USAID in jeopardy: Cuts, lost trust, and a threat to development priorities

Introduction

Following former US President Donald Trump’s electoral victory in November 2024, there was no shortage of speculation about the ramifications of decreased US funding flows to sectors like climate and family planning; the repeated withdrawal of the US from key organizations like the Paris Agreement and WHO; even the potential that funding would not be renewed for critical programs like PEPFAR.

The recent events in the US development sector, and particularly its flagship agency USAID, however, have surpassed November predictions in both severity and velocity—now, over 90% of the agency’s programs look to be cut. The appointment of the relatively moderate Marco Rubio as Secretary of State, which many in the development sector took as an encouraging sign at the time, has done little to stop what is shaping up to be the dissolution of the largest OECD DAC donor's main development funding agency and a major shockwave that touches all corners of the globe.

This is the first of a series of Donor Tracker insights that will cover the state of US ODA, the future of USAID, projected impacts to key sectors, and important moments for advocates to track in the coming year.

Political context

Donald Trump’s administration has confirmed plans to merge USAID  into the State Department to streamline federal bureaucracy. In an executive order on January 20, the day of Trump’s inauguration, the Administration announced a 90-day pause of most foreign assistance, stating the “foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values.”

Since the initial executive order, a flurry of additional orders, clarifications, and announcements have deepened the confusion surrounding the future of US ODA:

• Exemplifying the disorganized nature of the USAID overhaul, Secretary of State Marco Rubio issued a limited waiver on January 24 to protect emergency food assistance and "life-saving" programs for 90 days from the initial stop work order. However, the lack of clarity on how to interpret the waiver, a shortage of staff to resume implementation, and with key USAID implementing partners not eligible for these life-saving waivers, essential programs like the WFP and PEPFAR have found it nearly impossible to meaningfully resume service.
• On February 4, USAID announced that all direct-hire personnel, except those in mission-critical roles, would be placed on leave by February 7, with overseas staff set to be repatriated within 30 days. Many USAID employees working in dangerous geographies expressed that communication and coordination with the administration to return to the US was minimal, leaving them essentially on their own.
• On February 10, the State Department released a list of activities that remained approved under the 90-day partial waiver, which included HIV testing and care, as well as laboratory support and supply chain management for HIV medications, test kits, and other essential commodities. However, with funds still frozen, PEPFAR remained unable to pay contractors in order to implement programs allowed under the limited waiver.
• On February 13, the process of ending USAID contracts began with the release of more than 800 termination notices sent out, while on the same day a ruling from a federal judge ordered the Trump Administration to reverse its foreign assistance funding freeze on existing programs and already-completed work, citing that the administration has “not offered any explanation for why a blanket suspension of all congressionally appropriated foreign aid… was a rational precursor to reviewing programs” and asserted that the waiver system was not sufficient to protect critical services, there has already been an untold impact on countless vulnerable populations worldwide. Following the chaos caused by the freeze, restarting these programs will be a difficult and complicated process—not even mentioning the many contracts that had been fully terminated since the freeze was announced.
• As of February 21, US District Judge Carl Nichols ruled that there is no risk of “irreparable harm” to USAID employees and therefore they can be recalled from their placements or put on leave. The US government responded with an announcement that all USAID workers globally, with few exceptions, will be placed on leave. These cuts have had a ripple effect across other implementing agencies, as well as nonprofit organizations that implement programs with USAID funding and a web of development contractors that play a crucial role in delivering ODA.
• A February 25 court order noted the Trump Administration's failure to comply with the February 13 ruling, setting a February 26 deadline for the government to pay funds owed to ODA grant recipients and contractors. After a temporary suspension of the ruling on February 26, the Supreme Court eventually ruled 5-4 on March 5 that the US government must indeed pay approximately US$2 billion owed for already-completed work done by USAID and its contracting partners. In a rare victory for the development community, the US$2 billion will be a critical, if short-term lifeline for USAID partners.

