Rethinking Development Amid the US Funding Freeze: An Opportunity for Self-Reliance

The suspension of U.S. foreign aid under the Trump administration marks a pivotal moment for the development sector. Driven by shifting geopolitical priorities and a recalibration of foreign aid strategies, this decision has left organizations grappling with program closures, staff layoffs, and resource shortages in the Global South. In Pakistan, where U.S. funding historically accounted for 2–5% of the Annual Development Plan (ADP), the suspension has created significant budgetary gaps, threatening progress in critical sectors like health, education, and disaster relief. Over-reliance on a limited number of donors has exposed systemic vulnerabilities, but it has also created space for innovation, diversification, and greater local ownership.

Rather than viewing the funding freeze as a dead end, we must see it as a catalyst for transformation. By leveraging Pakistan’s rich culture of philanthropy, forging strategic partnerships, and adopting innovative solutions, the development sector can emerge stronger, more self-reliant, and better equipped to navigate future uncertainties. The question is not whether development organizations in Pakistan can adapt—but how boldly they will seize this moment to redefine their future.

In the following paragraphs, thinking specifically about Pakistan’s context, I have tried to jot down possible strategic actions the development sector can take to promote self-reliance.

1. Leveraging Pakistan’s Philanthropic Culture

Pakistan ranks among the most generous nations globally when it comes to individual philanthropy. According to a 2021 report by the Pakistan Center for Philanthropy (PCP), Pakistanis donate approximately PKR 450 billion (USD 2.3 billion) annually through informal channels such as Zakat, donations to mosques, and community-based initiatives. Yet, much of this giving remains fragmented and underutilized by formal development organizations.

How to Channelize This Potential:

• Formalizing Informal Giving: Organizations can create structured mechanisms to tap into informal philanthropy. For example, launching transparent donation platforms tied to specific causes—such as girls’ education, clean water access, or disaster relief—can resonate with donors who want to see tangible outcomes. Initiatives like the Edhi Foundation demonstrate how institutionalizing individual donations can fund healthcare, disaster relief, and poverty alleviation at scale.
• Community-Based Fundraising: Partnering with local religious institutions, influential leaders, and community organizations can amplify fundraising efforts. Historically, mosques, shrines, and charitable trusts have played pivotal roles in mobilizing resources during crises like floods or earthquakes. These networks can be leveraged year-round for sustained support.
• Corporate Social Responsibility (CSR): Pakistani businesses are increasingly recognizing their role in national development. Encouraging CSR contributions through structured partnerships can unlock significant resources. For example, NGOs could collaborate with corporations to fund school construction, vocational training programs, or renewable energy projects.

?2. Diversifying Funding Sources for International NGOs

International NGOs operating in Pakistan face unique challenges due to legal restrictions that prevent them from fundraising locally. Yet, these organizations possess extensive expertise, networks, and credibility that can be leveraged creatively to secure alternative funding.

Workable Solutions:

• Strategic Partnerships with Local Organizations: International NGOs can collaborate with locally registered entities to access domestic funding opportunities. Joint programs co-implemented with local partners can attract support from Pakistani donors while ensuring compliance with legal requirements. For example, an international NGO focused on maternal health could partner with a local hospital network to deliver services while sharing costs.
• Multilateral Grants and Global Foundations: Shifting focus toward securing grants from multilateral organizations like the World Bank, Asian Development Bank, and United Nations agencies can provide a steady flow of resources. Additionally, global foundations such as the Bill & Melinda Gates Foundation or the Ford Foundation often prioritize partnerships with international NGOs due to their technical expertise.
• Cost-Sharing Models with Provincial Governments: Exploring cost-sharing arrangements with provincial governments or private sector actors can reduce financial burdens. For instance, an international NGO working on flood resilience could partner with provincial disaster management authorities to co-finance early warning systems or infrastructure improvements.

