The world’s biggest aid donors are pulling back, urging a rethink of foreign aid.
In the latest sign of a global retreat from foreign assistance, the U.S. and the U.K. are slashing billions in development funding, accelerating a shift toward domestic priorities. Under President Trump’s “America First” agenda, the U.S. is set to eliminate nearly 15,000 grants— erasing $60 billion in funding— and gut over 90% of United States Agency for International Development (USAID) contracts. Meanwhile, the U.K. has announced plans to scale back its foreign aid budget from 0.5% to 0.3% of national income by 2027, as it diverts funds toward military spending.
With most U.S. government-funded aid already frozen— except for essential humanitarian relief— the cuts are driving global job losses, and exacerbating instability in some of the world’s most vulnerable regions. The trend isn’t new— but the scale and magnitude of the rollback marks a turning point in international development policy.
“The US Government’s brutal cessation of aid may be the most abrupt expression of the sunsetting of aid as we know it, but the writing has been on the wall for some time now,” says Lawrence Haddad, Executive Director of the Global Alliance for Improved Nutrition (GAIN) and a 2018 World Food Prize laureate.
Haddad, a former Director of the Institute of Development Studies, has long championed a smarter, more strategic approach to aid— one that leverages existing public and private-sector investment rather than relying largely on direct funding. The current landscape, he argues, demands a fundamental rethink of how aid is structured.
“The medium-term trends have been there all along: a retreat from thinking about aid as a promoter of national prosperity, safety and security— in all countries— towards a ‘my country first’ perspective,” he observes.
The numbers bear this out. In 2024, the European Union slashed its development fund by 7.5%, redirecting €2 billion toward refugee support. In 2023, nearly a third of the UK’s aid budget was spent domestically on refugee costs.
While global aid reached a record $224 billion in 2023— with the U.S. remaining the world’s largest donor— much of the increase was driven by pandemic relief, support for Ukraine, and refugee-related expenses— masking stagnation in long-term development funding.
The U.S. had planned to allocate $58.4 billion for international assistance in fiscal year 2025—21% less than in 2022, when aid surged to support Ukraine. But with USAID distributing nearly $44 billion in 2023 before its dismantling, the future of U.S. foreign aid is now in limbo.
Malnutrition, Hunger, and the Need for a New Foreign Aid Model
“This crisis is a wake-up call to re-think aid,” says Haddad.
GAIN works to combat all forms of malnutrition by making healthier diets more accessible, especially for the most vulnerable. It achieves this by linking food systems levers more effectively to nutrition outcomes and helping governments maximize their own resources alongside funding from donors, philanthropists, development finance institutions, and the private sector. While most of GAIN’s funding comes from government donors, it is not highly exposed to drops in US and UK funding. Still, Haddad’s organization is increasingly focused on how smaller amounts of aid can be leveraged to sustain and expand efforts to reduce malnutrition.
What’s compounding the urgency to change is the devastating timing— aid cuts are hitting just as global hunger reaches unprecedented levels, stretching resources to the breaking point.
In 2023, nearly 282 million people across 59 countries faced severe food insecurity, requiring urgent assistance. Meanwhile, U.S. funding for hunger and malnutrition fell sharply— from $11.2 billion in 2022 to just $7.5 billion in 2023. USAID alone had invested over $1 billion in nutrition programs that year— funding now gone.
“The numbers are staggering: over 3 billion people cannot afford a healthy diet, and 763 million are hungry,” Haddad says, with war-torn regions like Sudan, Yemen, the Democratic Republic of the Congo, and Gaza hit hardest.
“Nutrition is perhaps the most fundamental building block of sustainable development,” he says. “Malnutrition destroys brains, bones, muscles, immune systems, entrepreneurial spirit— and hope. If donor governments want prosperity, safety, and lower illegal immigration at home they should invest in the prevention of malnutrition at home and around the world.”
Why? Malnourished people are restless people, searching far and wide for a better life. Malnourished people have less to lose from conflict than others. Malnourished people are more focused on surviving and have less energy and time to focus on creating thriving economies.
“Aid alone cannot fix malnutrition, he says, but it can be the catalyst for millions of other fixes.” Haddad sees some hope amid the devastation.
Maximizing Scarce Foreign Aid to Leverage Greater Resource Flows
Haddad sees the future of aid not in sheer volume, but in smarter deployment—leveraging limited funds to drive concessional lending and mobilize private investment for greater development impact.
“When one form of aid disappears, another must replace it,” he says, because the needs— humanitarian and developmental— are too great for aid not to exist.
“But aid must be used better to leverage other resource flows— those that are much bigger and less vulnerable to disruption— to accelerate development and nutrition outcomes.”
Among his key recommendations are expanding public sector R&D investments beyond staple crops to include nutrient-dense foods like fruits, vegetables, legumes, dairy, and proteins; leveraging public procurement to create stable markets for healthy foods, particularly in schools and social programs; incentivizing businesses to invest in worker nutrition as a means of enhancing productivity and economic growth; creating financial debt and equity instruments for small- and medium-sized enterprises (SMEs) that play a vital role in economic growth while supplying nutritious foods; and urging development finance institutions to do much more for nutrition by lending and investing in human infrastructure— beyond roads, bridges and ports— by preventing disruptions to healthy brain growth from malnutrition in early life.
“Business will not come to nutrition unless there is a business case,” says Haddad, of the opportunity to leverage the private sector for nutrition. “We must create that business case. And it is not beyond our means to do so.”
On leveraging the development finance institutions, he says, “They often do not know why or how to invest in nutrition and so the nutrition community must work with them to show them why it is in their interests to do so and how they can do it.”
The push to harness private sector resources and channel large-scale concessional financing for stronger development outcomes has been gaining traction. But true change— or what Haddad calls “new aid”— won’t come from simply asking businesses and development finance institutions to fund traditional models. Instead, it requires creating innovative approaches that align development goals, particularly nutrition, with their core interests. Without reimagining how aid, finance institutions and business could intersect, development efforts risk remaining stuck in outdated approaches.
The Future of Foreign Aid: Rethink, Not Retreat
Despite dramatic aid shifts being experienced around the world, Haddad remains cautiously optimistic. “Aid won’t disappear,” he says, citing deep roots in the post-World War II era. He emphasizes that humanitarian priorities— such as addressing malnutrition, violence, inequity, and extreme deprivation— continue to have strong global constituencies.
Emergency humanitarian relief, he argues, will always deserve to have and will have public support, as evidenced by the Trump administration’s decision to exempt emergency food assistance from its funding freeze. However, development aid— the long-term investment in global stability— is under increasing pressure.
“Mass migration, global diseases, and terrorism are some examples of the problems that are hard to contain— international development is the best inoculation against these,” he notes. But to be effective, to save and change lives, to build strong, safe and prosperous nations, aid itself will have to change.
Haddad is hopeful. The world has repeatedly redefined aid in response to shifting political and economic realities, and today’s challenges demand a rethink of foreign aid. “When kings and queens die, different kings or queens take their place,” he says. “But the next incarnation of aid must not only be different— it must be smarter, more adaptive, and better equipped to navigate the risks and opportunities of our rapidly evolving world.”