Stranded by Withdrawal: What Abrupt Aid Reductions Leave Behind

Aid budgets are shrinking. But the effects of that contraction cannot be understood simply by adding up how much money has disappeared.

When funding ends abruptly, services can weaken, experienced staff can leave, supply arrangements can break down and local organisations can lose capabilities that took years to build. In places already dealing with displacement, fragile public systems or economic insecurity, those losses can spread well beyond the programme that was originally funded.

The important question for funders is not only whether funding should continue. It is what happens when it stops.

Aid is falling. What happens next is harder to measure.

The OECD expects official development assistance to fall again in 2026, following substantial reductions in 2024 and 2025. Health funding is particularly exposed, with development assistance for health potentially falling by billions of dollars between 2024 and 2026.1

Those figures show the scale of the contraction. They tell us much less about what happens on the ground when funding disappears from a particular programme, institution or community.

A national funding figure cannot show which health workers depend on an externally funded contract, which local organisations are providing services that government systems cannot immediately absorb, or how long it would take another institution to take responsibility.

That is where the real transition risk sits. A programme can close on paper long before the systems around it are ready for the consequences.

Withdrawal is not the reverse of approval

Funders spend a great deal of time deciding whether programmes should receive money. They assess need, expected results, value, delivery arrangements and risk.

Ending that funding requires a different kind of judgement.

When a programme is approved, the question is usually whether it is worth supporting.

When funding is withdrawn, the questions are more practical. What has become dependent on that support? Who is expected to take over? Can they actually do it? And what is likely to weaken or disappear if they cannot?

None of this means programmes should continue indefinitely. Priorities change. Governments and foundations have limited resources. Some programmes will reach the end of their useful life and others should be redesigned or closed.

The problem is not withdrawal itself.

The problem is withdrawing without understanding what has grown around the funding.

A service may have been formally transferred to government while still relying on donor-funded staff. A community organisation may hold relationships and trust that another provider cannot quickly recreate. A supply chain might be restarted within months, while an experienced workforce or community network could take years to rebuild.

The amount of money being withdrawn only tells part of the story.

We are already seeing what abrupt reductions can do

The global HIV response offers one clear example.

UNAIDS estimates that international resources for HIV fell by $1.6 billion in 2025, the largest decline in almost two decades. It has also documented disruption to services, supply chains and community-led systems following abrupt reductions in financing.7

Not every funding cut will produce the same effects. But when funding is withdrawn quickly, the operational consequences can appear just as quickly.

Medicines may become harder to obtain. Contracts end. Outreach workers leave. Organisations that have spent years building relationships with communities may close or scale back.

If funding later returns, that does not mean everything simply restarts.

Medicines can be reordered. Experienced staff may already have moved elsewhere. A local organisation that has closed cannot always be recreated. Trust, once lost, is harder to restore.

That is why transition planning matters before funding ends, not once the damage has become visible.

The effects rarely stop with the programme

This becomes especially important in places hosting displaced populations.

Refugees, host communities, humanitarian organisations, public services and local businesses often operate within the same economy. Funding directed at one part of that system can support activity elsewhere without that being the original intention.

Research around Kakuma refugee camp in Kenya, for example, has shown that the refugee and humanitarian economy affects employment, consumption, prices and local production.9 More recent evidence from Kenya found that as humanitarian assistance declined, refugee household incomes and spending also fell, affecting livelihoods connected to trade, services and casual work.10

Aid in these settings is not simply a transfer between a funder and an individual recipient. Over time, it can become part of the surrounding economic and institutional system.

When it contracts, the effects can travel with it.

That does not mean reducing aid automatically causes migration.

The evidence on migration is far more complicated than that. Decisions about whether people stay, return or move are shaped by security, employment, household resources, family circumstances, conditions in countries of origin and the practical ability to move at all.2–6,11

In some cases, worsening conditions may encourage movement. In others, people may become less able to afford it.

Trying to predict whether a funding cut will “cause migration” is therefore probably the wrong place to start.

A more useful question is what conditions are being changed, for whom, and what risks follow from that.

What should a funder understand before leaving?

Much of this can be tested before a major reduction becomes operational.

The questions are not particularly complicated. What matters is whether anyone has asked them properly.

A funder should know:

These questions cannot be answered from a donor office alone.

Governments, local authorities, delivery organisations and affected communities will often have a much better view of where the hidden dependencies sit.

That matters because a transition can look successful in formal reporting while working very differently in practice.

A clinic can remain open while becoming much harder to access.

