961, President John F. Kennedy sent a special message to Congress arguing that the existing system was “[b]ureaucratically fragmented, awkward and slow” and seeking to streamline these efforts into a single agency. 

Kennedy also recognized that as the wealthiest country in the world, the U.S. had a moral obligation to aid poorer nations, whose stability was crucial to America’s own security. “The economic collapse of those free but less-developed nations which now stand poised between sustained growth and economic chaos would be disastrous to our national security, harmful to our comparative prosperity and offensive to our conscience.” Six months after Kennedy sent his special message, Congress passed the Foreign Assistance Act of 1961, leading to the establishment of USAID.

USAID Expenditures

Fast forward over sixty years and, according to the Pew Research Center, USAID now accounts for approximately 60% of all government aid dollars worldwide, having awarded $42.5 billion in 2023 alone. The vast majority of these funds are allocated to health, humanitarian aid, and economic development initiatives. As just one example, the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR), created in 2003 by President George W. Bush, has invested $100 billion in HIV prevention and AIDS response efforts and saved the lives of more than 25 million people since its inception.

Before the recent funding freeze, USAID provided support in 160 countries and regions, allowing the U.S. to project soft power into the furthest reaches of the globe. Oftentimes, for beneficiaries of USAID-funded programs, this is the only direct contact they have with the U.S. The arrival of crateloads of food or participation in a USAID-funded program fosters a positive image of the global superpower and makes recipient countries more amenable to cooperating in other areas. 

As a percentage of national expenditures, all of these benefits accrue at a relatively low cost —USAID funding accounts for just .7% of the U.S. federal budget. The elimination of the agency would make only a small dent in U.S. government spending, while imposing widescale suffering on the world’s most vulnerable populations.

Alternatives to USAID Funding

Where can organizations affected by the USAID funding freeze look for support? Private foundations, corporations, government funders, and multilateral organizations may all be viable options for NGOs seeking funds to keep mission-critical programs operational. 

Private Foundations

According to the Giving USA 2024 report, in 2023, foundation giving in the U.S. totaled $103 billion. For organizations working outside the U.S., private foundations are a good place to start when looking for support.

Private foundations that conduct their work in developing countries often have objectives that overlap considerably with the work of USAID. For example, the Gate’s Foundation’s work in developing countries has a heavy focus on supporting health-related initiatives, specifically disease prevention and healthcare access, while also funding efforts to promote gender equality. 

Some private foundations have a thematic focus similar to that of USAID programs such as PEPFAR. The Elton John AIDS Foundation is one such funder. It is currently offering support through the Radian 2.0 funding initiative to address the AIDS epidemic in Eastern Europe and Central Asia. 

A solid grant research tool such as GrantStation can help organizations to locate private foundations based on their geographic scope, thematic focus area, target population, or the type of funding they offer. 

When applying to private foundations, eligibility is one thing to keep an eye on. Many U.S.-based foundations that give internationally may have a mandate to give only to U.S. 501(c)(3) organizations working abroad. So, even if a foundation awards grants for work carried out in Ghana, for example, it may not necessarily support organizations based in Ghana.

Corporations

Corporations—whether through their own foundations or corporate giving programs—are another good source of support for international NGOS. 

One strategy for locating relevant corporate grantmakers is to search for businesses with offices or stores in the organization’s local area, as businesses tend to give heavily in their local communities. A simple scan of a specific city on Google Maps can provide valuable insights into which companies do business in the local area. Surveying volunteers and employees to find out who has a personal connection to a local company is also a good way to make inroads. 

NGOs can also try researching multinational corporations that operate in their country. They may have bigger budgets to expend on philanthropic efforts and tend to give across the country as a whole. For example, the Air France Foundation, which focuses its support on education, environmental awareness, and humanitarian support, gives in countries where Air France flights operate. 

The health sector will be hit particularly hard by any cuts in USAID funding, so NGOs may look to the healthcare sector in search of funds. For example, pharmaceutical companies tend to award grants in their clinical areas, so organizations working to combat a specific disease can research drugmakers in that area.

In addition to financial support, companies might also offer product donations or employee volunteer hours, so NGOs can get creative with the type of support that they request. 

Again, grant research tools can be helpful to search corporate funders by geographic scope, areas of interest, or the type of support they offer.

Government Funders

USAID is just one of many government funders worldwide. 

For organizations affected by the agency’s funding freeze, it’s worthwhile to look into other government aid programs, particularly those from European governments and the Canadian government. Oftentimes, these programs have objectives that overlap with the work of USAID. 

For example, the Canada Fund for Local Initiatives (CFLI) focuses on areas such as human dignity (covering health, education, and nutrition), inclusive growth and governance, and gender equality. NGOs can use the CFLI’s searchable database to find open funding opportunities in their country. 

In addition to government aid programs, which tend to be larger in scope, embassies are a good source of funding for local, grassroots projects in any particular country. 

Again, when researching government funders, double check the eligibility requirements in terms of where the applicant is based. Depending on the country, some government funders will only support organizations based in their own country that are working abroad, or organizations based in the target country. 

Multilateral Organizations

Multilateral organizations, or multilateral institutions, are defined as organizations formed by three or more countries that work together on issues of common interest. Some of the more widely known multilateral institutions include the United Nations, the World Bank, and the International Monetary Fund. 

The United Nations in particular has a number of offices and programs that provide funding to non-governmental organizations, organized around specific areas of interest. For example, UN Women awards grants in the areas of gender equality and violence against women. The United Nations Democracy Fund supports initiatives that empower civil society, promote human rights, and encourage the participation of all groups in democratic processes. Again, these UN programs have a lot of similarities with USAID’s priority areas and are worth researching as possible funding avenues.

Other multilateral institutions, such as the World Bank, may offer different types of support such as loans, but the application process and requirements may be more cumbersome to navigate.

Emerging Opportunities

As the philanthropic world reacts to USAID's demise, it’s possible that new initiatives will be created to help fill in some of the funding gaps. One such initiative is the Foreign Aid Bridge Fund, created by UnlockAid and numerous partners to "enable high-impact organizations with sustainable business models to get back to work to prevent unnecessary harm and disruption to millions of people." While still in its early stages, the Fund is accepting inquiries and will award grants to organizations working in fields such as health, water, agriculture and food security, sanitation, climate adaptation, livelihoods and economic prosperity, education, and humanitarian response.

For now, the future of USAID, and the NGOs that depend on it to carry out critical humanitarian work, remains to be seen. If the world’s largest government aid program is indeed dismantled, the resulting human suffering will be immense and impossible to quantify through any cost-benefit analysis. There is no equation that can measure the value of a mother having access to life-saving medical treatment, or a child in a refugee camp learning to read. Hopefully, other funders will step up to fill the void.