The sudden USAID funding cuts earlier this year have created a deep conflict between two southern African organisations, MFDF (Mosepele Foundation Development Forum) and Mothers2Mothers South Africa (M2M), both caught in circumstances beyond their control. MFDF alleges that M2M, the prime implementer of the USAID-funded Bokamoso project, withheld funds, violated regulations, and exerted financial pressure to enforce “unfair closeout terms.” The tensions arose from the closure of Bokamoso, a five-year initiative launched to support the health and well-being of orphans, vulnerable children, adolescent girls, young women, and their communities in Lesotho. The shutdown forced MFDF to retrench 151 of its 157 staff, leaving affected adolescents at increased risk of school dropouts and teenage pregnancies.
While MFDF accuses M2M of wrongdoing, M2M argues that both organisations were navigating unprecedented operational and regulatory uncertainty following a USAID stop-work order in January, which halted disbursements and restricted activities to life-saving services. M2M noted that MFDF’s work fell outside the PEPFAR limited waiver and emphasised that it too was operating under extraordinary constraints while managing the closeout process. Despite this, MFDF claims M2M blocked payments owed under their M16.4-million subaward, including M1.2 million in accrued administrative costs such as salaries and benefits. M2M disputes these claims, stating no formal financial claim was submitted and that all allowable expenses had been reimbursed, citing the US government’s pending approval of the prime award.
The conflict intensified as MFDF accused M2M of misrepresenting the financial situation to justify terminating the partnership, alleging violations of US federal regulations regarding timely disbursement and proper closeout procedures. The foundation also warned that non-payment prevented them from providing terminal benefits to retrenched staff, prompting threats of legal action. The wider backdrop to the dispute is the US stop-work order issued under the America First Global Health Strategy review, which froze most foreign aid and shifted oversight of projects like Bokamoso from USAID to the State Department. MFDF alleges that M2M exploited this crisis to pressure them into accepting termination on unfavorable terms.
MFDF rejected M2M’s proposal for a rapid closeout, arguing that retroactively dating termination and compressing the closeout period violated the 90-day closeout regulation. M2M, however, maintains the 90-day rule is not yet applicable because the prime award is still not closed. MFDF also highlighted M2M’s unilateral decision-making despite a consortium-based Teaming Agreement. M2M described the situation as a “force majeure,” driven by directives from the US government, and asserted that the rapid closeout was necessary to minimise financial risk and ensure local partners could be reimbursed. MFDF has since reported M2M to the US Office of Inspector General and Lesotho’s anti-corruption authority, while continuing to contest the linkage between reimbursement and acceptance of termination terms.
The dispute underscores the operational and regulatory challenges faced by NGOs dependent on international aid, illustrating the cascading effects of sudden funding cuts on staff, vulnerable communities, and local governance of foreign-funded projects.
