NGOs demand urgent reform as global aid cuts may shift to private-sector investment

The sudden withdrawal of global humanitarian aid for malnutrition and health security, including steep cuts to USAID programs by the US administration and a proposed shift of resources to private-sector investments, has drained the pockets of numerous welfare organizations.

As these organizations call for funding, Nutrition Insight explores the potential for significant reforms to sustain support. We also speak with a Center for Global Development expert to examine the direct impacts on public health and nutrition.

Janeen Madan Keller, policy fellow and deputy director of the global health policy program, tells us: “Historically, nutrition financing has remained reliant on a small group of core donors. But donor contributions to nutrition-specific funding, channeled through the health sector, have plateaued since 2020, and the outlook for future funding remains highly uncertain.”

“Recent shifts in the global health landscape, including aid cuts by key bilateral donors such as the UK, underscore long-standing volatility and exemplify the risks associated with dependence on external aid, which makes low-income or middle-income economies particularly vulnerable to fluctuations in donor support.”

She uses the UK as an example. Once a long-time leader in nutrition financing, the nation has since fallen behind. In 2021, it slashed its aid budget for nutrition by a “staggering 60% compared to the previous year,” notes Keller.

“Against this backdrop, the role of the multilateral development banks and private donors may be particularly critical to help fill near-term gaps left by shrinking bilateral support and overstretched domestic budgets.

As part of the USAID proposal, the agency will be renamed the US Agency for International Humanitarian Assistance and several USAID bureaus may be eliminated.Aid reforms

The US Secretary of State, Marco Rubio, has cut 83% of USAID programs, despite a federal district judge’s ruling that the action was an overreach of executive power.

In a post on X, he said the 5,200 canceled contracts “spent tens of billions of dollars in ways that did not serve (and in some cases even harmed) the core national interests of the US…we intend for the remaining 18% of programs we are keeping (approximately 1,000)” under the State Department.

In addition to the funding cuts, the Trump administration has proposed a major restructuring of US foreign aid, which could further destabilize global nutrition efforts. 

Politico recently obtained a proposal to restructure USAID — shifting resources to the US International Development Finance Corporation, which will focus on private-sector investments in infrastructure, energy, and technology, rather than traditional nutrition and health aid. The shift also aims to challenge China’s global influence.

US aid suspension has had a knock-on effect in Europe, with the Netherlands cutting 30% of its aid spending, Belgium 25%, France 37%, and Germany planning to cut more than 50%. EU nations are prioritizing defense over humanitarian aid amid high global tensions, with the development of a ReArm plan. 

Nutrition Insight looked at how the gap presents an opportunity for Asian countries such as Korea, China, and Japan to step in, while the private sector may play its part in combating nutrition insecurity through food fortification. Recently, Japan signed a new agreement with UNICEF of nearly US$8 million in support of vulnerable children and women in Syria.

However, the US has been the largest donor of aid, and a report by the Associated Press suggests that private donors are unlikely to fill the gap — “the numbers don’t add up.” It says private funds must be doubled to make up for USAID cuts.

While private donors may not fill the global funding gap on their own, humanitarian organizations are taking steps to reform.“We need to regroup”

While private donors may not fill the global funding gap on their own, humanitarian organizations are taking steps to reform.

A recent letter to the UN Inter-Agency Standing Committee (IASC), the rapid humanitarian response provider, sends “a tough message: we need to regroup.”

“And we must renew. Reimagine how we work. Fight back, not for systems or institutions, but for the people we serve. Build fresh arguments and allies, locally and globally. Find new funding sources,” stresses Tom Fletcher, IASC chair and UN under-secretary-general for Humanitarian Affairs and Emergency Relief Coordinator.

Fletcher details action points to boost efficiency by emphasizing collective action over holding power. He proposes three priorities: the best possible crisis response with existing resources, urgent reform and reimagining work structures, and shifting power to humanitarian leaders in the country and its people.

UNICEF told Nutrition Insight last week that “this is a critical moment for unified action,” saying collective action has historically saved countless lives.

Rubio says 83% of USAID programs have been cut.Protect vulnerable people 

Sudan is facing “sweeping funding reductions and suspensions,” leaving 21 million desperate people vulnerable. Only 6.3% of the US$4.2 billion the UN claims is needed to provide humanitarian aid in Sudan has been received.

Eatizaz Yousef, the International Rescue Committee (IRC) Sudan country director, says the nearly two-year war has left over 30 million people, “including mothers and young children — unable to meet their daily food needs, and their weakened bodies struggle to fight off diseases.”

The UN calls on governments, donation and faith organizations, the private sector, and individuals to “urgently step up to help fill the gaps left by these devastating reductions.”

Earlier this month, the UN sent US$110 million from the Central Emergency Response Fund to help provide life-saving assistance in the top ten most underfunded crises across Africa, Asia, and Latin America. 

The organization says the “humanitarian community is seeking nearly US$45 billion to reach 185 million of the most vulnerable people caught up in crises worldwide. To date, just 5% of this funding has been received, leaving a gap of more than US$42 billion.”

The upcoming 2025 Nutrition for Growth Summit will bring together governments, donors, and development partners — bringing an opportunity for boosting nutrition security, says Keller.

Action Against Hunger previously spoke with Nutrition Insight, sharing how USAID cuts have been impacting their work in critical places like Haiti, Ethiopia, Nigeria, Madagascar, and Afghanistan, among many others.

We also spoke to experts who showed how countries with small aid budgets, like Spain, can improve nutrition outcomes long-term by supporting rural development, food security, and governance reforms.