Cost-cutting pressure in development cooperation: How NGOs can respond

USAID collapse and the consequences for Switzerland

Since it was founded by John F. Kennedy in 1961, the US development agency USAID has become the largest development agency in the world. With a budget of 40 billion US dollars per year, it had around 40 percent of the total government development funds of all countries in the Organization for Economic Cooperation and Development (OECD). Now it has been completely incapacitated within a few weeks. Of the original 6,200 projects, only around 1,000 are to be continued - in future under the supervision of the US State Department.

The consequences of these budget cuts and project freezes are also being felt by Swiss NPOs:

• For example, the development policy organization Terre des Hommes Switzerland lost 10 million dollars or 10 percent of its budget and had to lay off 440 employees worldwide.
• The aid organization of the Protestant Churches of Switzerland (HEKS) had to lay off over 100 employees and discontinue projects in Ukraine, Ethiopia and the Democratic Republic of Congo. The estimated loss: 7.5 million Swiss francs.
• The development organization Swisscontact has outstanding amounts of 14 to 16 million dollars, around 5 percent of its annual budget.
• The development organization Solidar Suisse is facing uncertainty regarding three aid projects for 36,000 workers.

According to Georg von Schnurbein, an expert in NPO financing, the sources of funding for Swiss aid organizations have become increasingly international. The professor from the University of Basel says: "Partner organizations such as USAID or the EU agency Echo have become more important." This has increased the dependence of Swiss aid organizations on foreign donors.

Donations for development cooperation on the decline

A small consolation: at least the volume of donations in Switzerland remains high overall. Excluding the extraordinary Ukraine donations in 2022, the volume rose by seven percent in 2023, as the Zewo donation statistics for 2023 show. However, international aid organizations recorded 55% fewer donations, while national organizations active in the social and health sector "only" recorded a drop of 35%. In 2025, Switzerland also reduced its funding for development cooperation (DC). Parliament decided to make cuts of CHF 110 million in the 2025 budget and CHF 321 million in the financial plan for the years 2026 to 2028. These cuts particularly affect bilateral, economic and thematic cooperation as well as contributions to multilateral organizations. However, the areas of humanitarian aid, peacebuilding and support for Ukraine are not affected. Specifically, contributions to multilateral organizations such as UNICEF will be reduced by around a quarter from 2025. All contributions to the Global Partnership for Education, amounting to over seven million francs, will also be discontinued. These budget cuts could affect the implementation of the International Cooperation Strategy (IC) 2025-2028. Despite targeted prioritization, there is a risk that the intended impact of international cooperation will not be fully achieved. Swiss organizations such as Alliance Sud sharply criticize these cuts and warn of dramatic consequences for the world's poorest countries.

Consequences for development organizations

NGOs in particular, which previously relied heavily on SDC and foreign funding, are facing major challenges. But what solutions are there for NGOs in Switzerland? And how can fundraisers tap into alternative sources of funding? Despite the major challenges, there are proven strategies to compensate for declining donations.

Diversification of funding sources

An experienced fundraiser in development cooperation says the following about possible solutions: "Diversification is the key to survival in these turbulent times. We need to be creative and find new ways to finance our work." Kristina Lanz is an expert in international cooperation at alliancesud, the Swiss competence center for international cooperation and development policy. She explains: "NPOs can better inform their donors about political events and not only call on them to donate more, but also to get politically involved in strong development cooperation." Kristina Lanz is of the opinion that funding foundations could step into the breach to some extent, "but are unlikely to be able to close the entire funding gap."

Concrete solutions could be:

• Instead of relying on one large funding institution, approach several small and medium-sized foundations. The aim: fewer cluster risks.
• Entering into partnerships with companies that pursue ESG (environmental, social, governance) goals. These are companies that aim for sustainable corporate governance and the protection of people and the environment. A positive development for fundraisers is that the number of companies in Switzerland that comment on ESG issues in their sustainability reports has increased significantly in recent years.
• Use crowdfunding campaigns specifically for visible projects that can be realized in the short term.
• Embed fundraising and communication more strongly in political contexts.

