The US aid freeze and UK INGOs
President Trump’s executive order to freeze US aid has rocked the international development community as he works to realign US foreign assistance with his administration. Over 50 countries have been impacted by the President's 90 day pause on US foreign aid assistance, the United States Agency for International Development (USAID), compelling INGOs such as UN agencies to suspend programmes, projects and even lay off staff.
But how might the freeze impact UK INGOs?
The Trump mandated freeze on US aid will impact several INGOs which rely on funding from the US Agency for International Development (USAID). UK INGOS could be affected in 3 key areas.
Financial and Operational Challenges
UK INGOs that are carrying out humanitarian and development projects will be forced to confront instant uncertainties. Ongoing programmes - such as the Malaria Vaccine Development Programme which is a collaborative effort between the University of Oxford and John Hopkins University - and even organisations such as Crown Agents have come to an abrupt halt.
The financial void may also pressure these organisations to seek alternative funding sources or reallocate existing resources, something which could potentially strain their budgets and negatively impact their capacity to deliver essential services.
Legal Implications
USAID contracts are controlled by US law, obligating INGOs in the UK to review their contractual obligations so that they can comprehend the full extent of the freeze’s impact. These contracts often dictate project timelines, deliverables and even funding disbursements meaning that there could be payment suspensions which could then lead to the organisations breaching their contracts.
Furthermore, the freeze in funding may then lead to workforce adjustments including redundancies and changes to employment terms. The employment law in the UK directs organisations to follow fair procedures in these situations with failures to comply leading to unfair dismissal to other employment related disputes. Legal advisory firm Bates Wells highlights that UK organisations affected by the freeze should pay attention to employment law considerations and staff safety/ security as they navigate the uncertainties.
Regulation and Governance
Beyond the more immediate concerns associated with operations, INGOs based in the UK may also need to address broader regulatory and governance issues. As mentioned above, the sudden freeze has had a large impact on funding, compelling leadership and those in governance positions to make difficult decisions pertaining to the mobilisation of resources, programmes prioritisation, crisis management strategies and even potential restructuring to ensure that funds are going to areas of need.
Effective governance requires transparent and thorough decision making processes, risk assessments and strategic planning to navigate different scenarios. The loss of funding may also need to be reported to the Charities Commission and then any necessary protocols taken.
Overall, President Trump’s freezing of US Aid presents an array of multifaceted challenges for UK INGOs, spanning operational and financial, legal and regulatory domains. The decision is currently in place for 90 days so it will be interesting to note how it develops and changes.
Published in the 4th edition of Developmental Insights