In what many have taken as the end to USAID, on February 27 it was reported that the administration plans to cut over 90% of USAID’s contracts (about 5,800) and reduce US foreign assistance by nearly US$60 billion overall. The cut is made up primarily of cuts to USAID (US$54 billion) and State Department grants (US$5.4 billion). With many USAID staffers receiving official termination notices, even those working for projects that had initially received a life-saving waiver, the administration signaled the premature end of the ostensible 90-day review period and quashed hopes of any meaningful resumption of USAID activities.

While not a Cabinet-level department, its administrator is nominated by the president and confirmed by the Senate, making it subject to Congressional oversight. The idea that an incoming president would align foreign assistance with the priorities of their administration is not, in and of itself, unusual. Both Democratic and Republican presidents have used foreign assistance funding as bolsters for both their foreign policy and domestic priorities and conducted comprehensive reviews of USAID programs. However, the dismantling of the agency has come as an unprecedented shock to the development community.

Funding at risk

During his first administration, US President Donald Trump indicated that he wanted to slash US foreign operations budget by a third. This cut never materialized, largely due to bipartisan Congressional resistance to the cuts. However, Congressional resistance to Trump’s cuts has not reappeared in 2025.

Proposed cuts in Trump’s second administration appear to go much further than slashing the budget by a third. Though there are some differences between the OECD definition of ODA and what the US reports as foreign assistance, with the latter covering a broader set of activities, the 90% cut to USAID programs would likely eliminate most of US ODA-- this and the accompanying Department of States program cancelations would be equivalent to more than a quarter of all OECD DAC ODA in 2023 being cut. In 2023, US ODA totaled US$66 billion. With the US$60 billion reduction, the US would make the unprecedented fall from the largest donor in absolute terms to around the eighth-largest, comparable with countries with much smaller populations and GDPs like Italy, Norway, and Sweden.

Effects of the Trump Administration’s cuts on the climate, global health, and education sectors will be covered in upcoming Donor Tracker Insights. Stay tuned!

Bilateral Funding

The largest recipient of US ODA has been Ukraine since the outbreak of the full-scale invasion by Russia in 2022. Accordingly, USAID’s largest sector is governance funding, which goes primarily to Ukraine.

Outside of Ukraine and governance funding, the next-largest sector for USAID is humanitarian assistance and the next-largest recipients of US ODA are Ethiopia, Afghanistan, Yemen, and South Sudan—all countries facing severe humanitarian emergencies, acute food insecurity, and conflict. The withdrawal of US assistance from these recipients is likely to cause a fatal decline in humanitarian services in these regions.

Impact on food and humanitarian assistance

With top US recipients of ODA outside of Ukraine all being geographies facing acute food insecurity, the termination of most USAID programs will have the most immediate effects on lifesaving nutrition services. USAID projects terminated in late February include a project in Nigeria that provided 5.6 million children and 1.7 million women with treatment for SAM, as well as a project in Bangladesh that provided food for malnourished pregnant women and vitamin A supplementation to children to prevent stunting and wasting.

Key programs providing food assistance have typically enjoyed bipartisan support in DC, with many Republicans eschewing a conservative view on development in general to support US intervention in crisis conditions. This is due in no small part to the fact that US farmers in predominantly conservative states produce a significant amount (more than US$510 million in 2024) of food commodities, including corn, rice, and soybeans, that are sent abroad as food assistance. The cuts, however, meant that food commodities to places in critical need like Sudan and Gaza could not be fulfilled, putting countless people back on the brink of famine. US Republicans and their constituents have bemoaned the loss of revenue, and a USAID implementing partner noted that “Emergency food assistance just kind of got thrown out with the bathwater.”

Read more about Nutrition for Growth and the fight against malnutrition

The US is also the largest provider of development assistance globally. Zooming out from food assistance-- according to UN officials, the US funds around 47% of global humanitarian aid. This includes support for SRHR, WASH, MNCH services, and health services for refugees. Many of the programs officially terminated in late February provided life-saving services in these sectors. UNFPA has warned that, in Pakistan, withdrawing US humanitarian funding will disrupt lifesaving SRHR services for 1.7 million people, including 1.2 million Afghan refugees, as over 60 health facilities are set to close. One of the USAID programs canceled in late February included a project in the DRC that operated the only source of water available to a quarter of a million people displaced by regional conflict.

