Weathering the winter freeze, searching for spring
While not entirely unexpected, the recent announcement by the US government to proceed with a 90-day freeze of almost all foreign aid, followed by the announcement that the US Agency for International Development (USAID) would be absorbed by the State Department, has caused a seismic shockwave in the sector, including among European philanthropic organisations.
As is frequently mentioned, USAID is one of the world’s largest individual contributors* to international development, with a budget of around $40bn (for comparison, the EU collectively provided just under €96bn in 2023), most of which is spent in Asia, sub-Saharan Africa and Europe – primarily on humanitarian efforts in Ukraine. The shutdown of USAID, then, could hardly be expected to provoke anything less than profound and most likely irreversible consequences for many organisations and communities around the world.
What we are witnessing is not an isolated cold spell, but rather a climatic cooling of international cooperation, for so long understood as crucial for global security and prosperity. And while the decision is being challenged and interpreted by some as unconstitutional, civil society organisations and foundations alike are considering what these developments mean for them, and how they can best support the communities they serve. The decision to freeze international aid comes as part of a series of executive orders issued by President Trump targeting issues such as DEI, immigration, tax tariffs and more, understood as part of a complex, noxious storm of geopolitical unrest and democratic degradation, all of which requires deep analysis as well as swift action.
While myriad discussions will undoubtedly be needed to fully unpack these ongoing developments, on 11 January Philea convened its membership to understand their immediate needs and help them make sense of the decision. In the rest of this piece, I will try to summarise the key takeaways.
While many are still trying to understand the long-term implications of what has unfolded over the past weeks, reports already point to the fact that:
- Food aid worth nearly half a billion dollars risks spoiling
- Critical healthcare programmes in crisis-affected areas are suspended
- Educational initiatives for vulnerable children are grinding to a halt
With the US decisions affecting communities on such a massive scale, foundations and philanthropic organisations themselves are also under threat, with attacks on the credibility of philanthropy compounding an already complex crisis. While unable to fill the chasm left by the crisis, funders are nonetheless pursuing ways to mitigate the most immediate needs of their grantees, for example providing bridge loans, helping with immediate cash-flow issues, loosening reporting deadlines and more.
We are also witnessing broader implications for global philanthropy and international cooperation, and with this, a greater need to reassess funding strategies, ensure flexibility in grantmaking and explore strategic alignment and collaborative approaches to maximise impact and best support affected communities.
Thinking beyond immediate individual crisis support, the sector is also being called upon to rethink its relationship with local actors and philanthropy infrastructure. The dependency of the global majority on human rights funding from the Northern hemisphere has impacted the resilience of local actors and a shift is needed to strengthen the ecosystem locally.
The current challenges also present an opportunity to rethink the philanthropic landscape. There is potential to regrow funding structures in a way that better supports local actors and long-term sustainability, shifting from emergency responses to resilience-building approaches. Moving forward, the sector should balance emergency response with a strategic vision for the future, ensuring that civil society remains strong, independent and capable of protecting democratic values.
One of many areas of concern is the impact on the Western Balkans and Eastern Europe, where past investments in democracy, media independence and civil society could be undermined. The suspension of funding affects not only human rights organisations but also essential service providers in education, healthcare and community development. Given the already shrinking space for civil society in some of these regions, the freeze places additional strain on independent organisations.
The financial scale of the impact likewise cannot be understated, with billions of dollars in funding allocated to the region in previous years now at risk. There is widespread concern that if national institutions attempt to fill the gap, non-transparent government-affiliated organisations could then absorb resources, further weakening independent civil society efforts. While the freeze is – officially – temporary, the risk of long-term consequences remains high.
Philanthropy in the region remains relatively young and underfunded compared to Western Europe. Most resources have historically come from external donors, including international organisations and diaspora contributions and many feel the need for European and global philanthropic actors to step up their engagement and financial support. Without intervention, rebuilding civil society structures could take decades.
Indeed, the risks to an already shrinking civic space are multitude. In various countries, especially in the Western Balkans, organisations have faced increasing media scrutiny, digital and physical threats and challenges from political regimes trying to restrict or shut down civil society efforts. It is therefore of critical importance to support organisations that work in politically sensitive areas, noting the risks that these sectors face both politically and financially. Similarly, we must recognise the significance of advocacy for the protection of civil society and the need to create a broader consortium for such efforts.
Some feel that philanthropy may need to engage more deeply with the political aspects of their work, a time for a narrative shift in the sector with a focus on a broader political response to support civil society’s ability to thrive and not merely survive. Others urge caution in making public statements that bring limited real value, to avoid making the issue about philanthropy rather than about the communities they serve. For some, being vocal would also come with a real risk of litigation, making it even more challenging to support grantees.
Many feel the need for investments in the organisational development and resilience of civil society organisations, a significant number of which are already fragile, rely on overworked staff and were already forced to accommodate the needs of public funders before the crisis. There is a case to be made for supporting grantees in financial and non-financial ways, with flexible and long-term core funding. Further suggestions from attendees include covering overhead costs generously, front-loading payments for upcoming grants and making restricted grants more flexible. In terms of non-financial support, foundations can support the sector be more resilient by supporting organisational development, with a specific focus on strengthening internal systems and capacity-building. Boosting grantees’ reserves and contingency planning are also considered crucial for sustainability, with many organisations already stretched thin before the freeze, with reserves not lasting more than a few months.
The freeze will clearly affect sectors differently – areas like climate may face financial challenges due to loss of funding, while others, such as human rights, diversity, equity and inclusion, could encounter political risks. Philanthropy needs to consider these distinctions when planning support strategies and some will reflect on their own investment strategies, if those investments include some of the big tech companies whose leadership was involved in the current crisis.
Sometimes a hard winter freeze is not the beginning of the end, but the end of the beginning and our sector has a key role to play in planting the seeds which will bring about future regrowth and renewal.
*According to the Council of the EU, EU collective ODA reached EUR 95.9 billion in 2023, up from EUR 93.3 billion in 2022 and EUR 71.6 billion in 2021
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