Six practical strategies for companies partnering with nonprofits to navigate international funding cuts

Ses partnering with nonprofits to navigate international funding cuts

In 2025, something almost unthinkable happened – the United States, the United Kingdom, France, Germany, the Netherlands, and other major donor nations began scaling back their Official Development Assistance (ODA) commitments.

Driven by economic slowdowns, domestic political pressures and a new emphasis on national interests over global solidarity, the cuts have had a chilling effect on a world already struggling with increasing global conflict and displacement, climate change, and deepening inequality.

In Africa, where donor dependency remains high and roughly 30% of health spending relies on foreign assistance, the effects have been seismic. According to the African Development Bank, the continent is expected to have lost nearly $39.8 billion in aid funding during 2025.

The slashed funding of the US President’s Emergency Plan for AIDS Relief (PEPFAR) funding alone – a 24% reduction in planned HIV/AIDS funding, according to the Center for Global Development – has crippled treatment programmes in South Africa, Eswatini, Malawi, Tanzania, Uganda, Zimbabwe and the Democratic Republic of Congo (DRC).

 In South Africa, three-quarters of PEPFAR-funded treatment programmes were cancelled, although a PEPFAR ‘bridge plan’ was put in place in South Africa in October.

Trialogue’s primary research indicates that only 16% of the 110 nonprofits surveyed between May and July 2025 for its annual Business in Society Handbook were affected by the USAID and PEPFAR funding freeze. However, of those affected, more than half (56%) reported losing income, and 38% had to stop some of their programmes.

Funding gaps bring opportunities

The global aid contraction has highlighted the vulnerability of donor-dependent systems; however, new ways of raising and using funds beyond government grants or bilateral aid are emerging. Private companies, foundations, impact investors, venture philanthropists, crowdfunding platforms, and even local communities are stepping in to support public goods, social programmes, and infrastructure.

Private investors seek strong returns in emerging markets but are often discouraged by risk, weak regulation, and inefficient systems. Blended finance helps overcome these barriers by using public or philanthropic funds to attract private capital. Pension funds, sovereign wealth funds, banks, and asset managers can be mobilised for projects with clear social, environmental, or economic benefits.

This approach complements public-private partnerships and impact investing, offering a practical way to tackle complex challenges and advance the Sustainable Development Goals.

In South Africa, initiatives that use blended finance and results-based models are reducing donor dependence.

The Jobs Boost Outcomes Fund, launched with R300 million from the National Skills Fund, pays implementing partners only for verified job placements and retention. The initiative has already created over 5 600 jobs and demonstrates how shared risk, independent verification and measurable outcomes can deliver tangible impact while reducing dependence on foreign donors.

The locally impactful Greater Cape Town Water Fund applies a “user-pays” blended-finance approach. By pooling resources from government, companies, donors and the World Wide Fund for Nature (WWF), the fund has enabled large-scale catchment restoration to secure Cape Town’s water supply.

Rethinking investment

Alternative finance offers a way forward – one that’s more resilient, locally anchored, and focused on outcomes rather than inputs. For companies, this means stepping into a more active role: funding what works, sharing risk, and helping build systems that can scale.

Here are six practical steps to take:

1.     Invest locally and think systemically. Companies can co-fund development alongside government and philanthropy, focusing not only on service delivery but on strengthening the systems that sustain it, such as data, monitoring and governance.

2.     Adopt results-based approaches. It’s essential to fund outcomes, not inputs. Outcomes-based financing ties payments to verified achievements, such as jobs created, patients treated, or hectares restored, thereby improving accountability and efficiency.

3.     Use corporate social investment (CSI) to de-risk innovation. Many private investors are nervous about trying new funding models. However, if early funders, such as foundations or donors, assume a greater share of the risk, it becomes easier for others to join in later. Corporate funding can serve as catalytic or first-loss capital, absorbing early risk and attracting other investors.

4.     Support ecosystem building. Many nonprofit organisations lack the systems and capacity to measure outcomes effectively – but they play a vital role as implementation partners. Companies can help by offering technical assistance, back-office support or short-term cash-flow relief.

5.     Collaborate rather than control. Funders should avoid micromanagement. Trust delivery partners, agree on success metrics early, and ensure independent evaluation.

6.     Think scale and replication. When pilot projects succeed, such as water funds or outcomes-based youth employment programmes, use their evidence to attract further investment or influence public-sector spending.

Trialogue is a niche corporate responsibility consultancy with more than two decades of industry research and experience.