As Global Aid Recedes, The Need For Proven Solutions Grows
We've entered a new era of austerity. The global pullback on international aid is still unfolding, and the sector is only beginning to process the full implications. International development foundations will need to choose between the immediate need of providing emergency supplies and providing long-term investment in economic inclusion-based poverty alleviation. This trade-off is daunting, and points to a future where choices are not about priorities, but about survival.
Global development efforts face uncertainty — and communities that need aid will suffer if we do not change our approach.
Yet within this sobering reality, there is also a sense of possibility. The shift in resources is pushing the sector to confront long-overdue questions and explore new models. Impact investors, philanthropic venture funds, and blended finance models are stepping in where traditional funding is pulling back.
These changes mean international development groups must step up now, more than ever, to ensure that vital humanitarian and development efforts continue to reach those who need them. As global development faces growing uncertainty and shrinking aid budgets, one thing is clear: we must invest in what works, and we must embrace the knowledge and lived experience of local leaders.
The Data Mandate: Prove It or Lose It
As development dollars become scarcer, the pressure to demonstrate cost-effectiveness and results is only intensifying. Donors—large and small—are going to double down on data and evidence of efficacy.
In the emerging funding landscape, we will need to prove not only that our poverty alleviation programs increase income, but that they improve outcomes in health, education, women's empowerment, and more. On top of that, we'll need to identify ways to reduce costs without compromising on quality and show funders that investing in economic inclusion delivers multiple returns, across sectors and across time.
The Abdul Latif Jameel Poverty Action Lab (J-PAL) recently published a brief that identifies six development programs that save lives, reduce disease, and help the poorest people in the world transition out of extreme poverty. Among them, only one approach has been repeatedly proven to sustainably move the most vulnerable households out of poverty: the Graduation Approach. This holistic, time-bound model equips families with the resources and support they need to build lasting livelihoods, and it works across contexts and geographies, from the remote rural communities of India, Burkina Faso, and Ethiopia, all the way to the post-conflict settings of Uganda and Colombia.
Participants in economic inclusion programs continue to earn and save more than their peers even after the programs end.
The benefits of the approach persist years after the programs end, with participants earning more, saving more, and experiencing greater food security and social inclusion. Plus, as household income grows, we witness life-changing outcomes in health access, education, and nutrition.
A Social Return on Investment (SROI) analysis on the MPowered project—an economic inclusion program focused on women—showed that for every Indian rupee invested, the project generated INR 6.7 in social value. This is a powerful case for scaling graduation programs, especially those rooted in gender equity, digital access, and local leadership.
Locally-Led Is No Longer Optional
There's now an opening for national governments, local organizations, and regional institutions to step up. Leaders from the Global South represent the communities most impacted by global challenges, and they're ready to offer the clearest solutions.
As traditional donors retreat, local leaders have an opportunity to reclaim ownership of the international development agenda and truly decolonize aid. And with their on-the-ground knowledge of local markets, community dynamics, and lived realities, partnering with these local leaders can unlock more effective solutions, and mobilize the funding needed to scale them.
Working with local leaders to advance the international development agenda has become essential.
This will require some deep shifts in mindset and practice for international NGOs. We must ask ourselves: What role do local organizations want us to play in the next chapter of development? How do we support rather than direct? And how do we shift power, resources, and decision-making to the communities we serve?
A New Chapter Begins
Working to support those who are experiencing extreme poverty and exclusion has never been more urgent. In the current funding climate, the Graduation approach isn't just a smart policy, it's smart economics: cost-benefit analyses show that long-term income gains often exceed the cost of implementation.
In short, if we want to efficiently reduce poverty, we must fund approaches grounded in evidence—and Graduation delivers. When paired with the partnership of local leaders, the Graduation approach becomes a powerful engine for sustainable change, rooted in trust, tailored to context, and scaled for impact.
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