With FCDO slashing budgets, where will UK NGOs turn for funding?

“When I meet up with people at the moment and they say ‘how are you?’, it’s a bit like going to a funeral and being asked, “how are you, under the circumstances?”, said Romilly Greenhill, chief executive of Bond, the membership body for U.K.-based international development organizations. The country’s development sector has reason to be somber. When the Trump administration imposed a sweeping freeze on programs operated by the US aid department on Jan. 20, many of Bond’s members were forced to halt or close humanitarian programs, according to Greenhill. Bond responded by gathering signatures from its members for a letter, seen by Devex, to U.K. Foreign Secretary David Lammy. “Many of us are either funded directly by US foreign assistance or by the multilaterals they support, or work in partnership with those who are,” the letter read. “Our colleagues and partners on the frontline of this suspension are telling us that the impacts are unprecedented, and risk immediate loss of life. There are also risks to many organisations simply ceasing to exist because they are not able to sustain themselves through this pause or adjust to a future without US funding.” It goes on to urge Lammy to increase the U.K.’s overseas development assistance above 0.5% of gross national income. Instead, the government did the opposite. In a shock announcement on Feb. 25, U.K. Prime Minister Keir Starmer revealed that he was cutting the country’s foreign aid spending from 0.5% to 0.3% of GNI by 2027 — its lowest level for more than 25 years. Worse still, almost half of the budget is in line to be spent on housing asylum seekers in the U.K., making the share of the pie for overseas development programs even smaller. Other governments have made similar moves, from France to the Netherlands. Commenting on the effect of the U.S. funding freeze on U.K. organisations, Greenhill said: “We’re hearing from members that waivers are not working, that funding for work that was already carried out last year has not materialized, and a lot of partner organizations simply don’t have the cashflow to be able to sustain activities. It’s absolutely devastating.” Immediate-term impacts on specific organizations are starting to filter through. The LGBTQ+ charity Stonewall could be forced to cut up to half of its 114 staff in the wake of the cuts, with only roles that have dedicated funding remaining safe, Stonewall's CEO Simon Blake has told staff. Stonewall received more than £500,000 ($647,000) from the U.S. government-backed Global Equality Fund between 2021 and 2025. Meanwhile, international aid charity Women and Children First announced on Jan. 23 — three days after Trump’s executive order to freeze US aid — that it would close in an “incredibly challenging” funding environment. A spokesperson for the charity said that while the decision wasn’t a direct consequence of the U.S. funding withdrawal, “what’s been happening has made it clear that the decision to close was probably the right decision.” All the sources Devex spoke to for this piece felt that it was too soon to say what impact the U.K. cuts would have. The focus for much of the sector right now is on persuading the U.K. government to reverse its decision to make cuts even deeper than those that threw the sector into chaos in 2021. Bond sent another letter to the government on behalf of more than 145 NGOs, calling on the government to not “balance its books on the backs of the world's most marginalised people.” “The future of the INGOs is reducing the projects they deliver and upping the advocacy to build a movement that is fighting for the rights of marginalized communities.” --— Jonathan Glennie, director, Global Cooperation Institute NGOs, including Oxfam and Médecins Sans Frontières, issued their own statements encouraging their supporters to wield influence on the prime minister by writing to their local member of Parliament. ONE Campaign staged a protest at the Houses of Parliament, projecting the words “AID CUTS WILL KILL” onto the buildings in large red letters, while Care International UK orchestrated a letter on behalf of more than 90 charities, activists and former heads of state calling on Lammy to increase aid spending for women and girls from the current 0.3% of bilateral aid to 20%. But supposing the cut is here to stay, at least for the medium-term, what longer-term impacts can we expect on the U.K.’s development sector? Devex understands that the Foreign, Commonwealth & Development Office invited major suppliers — OPM was one of the top three development contractors of 2023-2024 — to a roundtable on March 14 to shed more light on the shape the cuts might take. Helen McEachern, CEO of Care International UK, is keeping an open mind. Her organization lost almost half its income due to previous cuts from FCDO, which reduced aid spending from 0.7% of GNI to 0.5%. The 2021 financial accounts indicated that there had been “material uncertainty” over the charity’s ability to continue operating. In the financial year to June 2024, more than half (£27.2 million) of the charity’s £48.9 million income came from FCDO. McEachern believes the growth in high-net-worth individuals, or HNWI, could present an opportunity for INGOs to plug the sizable gap due to be left by the FCDO’s forthcoming cuts. Global HNWI wealth expanded by 4.7% in 2023, reaching $86.8 trillion, while the HNWI population increased by 5.1% to 22.8 million globally and continues to grow. “That’s an area Care is looking at,” McEachern said. “And foundations — are they able to give more at this time?” McEachern perceives that INGOs such as Care are relatively well-insulated from the cuts compared to private sector development contractors. “They don’t have other sources of income — we saw what happened to Crown Agents,” she said, referring to one of the FCDO’s largest suppliers of services, which shut down abruptly last year, partly due to previous cuts to British official development assistance. “We INGOs are exposed but we have other sources [of income] — most of those organisations, FCDO contracts is all they do. If the impact is big for us, for them, it’s massive. What happens to them now?” This is a question that David Landsman, executive chair of British Expertise International, the membership organisation for such companies in the U.K., has been giving significant thought to of late. BEI’s members include the likes of the Palladium Group, Adam Smith International, and Oxford Policy Management. Diversification appears to be the answer. “If one avenue closes, you have to look in other directions,” Landsman said. “We already work quite closely with other bilateral donors — the Australians come to mind — so I think we’ll do more of that, but we’re also looking to engage with philanthropies, big foundations but also private finance.” He added: “If you look at some of the development banks where the U.K. has traditionally played a significant role as a member, and you look at the scale of the involvement by U.K. organizations in actually delivering [contracts], there is quite a gap, so there is quite a lot of potential — and willing on the part of the banks — to look for more expertise coming from the U.K.” He cited the example of the Asian Development Bank, which in 2024 awarded contracts worth $6 billion, of which U.K.-based organisations only delivered $22.8 million, despite the U.K. having contributed $2.91 billion in capital subscription to ADB. Yet, for some, harnessing such opportunities is too minor a move and too similar to what the aid sector has always done. Jonathan Glennie, director at the Global Cooperation Institute, a think tank investigating the changing nature of international cooperation, told Devex that the aid system is “deeply flawed” and that cuts around the world offer a chance to change the way the sector operates in the U.K. and internationally. What he proposes is a global public investment system, which all countries contribute to, all countries can benefit from, “and where the decision-making is not in Paris or Washington or London, but shared across the world.” Glennie has been banging this drum for some time and published a book — “The Future of Aid: Global Public Investment” — on the subject in 2020. But, pointing to the United Nations, the International Monetary Fund, and the World Bank, which were set up the wake of World War II, he believes now is the time for his grand idea to come to fruition: “It’s actually easier to build new institutions in crisis moments than in noncrisis moments.” Glennie presented a paper detailing his proposal at a meeting with representatives from donor agencies including Norway, France, and the U.K. in February, and told Devex it received broad support. “This isn’t going to happen next year, but gradually over the next five years or so,” he predicted. Be that as it may, Glennie sees another silver lining for INGOs amidst the doom and gloom: less FCDO funding may enable organizations greater freedom to lobby. “If you’re taking a lot of money and delivering large projects, that definitely influences your desire to advocate strongly or make life hard for a government,” he said. “Before major British government money arrived in the sector in the late ‘90s, early 2000s, the role of INGOs was much more about advocacy. “The future of the INGOs is reducing the projects they deliver and upping the advocacy to build a movement that is fighting for the rights of marginalized communities.”