The decision by United States (US) President Donald Trump to halt American foreign aid to South Africa has sent shockwaves through the country’s development and social impact sector.
The US is not the only country withdrawing aid – the United Kingdom announced a 40% reduction in its international development budget, and the Netherlands, France, Belgium and Switzerland have also all cut their aid budgets as European countries look to bolster their defence budgets.
This ‘Western withdrawal’ of aid has direct consequences, the most immediate of which is the freeze on the President’s Emergency Plan for AIDS Relief (PEPFAR) and the United States Agency for International Development (USAID), which fund a significant portion of healthcare, education and human rights initiatives.
PEPFAR funding makes up around 17% of contributions to South Africa’s HIV/Aids programmes and has saved 26 million lives. In 2024, the US provided around R8.5 billion in direct funding under PEPFAR, with R8.2 billion projected for 2025. Funding cuts will account for around half a million deaths in South Africa, says Linda-Gail Bekker, CEO at the Desmond Tutu Health Foundation. Meanwhile, USAID funds 44 health projects in South Africa, according to health journalist Mia Malan.
However, only around 7% of South African nonprofits received funding from foreign government donors in 2024, according to primary research on NPO income conducted with 149 nonprofits by Trialogue. The same research showed that three quarters of companies and 80% of nonprofits do not collaborate at all with international aid agencies like USAID, GIZ, and the Foreign, Commonwealth and Development Office (FCDO). Thankfully, foreign aid funding cuts are not affecting the entire sector, or even most of it.
Aid cuts lead to retrenchments and financial uncertainty
This is not to suggest that the impact of aid cuts is not dramatic.
The ‘Rapid Analysis of Initial Impacts of the US Government’s Stop Work Orders on Social Development Organisations in South Africa’, a survey conducted by Social Impact Insights Africa, NASCEE, Southern Hemisphere, Benita Williams Evaluation and other organisations, has revealed what the impact is likely to be.
Around 55% of the 155 organisations surveyed are facing financial uncertainty, reduced cash flow, retrenchments, and programme shutdowns, and more than 5 900 staff and contractors had already been let go as of March 2025. Essential services, such as HIV treatment, food relief, home-based care, and ECD programmes have been severely compromised, although the Department of Health has indicated it can cover the costs of all HIV medication.
For corporate social investment (CSI) managers and business executives, the question is not just about what has been lost but how South African businesses can and should respond. This moment is not just a crisis – it is an opportunity to strengthen the local social development sector.
What can companies do?
South African businesses have long played a critical role in bridging gaps left by government and international donors. Research in the Trialogue Business in Society Handbook 2024 shows that local companies spent R12.7 billion on CSI initiatives in 2024, increasing investment by 2% in real terms from 2023. In addition, 70% of South African nonprofits surveyed by Trialogue in 2024 said they receive funding from South African companies, indicating the major role played by local corporates in supporting NPOs.
While the withdrawal of foreign funding should not cause companies to change strategic direction, there are several things that they should consider in response.
- Assess existing commitments
Companies should evaluate their current CSI commitments to identify areas directly affected by funding cuts. This includes partnerships with nonprofits that depend on foreign aid, and at-risk healthcare initiatives. The survey mentioned above has noted that children, youth, women, HIV+ individuals and people with special needs will be the hardest hit, most notably in Gauteng and KwaZulu-Natal. - Be flexible with funding
For those projects affected by the cuts, companies should be flexible and allow organisations to use the funding where it is most needed in the immediate term. This includes staff salaries that were covered by US funding. Companies can also consider changing the timelines of their funding to assist with immediate needs where milestone funding may have been planned for later. They could also allocate a portion of their disaster response/unallocated funds to assist with the current crisis. - Consider greater non-financial support
Companies should leverage their governance, financial, technological, human capital and other expertise to support their partner organisations through this period of change. They can consider seconding staff or providing pro bono expertise to support affected nonprofits. This could include free training in digital tools, AI, or data analytics, or leveraging business expertise in operational efficiency and governance. Additionally, companies can encourage employee giving and volunteering. Companies can also consider changing the timelines of their funding to assist with immediate needs where milestone funding may have been planned for later. They could also allocate a portion of their disaster response/unallocated funds to assist with the current crisis. - Support sector sustainability
Companies can play a crucial role in helping nonprofits become more sustainable. This includes long-term investment in their systems, infrastructure and leadership, as well as skills development. It could also include helping nonprofits to relook their funding mix, providing guidance with financial management and investment strategies, offering tools and networks to help them improve their fundraising capabilities or generate their own income, and contributing to endowments - Collaborate for greater impact
No single company can fill the financial void left by USAID. However, through multi-stakeholder partnerships, business can pool resources to ensure that critical services continue. This requires greater collaboration with government, civil society, and international funders who are still active in South Africa (read Trialogue’s top 10 tips for successful collaborations). The Solidarity Fund set up during the Covid-19 pandemic showed that collaboration was able to unlock funding and resources in a crisis. The current crisis may call for a similar business-led initiative focused on sustaining at-risk social impact programmes. - Advocate for policy and systemic change
The private sector has a powerful voice in policy discussions. By engaging with policymakers, businesses can advocate for policy shifts that support long-term sustainability in social sectors impacted by the aid cuts.
Trialogue recently held a webinar on trends driving CSI and development in 2025. Panellist Feryal Domingo, Acting Executive Director of Inyathelo, pointed out that CSI needs to “move out of transactional relationships and build collaborations that help to create shared value”.
Priya Naik, founder and CEO of Samhita Social Ventures in India, recommended that companies shift from programmatic funding to building institutional capacity. A trend in India is to focus on returnable rather than traditional grants, enabling funds to be recycled. “Around 90% of recipients of these funds have paid them back,” Naik pointed out.
Patricia Loyola, Director of Management and Social Investment at Comunitas in Brazil, noted the need for both short-term, direct interventions to address urgent challenges and for more collaborative partnerships. Some companies have provided civil society with seed funding to model public policies and scale successful initiatives – success stories include reducing the infant mortality rate in municipalities, for example.
Finding creative solutions
The withdrawal of US aid may be a challenge, but it also presents an opportunity for South African organisations to become more resilient and less dependent on foreign funding.
Organisations are acutely aware that they can’t rely on a single funding source in the development space, whether from the private or public sector. Having multiple funding sources and building resilience funds (such as nonprofit endowment funds and pooled emergency funds with many stakeholders) can provide a safety net for at-risk nonprofits. This can help to drive stronger local partnerships and greater sustainability in the face of ongoing turbulence in the funding space.
Through strategic investment, collaboration, and innovative funding mechanisms, businesses can ensure that social impact efforts not only survive this crisis but emerge stronger and more resilient.
