In 2023, the US Agency for International Development (USAID) announced a fairly radical shift for a large, decades-old, bureaucratic institution. It sought to jumpstart overseas projects that were run by local organizations on the ground, working to solve problems like refugee displacement or lack of access to clean water.
This approach, known as Locally Led Development (LLD), was meant to be an antidote to top-down models of international aid, in which government agencies and large NGOs were often disconnected from the needs of communities and laden with administrative overhead. More than a dozen of the largest US philanthropies involved in international development signed a joint statement with USAID backing the principles of LLD.
Today, however, this USAID initiative is over, as is, effectively, USAID itself. The agency was the victim of funding cuts made by a Trump administration eager to slash social programs at home and abroad upon returning to power in January. Even the links to USAID’s local development initiative are dead.
Yet, the elimination of USAID has not spelled the end for these new models of development. On the contrary, internationally focused philanthropies are continuing and, in some cases, accelerating programs outside traditional bilateral (single-government) and multilateral (multiple-government/United Nations) frameworks.
A recent survey by the Council on Foundations (CoF) found that three-quarters of the philanthropies that signed the joint USAID statement two years ago are giving more than 21 percent of their grant dollars directly to local organizations, and more than one-third report disbursing over 90 percent of their grant dollars to locally led groups. None of the foundations reported pulling back from LLD.
“I think, maybe because of what’s happened to USAID, [international philanthropies] feel like they need to carry that banner into the future,” said Brian Kastner, CoF’s director of engagement. “Because philanthropy is able to make that commitment without changes in administration.”
Foundations Left to Pick Up the Pieces
“We’ve become the world’s largest funder of refugee-led organizations, which is kind of crazy, [considering that] our budget is $150 million a year.”
It’s difficult to overstate the impact of the US government’s retreat from international development, which had supported more than $60 billion in funding for programs ranging from disease prevention and refugee assistance to basic education and sanitation. About a third of this funding was administered directly by USAID. The elimination of USAID has effectively ended all but a fraction of these programs, the remainder of which are now run out of the State Department. This retreat is expected to have devastating consequences, with some researchers estimating that it could lead to 14 million more deaths over the next five years, including 4.5 million children under five.
These challenges are compounded by humanitarian crises in war zones Sudan and Gaza, and by climate change–driven extreme weather, as well as a pullback from international aid on the part of wealthier European countries—historically chief funders of international development alongside the United States.
According to United Nations data, global humanitarian aid is down sharply in 2025, amounting to just under $20 billion year-to-date, approximately half the amount recorded in 2022.
It is generally understood in the private philanthropic world that US foundations cannot fully bridge the gap left by USAID, especially at a time when domestic nonprofits are under unprecedented strain. But the shift toward LLD has shown how new models can make scarce development dollars go further and meet needs that had not adequately been addressed via traditional development channels.
The Conrad N. Hilton Foundation, for example, has become one of the main funders of refugee-led assistance organizations in Africa and Latin America, the foundation’s CEO Peter Laugharn told NPQ.
“From our perspective, locally led development and targeted funding is just good donorship.”
“We’ve become the world’s largest funder of refugee-led organizations, which is kind of crazy, [considering that] our budget is $150 million a year,” Laugharn said.
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Refugee assistance organizations provide shelter, education, assistance with paperwork, childcare, and other services. The Hilton Foundation supports such organizations in Ecuador, Colombia, Uganda, and Ethiopia, some of them led and run by refugees themselves. For this reason, Laugharn notes, the groups are closely attuned to the needs of refugees, and the assistance they provide has a much greater impact than it would if it had to pass through the traditional channels.
“From our perspective, locally led development and targeted funding is just good donorship,” Laugharn said. “We’re doing our jobs well when we get as close as we can to the people who are most experienced with the problem and tackling it themselves.”
Laugharn also stresses that LLD makes economic sense in a time of strained budgets, noting that, “it tends to be less expensive, it tends to be more sustainable, and it builds local capacity.”
In this sense, the approach dovetails with emerging best practices in the United States that prioritize giving nonprofits on the frontlines of societal challenges greater autonomy and flexibility.
“Now that USAID doesn’t exist, is there a way for recipient countries to take more ownership of their own development agendas?”
Innovation in a Time of Crisis
Another reason LLD appears to be gaining momentum, despite the gutting of USAID, is that it’s being actively promoted outside Washington, DC, including by former US international development officials.
At the Innovations in International Philanthropy Symposium in late September 2025, Samantha Power, the USAID administrator under former President Biden, encouraged private philanthropy to be a catalyst for international development. “This is a moment to practice development diplomacy—leveraging your investments by seeking collaborators,” Power said.
While international aid represents a small fraction of overall charitable giving in the United States, it’s one of the fastest growing categories. In 2024, giving for “international affairs” increased by nearly 18 percent from the previous year to $35.5 billion, according to Giving USA. (By comparison, $146.5 billion was donated for religious purposes, the largest category.)
Another potential impetus for private international aid is the recent announcement by the Gates Foundation—by far the largest private supporter of international development and public health—that it would wind down and accelerate its disbursement of $200 billion to meet a new 2045 deadline.
The retreat of the United States from international development has greatly compounded the challenges facing vulnerable populations in poorer parts of the world. The hope among international-focused philanthropies is that donors and their supporters can rise to the moment, not just with financial support but with fresh ideas.
“I think there is no replacement for the US as a global actor,” Laugharn of the Hilton Foundation told NPQ. “We hope that the charitable impulse of the American people ultimately takes a new shape and form.”
Being able to show donors how their support will directly benefit those most in need and bypass slow-moving bureaucracies could be one way to gain more support for international programs.
“We have heard pretty strongly from Global Majority countries that the aid system doesn’t work,” said Kastner of the Council on Foundations. “And right now, there are a couple movements to rethink what that looks like. Now that USAID doesn’t exist, is there a way for recipient countries to take more ownership of their own development agendas?”
