Aggressive Freeze on Funding
The Trump administration’s aggressive freeze on foreign aid funding has taken a dramatic turn, leading to the cancellation of over 800 USAID contracts and grants, mass layoffs across international development organisations, and a legal showdown that could further entangle the former president in court battles.
According to Anna Gawel of Devex, USAID’s largest partners—including FHI 360, DAI, Chemonics International, HIAS, and the International Republican Institute—are among the organisations forced to furlough thousands of employees as funding dries up. The crisis is not limited to the United States, with nearly 52,000 jobs lost worldwide, as reported by USAID Stop-Work, a coalition of former and current USAID staff.
A Legal Firestorm
As the administration pushes forward with terminations, many of which violate standard 30-day notice requirements, contracting officers now find themselves exposed to legal repercussions.
“It’s a lawyer’s field day,” a former USAID contracting officer told Devex. Under U.S. federal law, officers representing the government in contracts can be sued for breaching agreements. The termination notices, issued at an unprecedented pace, have already triggered lawsuits from contractors and NGOs seeking compensation for work they’ve completed.
On February 12, plaintiffs in an ongoing lawsuit against the Trump administration submitted a court filing alleging that the government was “accelerating their terminations of contracts and suspensions of grants,” exacerbating what they describe as “irreparable harm.” In response, the administration was compelled to release a list of 231 terminated projects within a 48-hour window.
Yet, for many NGOs, the legal process offers little immediate relief. Organisations owed millions of dollars for completed services have no choice but to lay off staff and suspend programmes. “I doubt these folks will ever really pay out these costs,” the former contracting officer added. “And if they do, the vast landscape of USAID’s implementing partners will be out of business, and it will be too late.”
The Human Cost of Terminations
Beyond the legal ramifications, the mass layoffs have created a crisis within the global development community. Many USAID-funded projects—ranging from election monitoring to rural internet access—are now in jeopardy.
“We’re talking about hundreds of millions of dollars owed for services already provided,” says Tom Hart of InterAction, a coalition of NGOs working in international development. “That’s why, at least in the INGO sector, we’re seeing mass layoffs, country programmes stopped, and some organizations looking at shutting their doors.”
For Kim Kucinskas, a director at the nonprofit group Humentum, the situation has become a balancing act between crisis management and maintaining existing programs. “It’s physically, emotionally, mentally exhausting,” she told Devex.
Congress Fights Back
With USAID funding in freefall, congressional Democrats have introduced the Protect U.S. National Security Act, which aims to safeguard the agency from further dismantling. The bill, authored by Rep. Sara Jacobs (D-CA), seeks to ensure USAID’s operations continue in compliance with federal law and to prevent adversaries from filling the power vacuum left by U.S. foreign aid cuts.
“Eliminating USAID will be a death sentence for millions of people,” Jacobs stated. “People will starve, babies will die, and poverty will skyrocket. Not to mention, Trump’s elimination of USAID is completely illegal.”
However, with Republicans controlling both houses of Congress, the bill faces an uphill battle. In fact, last week, Rep. Greg Steube (R-FL) introduced legislation to abolish USAID altogether, transferring its responsibilities to the U.S. State Department.
What’s Next?
Aid organisations are left scrambling to stay afloat amidst legal battles mounting, Congress remains at an impasse. The 90-day review process, designed to assess which projects may continue, is proving too long a wait for many NGOs. Even major players in the sector are running out of cash to cover costs, forcing them to redirect resources, downsize, or shut down completely.
For now, USAID’s future remains uncertain. But one thing is clear: the fallout from Trump’s funding freeze is only just beginning.
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