How Bangladesh’s local NGOs are surviving the foreign aid collapse
The organisations with deep roots in Bangladesh’s communities that had spent decades building trust—now face a new reality—they are competing with large international organisations for the same small grants that had once been their exclusive lifeblood
On the night of 31 January 2025, AKM Tariful Islam Khan, senior manager of communications at the International Centre for Diarrhoeal Disease Research, Bangladesh (icddr,b), sent a statement to reporters that marked the start of an unravelling in the country's development sector.
"As per the directive of the US government, we have suspended projects and research funded by them until further notice," Khan said. "We express our sympathy and regret for any inconvenience caused to our service recipients, various stakeholders, and colleagues."
But behind the apology were more than 1,000 termination letters — becoming the single largest casualty of the USAID shutdown in Bangladesh. But it was only the beginning.
Gradually, more than 100 development projects worth $550 million were suspended in Bangladesh. Over 20,000 people lost their jobs almost overnight. And beneath those numbers, a quieter, slower process began — one that is reshaping who gets to do development work in this country, and who gets crowded out.
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One year past, the question is: how are those who survived managing to stay afloat?
Survival in many forms
Md Maksudur Rahman, the Chief Executive of the Bangladesh Environment and Development Society (BEDS), a local NGO in Khulna, never received USAID funding directly for his organisation. But when the international aid stopped in early 2025, the shock wave came anyway, through the donors his donors relied on.
"A sudden decision is like a heart attack," he said.
For BEDS, the shock was immediate but not terminal. The organisation did not collapse; it adapted. However, for BEDS, the adaptation has been longer in the making. Rahman has spent a decade building a social business model — branding and marketing community agricultural products to generate revenue that does not depend on foreign grants.
"When a project is dependent," he says, "everything ends when the project ends." It has given BEDS a floor that many organisations do not have. But he is clear about the limits. "The large sectors that have become established will stay; the rest will fall away."
To be honest, it happened. Many organisations failed to survive.
Some have quietly shut field offices, stopped hiring, and are waiting to see if anything comes through. The ones still running are doing it differently than before. The most common shift: replacing permanent staff with consultants.
Organisations that once employed programme officers and field coordinators on long-term contracts now bring them in project by project, paying per deliverable, carrying no liability when the funding ends. The work still gets done — sometimes — but institutional knowledge does not accumulate. Each engagement starts from near zero.
Localisation as a lifeline
A path some organisations are betting on is localisation. Donors cutting overall aid are increasingly insisting that what remains goes directly to local organisations, not international intermediaries.
When a local NGO competes directly with an international organisation, donor preference now often goes to the local one. Some consortiums have flipped the old hierarchy entirely, with a small national organisation holding the grant and sub-contracting work to a large international NGO.
For the right organisation — one with existing donor relationships, a credible track record, and the administrative capacity to manage a grant directly — localisation is a genuine lifeline.
The problem is that the organisations most likely to meet those criteria are the larger, more established national NGOs. The twelve-person women's cooperative in Satkhira, or the community-based environmental group in Khulna that never needed to think about compliance frameworks, does not have the same access to that door.
Asif Saleh, Executive Director of BRAC, made the point clear in the context of climate finance, "Only 10% have reached the intended, most vulnerable communities, and only 6% have supported locally-led approaches."
Even BRAC, despite three years of trying, had been unable to access the climate funding it needed. If BRAC cannot get through, the implication for the smaller ones is obvious.
A new reality for local NGOs
The organisations with deep roots in Bangladesh's communities that had spent decades building trust—now face a new reality. They are competing with large international organisations for the small grants that had once been their exclusive lifeblood.
Zinat Ara Afroze, a former convenor of the Association of Unemployed Development Professionals and now an international consultant, watched it happen across professional networks.
"Due to the current crisis, larger organisations are now moving into the space traditionally occupied by smaller, local NGOs," she said. "They are starting to compete for the smaller projects that used to be the lifeline for local organisations."
Syed Aminur Rahman, a development professional, added a quantitative perspective, "Previously, a large organisation wouldn't look at a project worth less than $2 million. Now, they are aggressively competing for $100,000 projects just to survive."
Meanwhile, the international consulting firms that had built entire operations in Bangladesh on USAID funding simply left. Chemonics International and Tetra Tech shut their Bangladesh
offices entirely. ACDI/VOCA declared dissolution. Their exit was clean and visible; what they left behind — smaller organisations now fighting BRAC and Save the Children for what remained — was neither.
Rahman also mentioned this new phenomenon. He found it unexpected that senior USAID project managers — people who had spent careers leading multi-million-dollar programmes — "even knocked on our small organisation's door to see if there were any consultancy opportunities or any scope to survive."
What happened to the development workers
Adib Khan, a programme manager at an international NGO, spent five months searching before finding another job — at the same organisation, but demoted to senior officer. He sent his family back to Mymensingh and is now based in Cox's Bazar on a project.
"I'm constantly anxious about what comes next," he said. When he applied to the corporate sector, companies saw his NGO background and did not call back.
Samia Alam, a communications lead, lost her job the same night her team heard the project had shut down. Ten months later she was still unemployed, living at her father's house, raising her daughter alone.
"It felt like the sky had fallen on my head," she said. "My life was going well with my job and my daughter, and now it's all gone." She is considering leaving her field entirely, though in a sluggish economy that is not straightforward either.
Rayhan Maruf worked for 10 years at a well-known INGO before the shutdown left him jobless. Six months in, with his father undergoing cancer treatment, he used his savings to try importing Pakistani clothes. The market was too saturated. He has not recovered financially, and neither has his father.
"Eventually, a time will come when this funding will decrease. This is a reality. Maybe this trend will last another 20 years. But what after 20 years? Will this sector sustain then? We need to build a self-sustaining model that can withstand such fund shortages."
Samin Hossain, a former gender specialist, is now freelancing. "For now, I'm doing consultancy work, but I don't know how long that will sustain me," she said. "What seems most realistic for me and my family is to leave the country eventually."
A K M Musha, who served as Country Director of Helen Keller International in Bangladesh, left after leading the organisation through a major downsizing following the closure of three large USAID projects. He announced he would spend his break offering free advisory services to local NGOs — a senior figure with nowhere obvious to go, volunteering his experience to organisations that could not afford to pay for it.
Tony Michel Gomes, former Director of PR and Communications at CARE Bangladesh, told TBS, "the higher your position was, the harder it became to find a new job. Years of experience and hard-earned skills are not paying off."
The sector did not contract and redistribute. It contracted and disappeared.
A wake-up call
Dr Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), described the structural squeeze on low-income countries as a combination of "shrinking aid budgets and a slowdown in global growth."
She was also explicit about what happens to civil society when political and funding pressures tighten simultaneously.
"Political polarisation has significantly impacted the regulatory environment for NGOs and CSOs, with a decline in policymakers' tolerance for objective criticism, leading to the use of new laws as a censorship tool."
For local NGOs, squeezed on funding from one side and regulatory space from the other, the room to operate independently has rarely been smaller.
Maksudur Rahman is not pessimistic, exactly. He has watched enough funding cycles to know that sectors survive. But he is clear-eyed about what that survival will require.
"Eventually, a time will come when this funding will decrease. This is a reality. Maybe this trend will last another 20 years. But what after 20 years? Will this sector sustain then?" he said. "We need to build a self-sustaining model that can withstand such fund shortages."