Multilateral Funding

The US typically channels most of its ODA bilaterally, with a focus on strengthening bilateral relationships and promoting national interests. While the US only channeled 10% of its ODA through multilateral institutions in 2023, this still amounted to a notable US$5.5 billion. Trump Administration officials have already eschewed high-level G20 gatherings of state and finance ministers, and the administration has taken steps to withdraw funding and membership from numerous multilateral organizations to which the US is a key contributor.

The Global Fund to fight AIDS, Tuberculosis, and Malaria received the largest share of multilateral ODA from the US in 2022, making up about a third of its total funding. The Global Fund seeks to raise US$18 billion between 2027 and 2029, a target it already failed to meet in its last fundraising cycle. During Biden’s administration, global health funding was already cut by a historical amount in the FY2025 budget request, largely due to reductions in US funding to the Global Fund (falling from US$2 billion to US$1.2 billion) related to declining funding from other donors; US law limits US contributions to no more than one-third of all funding from other donors. It remains unclear whether the US$1.2 billion in funding will materialize.

In early February, the administration ordered a six-month review of US funding to MDBs. Though the Biden Administration had confirmed a pledge of US$4 billion to the IDA in December 2024, it remains to be seen if the Trump Administration will honor this pledge, which is not without precedent—in December 2016, the Obama administration made a US$3.9 billion pledge to the IDA. When Trump took office in 2017, his administration cut the pledge to US$3.3 billion. A total withdrawal of funding from US -backed MDBs is considered unlikely, however, a US exit from the MDBs where it holds the largest stake, such as the EBRD and IBRD, would significantly impact their capitalization and governance.

The Trump Administration issued an executive order announcing its withdrawal from the WHO on January 20, 2025. The US had contributed US$1.3 billion to the 2022–2023 biennium program budget, making it the largest donor by far (providing 12-15% of WHO funding), enabling work by WHO, the US, and other countries and partners to identify and respond to emergencies, stop disease threats from spreading across borders and advance other key global health priorities.

The Trump Administration has also canceled US$4 billion in pledges to the GCF, the world’s largest climate fund. The US has historically provided more funds to the GCF than any other contributing country. The Obama and Biden administrations respectively committed US$3 billion to the GCF, although only US$2 billion of the US$6 billion total has since been allocated. This marks the first time that a country has withdrawn previously pledged funds.

Gavi’s replenishment round, set to take place this year, is looking to raise at least US$9 billion for the 2026-2030 period. At the launch of Gavi’s Investment Opportunity 2026–2030 in June 2024, the US committed to a five-year pledge of at least US$1.58 billion, or nearly a sixth of Gavi’s replenishment goals. Given the cuts to development spending as well as the antagonistic stances of many Trump Administration officials towards vaccines, there is a potential that the US will back down on or significantly reduce its pledge.

Conclusion

The legacy of USAID spans more than 60 years. Its end is not only a loss for the millions of individuals around the world who no longer have access to lifesaving goods and services, but also for the majority Americans, according to recent polls, who hold the belief that the US should continue offering ODA. Even in the event of future policy shifts in the US, what has been destroyed in a matter of weeks cannot easily be rebuilt. The complexity of global supply chains which have now been disrupted, and the loss of credibility for potential partnerships with the US, mean that many of these rapid changes are likely to remain the status quo. Even in the UK, where policy shifts have brought a Labour government back to power, cuts to ODA are increasing. While advocates in the US have not given up their fight, and with barebones operations like basic HIV testing and care under PEPFAR continuing to function, the new reality is here to stay.

This Donor Tracker Insight is part of an ongoing series of US development assistance in the context of ODA trends globally. In the coming weeks, the team will cover sector-specific insights into the effects of the Trump Administration’s cuts on global health, climate, and education.