International NGOs should advocate for policy changes that allow limited local fundraising for specific projects. For example, revising existing laws to permit small-scale crowdfunding campaigns or partnerships with local intermediaries could unlock new resources without violating regulatory frameworks.

3. Strengthening Systems for Long-Term Sustainability

The funding freeze underscores the urgent need for organizations to strengthen their internal systems and diversify revenue streams. This requires a shift in mindset—from dependency on external aid to fostering self-reliance and sustainability.

Possible Strategies:

• Developing Earned Income Streams: Both local and international organizations can explore income-generating activities aligned with their missions. For example: Training institutes run by NGOs could offer fee-based vocational courses targeting youth employment. Agricultural projects could generate revenue by selling high-quality seeds, fertilizers, or other inputs to farmers. Health-focused organizations could operate low-cost clinics or pharmacies to subsidize free services for marginalized communities.
• Advocacy and Policy Influence: Organizations can position themselves as thought leaders by engaging in advocacy and policy dialogue. This not only enhances visibility but also attracts funding from donors interested in systemic change. For instance, advocating for reforms in education or healthcare policies can demonstrate organizational impact beyond direct service delivery.
• Capacity Building for Local Staff: To mitigate the loss of capacity caused by layoffs, organizations should invest in upskilling remaining staff and empowering local leadership. A leaner but more skilled team can deliver greater impact with fewer resources.

4. Embracing Technology and Innovation

While crowdfunding mechanisms popular in the West may not yet be viable in Pakistan, technology can still play a transformative role in enhancing transparency, accountability, and donor engagement.

Opportunities for Innovation:

• Digital Platforms for Donor Engagement: Creating user-friendly websites or mobile apps where donors can track project progress and see tangible outcomes can build trust and encourage repeat contributions. For example, an app that allows users to monitor the construction of a school or the distribution of food aid in real time can foster deeper connections with supporters.
• SMS-Based Fundraising: Given the widespread use of mobile banking and SMS services in Pakistan, organizations can leverage these platforms for small-scale donations. For instance, donors could contribute via text messages, with funds deducted directly from their mobile accounts.
• Virtual Campaigns and Storytelling: Hosting virtual events, webinars, and storytelling sessions to highlight success stories can engage a broader audience and inspire giving. Sharing testimonials from beneficiaries or showcasing completed projects can humanize the work and motivate donors.

Blockchain technology can revolutionize transparency in the development sector by providing immutable records of fund utilization. Donors could track every rupee spent, ensuring accountability and building trust.

5. Engaging the Diaspora Community

The Pakistani diaspora contributes billions annually to family remittances but lacks structured avenues to support development projects. Organizations can launch targeted campaigns to channel diaspora contributions into formal funding streams.

Proposed Actions:

• Diaspora Bonds: Pakistan could issue diaspora bonds, allowing overseas Pakistanis to invest in national development projects. Similar initiatives in India and Israel have raised billions for infrastructure and social programs.
• Targeted Campaigns: Creating dedicated funds for education, healthcare, or disaster relief can appeal to expatriates eager to give back to their homeland. For example, a campaign to rebuild schools destroyed by floods could resonate deeply with the diaspora.

The suspension of U.S. funding under the Trump administration is undoubtedly a setback, but it also serves as a wake-up call for the development sector to embrace innovation, resilience, and adaptability. By channelizing the nation’s rich culture of philanthropy, forging strategic partnerships, and adopting cutting-edge solutions, organizations can not only survive this crisis but thrive in its aftermath.

For international NGOs, the path forward lies in collaboration, advocacy, and creative problem-solving. For local organizations, this is an opportunity to step into leadership roles and drive sustainable change. Together, they can redefine the future of development in Pakistan—one that is less reliant on foreign aid and more rooted in local ownership and ingenuity.

As we navigate these challenging times, let us remember that adversity often breeds innovation. The question is not whether Pakistan’s development sector can rise to the occasion—but how boldly it will seize this moment to transform itself for the better.