The abrupt suspension of foreign aid by the Trump administration, including funding through the US Agency for International Development (USAID), dealt a significant blow to Pakistan’s social sector, causing many organizations to halt projects, lay off staff, and scale back operations. Announced in January 2025 under the “America First” policy, the freeze compounded an already challenging funding environment in Pakistan, where donor fatigue and shifting international priorities had been reducing aid flows in recent years.
Despite the initial shock, Pakistan’s development sector has demonstrated resilience. Local NGOs quickly adapted by diversifying funding sources, leaning more heavily on domestic support and contributions from the Pakistani diaspora. Experts note that Pakistan’s long-established NGOs, with multi-sectoral and multi-donor strategies, were able to avoid total dependency on single donors, allowing many organizations to maintain operations and continue serving communities.
The sudden withdrawal of USAID funds disrupted key health, education, and community welfare projects. For instance, the Sindh Rural Support Organization (SRSO) had to shut down three major health initiatives. Staff layoffs were unavoidable, but cost-cutting measures and project restructuring allowed almost 90% of affected employees to be re-employed within months. Some previously halted projects were later restored when USAID resumed partial funding, allowing further rehiring and project expansion.
Diaspora contributions have become increasingly crucial to sustaining Pakistan’s social sector. With over eight million Pakistanis living abroad and sending more than $30 billion annually in remittances, NGOs have been able to continue health, education, and water-related projects, especially in underserved rural areas. Organizations such as Al-Khidmat Foundation and The Citizens Foundation have seen diaspora support rise substantially, reflecting growing trust and confidence in their work.
The challenges faced by Pakistan mirror a broader global trend of declining aid. The freeze on US aid, historically the largest donor, has prompted similar reductions from other countries, straining the international development community. Agencies like the Geneva-based Global Fund have had to slash previously approved grants, underscoring the need for NGOs to diversify funding and strengthen local and diaspora support to maintain critical social services.