Kristina Lanz from alliancesud adds: "NPOs can place their fundraising and communication more clearly in a social and political context in order to sensitize donors to the political dimension of development cooperation. Through petitions, the organizations can also ask their donors to become directly politically involved.

Lottery money as an alternative source of funding

The lottery companies Swisslos and Loterie Romande generated a profit of over half a billion francs for the first time in 2023. Swisslos proceeds go to the cantons to support the common good (see blog post). A quarter of this money went to the environment and development aid. In 2023, the cantons used Swisslos funds for around 21,000 projects.

Examples:

• The canton of Aargau approved CHF 1.5 million for 46 development projects in 2023.
• The canton of Solothurn supported eight projects with CHF 100,000 in 2024.
• Good to know: Support is provided through contributions to recognized aid organizations based in Switzerland. The projects supported cover various areas, such as health, education, agriculture, infrastructure, environmental protection and social development.

This support enables Swiss aid organizations to carry out important projects to improve the quality of life in developing countries and promote self-help in the process. Applications to the cantonal lottery funds can be used to close any funding gaps.

Further strengthening digital fundraising

It may also make sense for Swiss development organizations to invest further in digital fundraising, as the donation market is developing in this direction and digital channels are becoming increasingly important. According to the Donations Report, 10% of all donations were made via direct digital channels for the first time in 2022, an increase of 61% compared to the previous year. 90% of the digital donation volume has so far "only" gone to 22% of the (largest) organizations. Digital fundraising also enables access to different donor groups such as private donors, foundations, companies and major donors via a single channel, which can save time and costs. Digital fundraising tools offer nonprofit organizations innovative ways to expand their reach and approach donors more efficiently. In the digital era, NGOs should maximize their online presence. Effective storytelling and user-friendly donation platforms can make all the difference. Further tips:

• Use social media and influencers to reach donors emotionally.
• Use donation platforms in a targeted manner and optimize online donation processes.
• Use storytelling techniques to make projects more tangible.
• Implement TWINT as a low-threshold donation option.
• Develop hybrid fundraising events (combine online events with local events) for greater reach.

Tips for fundraising in crisis situations

Even if the financial shortage may be acute, it is important not to forget: Keep calm and continue proven fundraising activities. Organizations that have invested in their fundraising in previous times of crisis have generally been more successful in the long term than those that have cut budgets disproportionately. Some more tips:

• Upgrading offensive: inform previous supporters openly about financial bottlenecks. Long-standing donors are often willing to provide additional help in times of crisis.
• Develop contingency plans: NGOs should prepare scenarios for sudden funding shortfalls.
• Scaling up programs: In times of crisis, it may make sense to focus on core programs and reduce less essential activities.
• Build up reserves: If possible, NGOs should build up financial reserves for times of crisis.
• Strengthening advocacy work: NGOs can join forces to lobby for the restoration of funding.
• Engagement of volunteers: In times of scarce resources, volunteers can be a valuable support.
• Consideration of growth in French-speaking Switzerland when approaching donors.
• Targeted approach of institutional donors in French-speaking Switzerland.

How the Fundraiso.com online platform helps

Fundraiso.com helps NGOs to tap into alternative sources of funding. The platform offers:

• An extensive database of foundations and funding institutions.
• Up-to-date information on Swisslos and SDC funding.
• Targeted search functions to find suitable donors.

Basel-based fundraiser Andreas Cueni advises on foundation fundraising: "Basic information on foundations is easier to find nowadays and inquiries are therefore simpler. However, I recommend carrying out research on the founders and their management teams beforehand. This is because many foundations are not funding, but are themselves operationally active or even looking for funds. The really important and suitable foundations have to be filtered out of the large number."

Conclusion

Austerity pressures and economic uncertainties will continue in 2025, but NGOs can continue to operate successfully through strategic fundraising and the use of alternative sources of funding. Fundraiso.com provides valuable support in discovering new opportunities and securing financial stability. In times of crisis, there is also an opportunity for innovation in digital fundraising. NGOs that act creatively and flexibly now can emerge stronger from this situation and continue their important work.