The Impact of Foreign Aid Changes on Nonprofits: What You Need to Know

The landscape of U.S. foreign aid has become a hot-button issue, especially in the wake of a recent order from President Donald Trump to suspend all foreign aid — a move that many nonprofits, charities, and public service organizations fear could wreak havoc on their funding streams. Although this order is now under legal review, its ripple effects are already being felt.

The Stakes Are High

It’s essential to understand that foreign assistance programs don’t simply turn on and off like a switch. Mitchell Warren, executive director of the AIDS Vaccine Advocacy Coalition, points out that the suspension has already started to impact the flow of critical resources aimed at HIV prevention worldwide. For nonprofits that rely heavily on federal funding — which accounts for about 30% of the overall nonprofit sector’s revenue — the seriousness of this situation cannot be overstated.

Diane Yentel, president and CEO of the National Council of Nonprofits, stated that a lawsuit was initiated against the funding freeze, leading to a temporary restraining order that has allowed many organizations to regain access to crucial funding. However, the situation remains precarious. Many small nonprofits are still facing harsh realities, potentially leading to furloughs and program closures.

The Bigger Picture: A Federal Bureaucracy Under Scrutiny

Trump’s suspension of foreign aid is part of a broader initiative to reduce the size of the federal government. Elon Musk and his advisory team have even referred to dismantling the U.S. Agency for International Development (USAID) as a pivotal step in this mission. Yet, polling data reflects that a significant portion of the American public supports foreign aid. According to a 2024 Reagan Institute poll, 54% believe that the U.S. should maintain a proactive international presence.

The Warning from Nonprofit Leaders

Michael Thatcher, CEO of Charity Navigator, shared poignant insights about how this funding freeze has shaken the nonprofit sector to its core. Many organizations operate with less than 100 days of working capital, making them particularly vulnerable. "About half may not survive," he cautioned. Individual donations can play a crucial role in mitigating this impact. If there are causes you’re passionate about, now is the perfect time to contribute.

Understanding the Financial Landscape

It’s worth noting that federal foreign assistance represents only about 1% of the federal budget — roughly $63 billion for the fiscal year 2023. By comparison, American donors contributed a staggering $49.3 billion to international causes as of 2020. This puts individual and philanthropic giving in a vital position to help fill the gaps left by governmental funding.

Where to Direct Your Contributions

Now, more than ever, individuals have the power to make a significant impact. Leaders in the philanthropy sector, like Michael Jarvis of the Trust, Accountability, and Inclusion Collaborative, stress the importance of strategic and effective deployment of funds from individual donors. While private contributions cannot entirely compensate for the funding the government is withdrawing, they nonetheless can make a substantial difference in sustaining the missions of affected organizations.

Organizations such as Save the Children and UNICEF have been identified as being significantly impacted by the funding freeze. Platforms like Charity Navigator can provide you with insights into these nonprofits, helping you make informed decisions on where to direct your donations.

Additionally, there may be tax benefits associated with making contributions—check with a financial advisor or tax professional to get the most from your giving.

Conclusion: The Call to Action

As the complexities surrounding U.S. foreign aid unfold, you have the opportunity to play a critical role in supporting vital causes. Donating to reputable nonprofits can help ensure that the critical work they do continues, despite the uncertainties posed by federal funding changes.

At Extreme Investor Network, we encourage you to think deeply about the issues that matter to you. Whether through financial contributions or advocacy, there are multiple ways you can contribute to the causes you care about most. Stay informed, stay engaged, and use your voice—and your dollars—to make a difference.