The international aid sector has recently been dealing with significant challenges that have left many question marks about its future and financing models. Traditional grants, which constitute the backbone of development assistance, are shrinking in the context of different donor priorities, economic fluctuations, and rising geopolitical conflicts. The USAID stop work order, the 90-day U.S. aid freeze, along with budget cuts from Germany, the Netherlands, and other major donor countries are pushing international organizations to search for and explore new financing sources, turning towards private-sector involvement, fundraising, or other alternative funding methods. However, with these potential shifts, can international organizations still adhere to their main mission of helping the most vulnerable populations and continue their quest to achieve the Sustainable Development Goals? Check out some expert opinions below.
Key Takeaways:
- In 2023, the 17 largest Development Assistance Committee donors contributed US$213.13 billion in ODA. In 2025, projections indicate that ODA from these donors will decrease by a total of US$74.02 billion.
- According to experts, organizations can adopt alternative financing models and maximize impact through localization, social enterprises, minimizing operation costs, enhancing collaboration etc.
- Diversifying revenue streams through service delivery fees, public-private partnerships, and institutional fundraising can further reduce reliance on diminishing donor contributions.
- By engaging both public and private sectors, leveraging innovation in ICT and fintech, and expanding geographically and thematically, organizations can navigate the funding shifts and thrive in today’s evolving aid landscape.
DevelopmentAid: How can international organizations adapt their funding strategies in response to shrinking donor contributions while maintaining the effectiveness of aid programs? What alternative financing mechanisms could help to fill the funding gap in international development?
“The international aid landscape is shifting. Traditional donor funding is shrinking due to evolving priorities, economic constraints, and geopolitical tensions. This challenges international organizations to maintain financial sustainability while continuing to deliver aid effectively to vulnerable populations. To address this, organizations can adopt alternative financing models and maximize impact through the following approaches:
- Promote localization – strengthen local non-governmental organizations (NGOs), community-based organizations (CBOs), and small and medium enterprises (SMEs) to take the lead in aid delivery. This reduces costs while ensuring a community-driven approach to meet the needs of vulnerable people.
- Support social enterprises – encourage business models that generate revenue and reinvest profits into essential services such as healthcare, WASH, and education.
- Minimize operational costs – shift the role of international NGOs towards the capacity-building of local actors, enabling them to efficiently implement programs on the ground.
- Enhance collaboration – establish joint country programs among international organizations to reduce costs and improve effectiveness through networking and policy advocacy.
By embracing these strategies, INGOs can sustain their mission, optimize resources, and create long-term impact serving vulnerable communities despite the funding challenges.”
“In response to the ongoing evolution of the international aid landscape, organizations must pivot toward hybrid financing models that blend traditional grants with innovative mechanisms such as results-based financing, social impact bonds, and blended finance approaches. These models encourage performance, foster private sector engagement, and ensure accountability — driving both financial sustainability and developmental impact. Additionally, international organizations should strengthen local partnerships and build the capacity of grassroots actors to enable more cost-effective, community-led solutions. Diversifying revenue streams through service delivery fees, public-private partnerships, and institutional fundraising can further reduce reliance on diminishing donor contributions. Ultimately, striking the right balance requires a dual focus: maintaining the core mission of serving vulnerable populations while ensuring financial resilience through adaptive, diversified funding strategies.”
“International organizations can improve funding opportunities by adapting their funding strategies and finding alternative financing mechanisms. Adapting funding strategies could include reducing dependence on traditional donors such as the USAID and exploring other funding sources such as the private sector and foundations such as the Gates Foundation, the Ford Foundation, and the Carter Foundation among others. International organisations can also reduce spending on non-essential services such as workshops and foreign trips and opt for virtual meetings instead, without spending money on travelling and accommodation. Another option would be to foster partnerships and collaborations with governments, civil society, and the private sector to share resources, expertise, and risks. Funds can also be raised by harnessing remittances from the diaspora communities so that they can sponsor NGO activities in their own countries. However, getting funding from the diaspora community might be a challenge especially from political refugees who would not want to support the regimes that had persecuted them back home. Lastly, funds can be raised through crowdfunding, where the NGOs can ask individuals to support their projects. One way or another, aid sector organizations should establish and strengthen the regulatory frameworks needed to support innovative financing mechanisms and ensure transparency and accountability.”
See also: 25 foundations in the U.S. and Europe with funds for DEI, climate, and education
“As a consulting firm specializing in economic development, trade, digital transformation, and sustainability, we envisioned the shift to alternative funding sources in our attempt to mitigate the risk of being dependent on a single source of funds. Unlike traditional NGOs reliant on grants, we secure contracts through competitive RFPs, offering expertise across a wide range of sectors – from trade policy, e-commerce, and financial inclusion to digital marketing, infrastructure, and climate resilience. When a $200,000 USAID contract was canceled, it reinforced our commitment to diversification. We operate across multiple African countries, reducing dependency on any single market while broadening our service offerings to include government procurement, private sector business development, and technology-driven consulting solutions. Our experience shows that resilience in international development lies in blending impact with financial sustainability. By engaging both public and private sectors, leveraging innovation in ICT and fintech, and expanding geographically and thematically, organizations can navigate the funding shifts and thrive in today’s evolving aid landscape.”
See also: Who will take the United States’ place on the apex of international aid? | Experts’ Opinions
Just as international development organizations are looking for new ways to attract financing, development experts should look for new ways to gain opportunities. Nobody has cancelled the traditional method of checking websites and applying for jobs, but this is risky in today’s competitive environment. To stand out from the competition, candidates should find new ways to approach opportunities while saving time and resources. One way is by becoming Individual Professional Members, which guarantees access to over 5,000 job openings with just one click. If there is not a position that seems to be a fit, Professional Members could also look for open tenders or grants for individuals or approach organizations directly. In this way, they ensure they have explored all their options while not allowing job hunting to take up a significant part of their time.
