Attachments
Executive Summary
Overview
Upon taking office, the new United States Administration enacted a sweeping shift in foreign aid policy. From day one, the President signed Executive Orders that reshaped key services to humanity, including refugee protection and resettlement, to the principles guiding U.S. foreign aid - triggering a full-scale review of all funding commitments.
The administration’s subsequent actions of freezing grants, cancelling contracts, halting payments and dismantling USAID have sent shockwaves through the humanitarian system. As the world’s largest bilateral humanitarian donor, any U.S policy shift carries profound consequences for crisis-affected populations and the organisations that support them.
Against this backdrop, ICVA has prepared this report to provide a snapshot of the immediate consequences and emerging trends resulting from the abrupt shifts U.S. foreign aid policy. Drafted in early February, it draws on insights from ICVA members, the broader NGO community, and public sources, as well as survey findings on how these changes are affecting NGOs’ operational and organisational capacities. Given the rapid evolving situation, this report does not aim to provide an exhaustive analysis but highlights a few key findings:
Key Findings
Lives are at Risk
The "Stop Work" Orders have forced the closure of critical assistance and protection services, including hospitals, health centres, cash assistance, food distribution, nutrition programmes, legal aid for displaced persons, and essential shelter, education and water and sanitation programmes. Contract terminations, uncertainty surrounding potential waivers, the dismantling of USAID, and disruptions in U.S. payment systems have further exacerbated the crisis.
Community Confusion & Security Risks
The abrupt suspension of aid has caused widespread incomprehension among communities and local authorities, leading to panic and frustration, increased access challenges and security risks, and heightened expectations on remaining operational organisations.
Vulnerable Populations Most Affected
LGBTIQ+ individuals, asylum-seekers, refugees, and vulnerable migrants face heighted risks of being denied humanitarian assistance due to their identity or legal status. Services essential for displaced populations, such as camp management, water trucking, healthcare, and education are being severely disrupted, impacting both emergency responses and long-term assistance in protracted crises. Women and children are at increased risk of violence and abuse.
Weakened Humanitarian System
Cuts to funding have severely undermined humanitarian needs assessment, accountability, mechanisms, response planning at both global and country levels. NGOs are struggling to assess the real-time needs of communities and deliver independently.
Weakened Coordination Mechanisms
Country-level coordination structures, including NGO forums have been weakened, making it more difficult for organisations to collectively adapt to shifting funding realities, reduce gaps and maximise efficiencies.
NGOS Facing Financial Collapse
The failure to reimburse incurred costs up to 29 January 2024 has triggered a widespread liquidity crisis among NGOs and UN partners. Large-scale layoffs have already been announced, with smaller NGOs fighting for survival.
Local and National NGOs Hardest Hit
With no financial reserves and total reliance on project-based funding, many local and national NGOs have been forced to immediately lay off staff and terminate contracts, leading to legal liabilities, loss of community trust, and the potential collapse of their organisations.
Shrinking Humanitarian Funding Landscape
The US funding freeze comes amid a broader decline in humanitarian financing, with major donors such as Germany, the Netherlands, Belgium, Switzerland and the UK also cutting aid budgets. Few NGOs have found alternative funding to offset losses, and competition for scarcer resources is intensifying. While efforts to diversify financing, including through private philanthropy, are underway, confidence in bridging the gap remains low.
Risk of Counterproductive Reforms
While the humanitarian system has long needed reform, the abrupt U.S. funding freeze risks triggering reactive, financially driven changes - implemented hastily, without meaningful input from civil society and crisis-affected populations.