Responsibility can be transferred to a government department without giving it the resources to carry that responsibility properly.

A final evaluation can show that targets were met while telling us almost nothing about what happens six months after the funding has gone.

Replacement funding is only part of the answer

There is growing interest in whether philanthropy, private capital and other forms of financing can fill some of the gaps left by reductions in public development assistance.

In some cases, they can help.

Bridge funding may prevent an important service from collapsing during a transition. Philanthropic funding may preserve a capability that would otherwise disappear. Other forms of finance may help an organisation adapt or allow responsibility to move gradually rather than overnight.

But there are limits.

Private and philanthropic capital cannot simply replace public development finance at scale. Some essential services have no commercial model. Other funders have different priorities, approval processes and time horizons. And replacement funding often arrives later than the decision that created the gap.

By that point, staff contracts may have ended, services may already have been reduced and local organisations may have closed.

So before asking who can replace the money, it is worth asking a more basic question.

That question matters because the answer may include far more than the funded activity itself.

It may include staff, institutional knowledge, local relationships, supply arrangements, monitoring systems or organisations that have become part of how a service actually functions.

Funding decisions should include the cost of leaving

The current contraction in development assistance makes this increasingly important.

The issue is not whether every programme should be protected from change. Nor is it an argument that funding should continue simply because withdrawal carries risk.

It is an argument for understanding that risk before the decision becomes irreversible.

Funders routinely examine delivery risk before committing money. The same discipline should apply when they leave.

What depends on this funding now?

Who will inherit responsibility?

What could be lost during the transition?

And will anyone still be watching closely enough to know when things begin to go wrong?

Because when funding disappears abruptly, money is not always the only thing that leaves.

Capacity can disappear with it.

References View references

Evidence cited includes peer-reviewed research and institutional publications. Findings relate to different countries, forms of assistance and types of population movement and should not be interpreted as establishing a single causal pathway from aid reductions to migration outcomes.

1. OECD (2026). ODA projections for 2026 and the near-term: Implications for vulnerable countries and sectors. OECD Policy Briefs, No. 59. OECD Publishing, Paris. doi.org/10.1787/d7c74fa2-en
2. Lanati, M. & Thiele, R. (2018). “The impact of foreign aid on migration revisited.” World Development, 111, 59–74. doi.org/10.1016/j.worlddev.2018.06.021
3. Gamso, J. & Yuldashev, F. (2018). “Does rural development aid reduce international migration?” World Development, 110, 268–282. doi.org/10.1016/j.worlddev.2018.05.035
4. Dreher, A., Fuchs, A. & Langlotz, S. (2019). “The effects of foreign aid on refugee flows.” European Economic Review, 112, 127–147. doi.org/10.1016/j.euroecorev.2018.12.001
5. Dao, T. H., Docquier, F., Parsons, C. & Peri, G. (2018). “Migration and development: Dissecting the anatomy of the mobility transition.” Journal of Development Economics, 132, 88–101. doi.org/10.1016/j.jdeveco.2017.12.003
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7. UNAIDS (2026). Special report for AIDS 2026. UNAIDS, 27 July 2026. UNAIDS report
8. Verme, P. & Schuettler, K. (2021). “The impact of forced displacement on host communities: A review of the empirical literature in economics.” Journal of Development Economics, 150, 102606. doi.org/10.1016/j.jdeveco.2020.102606
9. Alix-Garcia, J., Walker, S., Bartlett, A., Onder, H. & Sanghi, A. (2018). “Do refugee camps help or hurt hosts? The case of Kakuma, Kenya.” Journal of Development Economics, 130, 66–83. doi.org/10.1016/j.jdeveco.2017.09.005
10. World Bank (2026). “As Aid Shrinks, Jobs Become Central to Self-reliance for Host Communities and Refugees in Kenya.” 18 May 2026. Based on two waves of the Kenya Longitudinal Socioeconomic Study conducted with UNHCR and the Center for Effective Global Action. worldbank.org
11. Beaman, L., Onder, H. & Onder, S. (2022). “When do refugees return home? Evidence from Syrian displacement in Mashreq.” Journal of Development Economics, 155, 102802. doi.org/10.1016/j.jdeveco.2021.102802
12. Gabelle, C. C., Gallego-Ayala, J. J., Beazley, R. I., Macleod, E., Aweko, S., et al. (2026). Social Protection Systems for Forcibly Displaced Populations and Host Communities in Africa’s Great Lakes Region. International Development in Focus. World Bank. doi.org/10.1596/978-1-4648-2344-2