Rethinking Aid: USAID’s Shutdown and the Future of Humanitarian Funding

By Sophie Marx  
The shutdown of USAID in January 2025 has already revealed national and international repercussions, the full extent of which has yet to unfold. 

It marks a turning point in global aid, creating a highly competitive landscape for funding -one in which we must not lose sight of the human lives at the centre. 

Speaking to Ramona Handel-Bajema, a consultant for the NGO VisionSpring, highlighted the recent developments and challenges facing the US and the international community. 

With VisionSpring’s USAID grant for the Clear Vision Workplace (CVW) Program ending in December 2024, the NGO found themselves in a better position than most in the face of the shutdown. 

“It was the end of January when USAID was almost immediately put to bed by Doge. It was their first big move and all of a sudden, they were gone and we were still owed money,” explained Ms. Handel-Bajema. 

“Eventually, four out of the five invoices we were owed were paid, just unexpectedly by the U.S. government. There’s one outstanding one that we’re still trying to get the funding for.” 

The NGO had to make a sharp pivot in seeking new funding, as their original strategy had accounted for an additional couple of million dollars from USAID. 

“If you take this one example of VisionSpring, we were compared to other groups, hardly hit at all because we didn’t lose any money. But there’s a cascading effect when you remove this huge pot of money, that everybody starts competing for the other pots of money.” 

She elaborates: “Particularly with funding being taken away from the UN now for its various efforts, it’s just trickling down so that the competition for funding is particularly rough.” 

In line with the “America-first” intervention by President Trump, USAID, which largely provides foreign aid, presented a priority in revising the budget focus. 

“The big irony and the big problem with USAID, in my opinion, was that actually US contractors got the better end of the deal than a lot of the local people that were supposed to be receiving the aid. USAID was trying to fix that and trying to localize more.” 

“As a consequence, US companies lost a lot of money too when USAID went down, but it is not only US NGOs that are going to be hurt. The world is going to be hurt.” 

Deep-rooted issues of global reliance on the US for financial aid are already becoming visible in the Global South and, according to Ms. Handel-Bajema, call for other countries to step up. 

She explains: “Around 70% of Ethiopia’s healthcare workers were, for example, funded by USAID, so Ethiopia’s healthcare system is going to be hurt, as will irrigation programs in Pakistan.” 

“The message there is that we won’t wait for USAID or the US anymore. We are going to try and solve our own problems with our own funding. So, there’s another kind of heightened urgency for countries outside of the United States to start stepping up.” 

If other governments fail to compensate for USAID efforts, a shift to private investors opens the humanitarian Pandora’s box of aid requiring a financial return instead of being framed as charity. 

“You would have to show that there’s an economic return on that investment. So, the old model of just charity writing checks is going to be shifted into more of a blended finance idea where the problem that you’re trying to solve has to be for profit.” 

“It can’t just be solving the problem for the problem’s sake. You have to demonstrate that by not solving that problem it costs money, and by solving the problem you can make money.” 

Nevertheless, there is an opportunity for a positive systemic change too, when one country’s governmental policies no longer have a reigning influence on international aid. 

“If you get government funding, then you have to play by the government’s rules. So, if you’re free of that, then you can do as you want. So, it’s an opportunity too, I think, for positive change because what we were doing in the past wasn’t working either,” she reflects. 

“It wasn’t solving any problems. It was helping, but it was not fixing the underlying problems. So maybe it’s okay for countries to be forced to solve a little bit more of their foundational issues.”