President Donald Trump’s sweeping overhaul of US foreign assistance has thrown the aid and development sector into disarray, leaving hundreds of contractors struggling financially. Some have already laid off staff, while others face millions of dollars in unpaid invoices.
Just hours after taking office on 20 January, Trump ordered a broad review of nearly all US foreign aid programmes and tasked billionaire Elon Musk—who has previously accused USAID of being a “criminal” organisation—with downsizing the agency.
Since then, dozens of USAID staff have been placed on leave, and hundreds of internal contractors have been laid off. Meanwhile, Musk’s newly formed Department of Government Efficiency has significantly reduced operations at USAID, the primary US agency responsible for providing humanitarian aid worldwide.
Blanket stop-work orders issued by the State Department have sent shockwaves through the aid industry, both domestically and internationally. Many contractors typically cover costs upfront and later bill the US government, leaving them vulnerable to financial instability.
For Steve Schmida, co-founder of Vermont-based Resonance—a longtime USAID contractor focused on innovation, fisheries conservation, and trade—the crisis has become an “existential” threat.
“We had millions of dollars in invoices due to be paid that had been approved by our clients in the US government… We quickly understood that this was a serious threat to our business,” Schmida said.
Facing an imminent revenue collapse, Schmida began laying off and furloughing dozens of employees. By the time the cuts are complete, nearly 90% of his workforce will have been affected, with only about a dozen of his nearly 100 US-based employees remaining.
“The last 10 days have been the worst 10 days of my professional life,” he said, noting that some of the affected projects had received funding during Trump’s first term.
An official at a USAID implementing partner, speaking anonymously due to fear of retribution, said their company had been forced to furlough hundreds of US-based staff. They also claimed the US government owed them more than $50 million in past-due invoices from November and December.
Both the official and Schmida indicated that they might have no choice but to take legal action to recover the unpaid funds.
Faridah Abdulkadiri
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