On Tuesday, February 25th, socialprotection.org hosted an open discussion on the potential impact of the recent U.S. foreign aid freeze on the social protection sector.
Key speakers in the discussion included Valentina Barca, Anna McCord, Carla Lacerda and Thomas Byrnes.
Thomas Byrnes provided an introduction: 12 billion U.S. dollars of aid has been frozen, 8 billion of which had been for health initiatives. US funding was 42.3 per cent of total humanitarian funding in 2024 and UN institutions such as the International Organization for Migration (IOM) and the World Food Programme (WFP) are massively dependent on it. While the U.S. has been offering waivers for essential goods like food, medicine and shelter, payment systems are down, preventing this funding from reaching those who need it. The effects on beneficiaries have been brutal, with the BBC reporting that people in Sudan are beginning to starve due to cash assistance being pulled.
How will the funding freeze affect the social protection sector? What are the expected impacts?
Valentina Barca noted that although we may not expect direct impacts, as social protection has never been a U.S. priority, we will certainly see ripple effects. Funding being pulled from large UN institutions such as the WFP and IOM, and the likely chance of the US pulling out of key international financial institutions such as the World Bank and IMF, will mean that their subcontractors who implement social protection programmes on the ground will no longer have funding. Additionally, the funding streams that still exist will likely be used to plug the 8-billion-dollar gap in health funding for example. We can see that the Gates Foundation is already doing this.
The current wave of anti-development assistance and increased defence spending in the U.S. is not an isolated trend. Just two days ago, UK Prime Minister Keir Starmer announced a drastic cut to the already limited Official Development Assistance (ODA) budget, reducing it from 0.5 per cent of GNI to 0.3 per cent, while simultaneously increasing the defence budget to 2.5 per cent. Germany’s social protection funding also saw a 70 per cent decrease between 2022 and 2023. Meanwhile, the EU is prioritising the strengthening of alliances, securing resources, and managing migration flows, rather than focusing on the urgently needed ODA. As U.S. Secretary of State Marco Rubio has remarked, the emphasis is now on a purely transactional approach.
The funding pull will not only have dire effects on the implementation of programmes, but we will also lose valuable data and evidence that the social protection sector heavily relies on. This comes with the cutting of FEWS Net, a critical famine monitoring system, and the Demographic and Health Surveys Program, for example.
With Trump’s executive order on DEI (Diversity, Equity, Inclusion), securing funding for social protection programmes focused on disability and gender will be more challenging than ever. UNICEF and UN Women have been informed that they will not receive any U.S. funding for projects related to these areas.
What can the social protection sector do to recover from this?
Participants in the discussion raised the need to restructure how we talk about social protection, for example in security and job creation terms rather than rights-based terms. WFP are already doing this to reframe their projects on gender.
Another crucial point emerged from the conversation: governments might finally take more responsibility for funding social protection. The reduced influence of international donors on national social protection policy would give more freedom to governments to promote better universal schemes. However, a key question remains: Is this likely, given the growing shift to the right among many governments?
Another question addressed whether this funding shift will drive increased localisation— offering benefits like better streamlining and affordability—or whether donors will consider funding large UN agencies as more efficient, thereby decreasing localisation.
The conversation provided important context to the USAID freeze, but we are still left with many questions. For example, will this radical shift in aid financing provide the opportunity for deep system reform? Will international financing be rethought, along with debt restricting and refinancing? Can we reduce the heavy dependency of many low- and middle-income country governments on the U.S. and the UN?
We are only at the starting line of finding the answers. What is clear, however, is that greater collaboration and coherence between development and humanitarian efforts are more crucial than ever.
Written by Emma Noble, Business Development Officer