Executive Summary

Official development assistance has fallen for three years in a row, and the Organisation for Economic Co-operation and Development (OECD) expects it to remain below its 2025 level until at least 2028. This brief follows the Policy Dialogue Initiative’s (PDI) August 2026 webinar on the post-development aid era. It asks how Egypt’s government, non-governmental organisations (NGOs) and civil-society organisations (CSOs) can adapt, and how to design resilient public policies when the external support they relied on has become unreliable.

Egypt’s direct exposure to the aid cuts is modest, because development grants have always been a small part of its external finance. The cuts have fallen instead on refugee assistance, humanitarian programmes and the national organisations that deliver services. They deepen challenges that already existed: demand that rises whenever state support is reformed, costs that follow the exchange rate, domestic giving that is large but seasonal, and reporting systems built for international donors.

Adaptation is under way on three tracks. The government pays for its main social programmes from the domestic budget and is moving ration cards to a cash-valued “commodity wallet”. NGOs and CSOs are being pushed towards localisation, which works only if it is done by design, with fair overheads, multi-year terms and pooled funds, and not by default as international partners withdraw. Remittances and domestic philanthropy are the largest alternative sources, provided giving becomes more predictable and is publicly reported.

The brief assesses three options: waiting for donor funding to return, diversifying into domestic funding, and localisation by design. The first is not viable; the other two work best together, and our nine recommendations follow from that combination. For government, the most urgent are a referral pathway built into the ration reform and faster approval of humanitarian funding. For NGOs and CSOs, they are a shift from project grants towards recurring domestic income and a role as localisation hubs on fair terms. For donors and the private sector, the main request is a pooled, multi-year fund that pays core costs.

 

 

I. An Introduction to the Post-Development Aid Reality

The global political and economic landscapes have changed drastically in the last five to ten years, and this change shows certain characteristics, such as moving towards a more transactional foreign policy, neo-protectionist economic policies, and an overall more inward-looking stance evident across many states. A prime example of this is the United States, given that its current policies and actions reflect these characteristics.

One critical example was the restructuring of the US Agency for International Development (USAID) in 2025, when the Trump administration dismantled it and absorbed it into the State Department.[1] US aid fell 56.9% as USAID was dismantled, and humanitarian aid across all donors fell 35.8%.[2]

Net official development assistance from the OECD donors fell 23.3% in real terms in 2025, to $171.5 billion, after an 8.5% fall in 2024. It was the third consecutive annual decline, something last seen in 1992–95, and the largest single-year drop the OECD has recorded. The OECD projects a further 6.9% fall in 2026 and expects aid in 2028 to remain about 10% below its 2025 level.[3] For developing states like Egypt, the dismantling of such an agency affected the country, given that it has developed a limited dependency on such international aid programmes.

I.I. Problem Statement

Egypt’s NGOs and civil-society organisations have always worked with funding that is shorter and less certain than the needs they serve. The contraction in international aid since 2025 has turned that recurring difficulty into a lasting condition. Grants that once paid for refugee assistance, humanitarian programmes and the core costs of national organisations have shrunk or ended, and the OECD expects aid to remain below its 2025 level until at least 2028. Demand, on the other hand, is rising: households are leaving the ration rolls as the subsidy system is reformed, and the cost of food moves with the exchange rate. National intermediaries are being asked to do more with funding that is harder to plan around. The government institutions that work alongside them have limited fiscal room, a constraint shared by most developing countries. Unless both sides adapt deliberately, the cost of this gap will fall on the households these organisations serve.

A vital question in the current circumstances is:

How do you design resilient public policies when the external architecture you depended on has become unreliable?

II. When Economic Challenges Fall on the Most Vulnerable: The Situation in Egypt

Bilateral development grants have long been a small part of Egypt's external finance. US economic support, for example, has averaged around $125 million a year in recent years.[4] The Centre for Global Development estimates that US development aid to Egypt fell by about 84% after the 2025 cuts.[5]

Egypt’s situation became more challenging in this context. USAID's MENA allocation stood at around $4.2 billion in 2024, of which about $1 billion in economic development funding flowed to longstanding allies such as Egypt and Jordan.[6]

The global system was already slow to fund local organisations. Under the 2016 Grand Bargain, donors aimed to channel 25% of humanitarian funding to local and national actors as directly as possible. In 2025 the direct share was 4.3%; for Grand Bargain donors alone, it was 0.6% in 2023.[7] Pooled funds do much better, sending more than half their allocations to local actors. Across the humanitarian system, the United States cut 55% of its humanitarian funding and an estimated 9% of organisations stopped operating, which is damaging for beneficiaries and others in humanitarian crises.[8]

Jordan, which relied more heavily on US development funding, shows what this challenge can cause. The end of about 60 USAID programmes there hollowed out the professional workforce that ran its development sector.[9] Egypt faces a smaller version of the same risk: its macroeconomic financing is largely unaffected, while local delivery capacity is exposed.

III. A Recurring Challenge for National Organisations and Institutions

NGOs sit between funders, the state and households. The pressures they face did not begin with the 2025 cuts, but each has become harder to manage.

Short money for permanent needs	Institutional funding usually comes as projects of a few years with little allowance for overheads. Food insecurity does not end with a project cycle, so core staff, warehouses and data systems end up funded from whatever income an organisation can raise. That is itself a problem, because such income is not guaranteed to cover the costs of the projects at risk.
Demand rises when the state reforms	The proposed cash allowance of EGP 50 per person a month is not indexed to food prices.[10] Organisations rarely get notice of such changes, so they cannot plan for the demand that follows.
Costs move with prices and the exchange rate	Egypt still imports more than half its wheat, about 12 million tonnes in 2026/27 against consumption of 20.7 million.[11] When the pound weakens or world prices rise, the cost of a food box rises too, while donations are pledged in fixed amounts.
Domestic giving is large but seasonal	Zakat, sadaqa and corporate giving are the main alternative to foreign grants. They peak around Ramadan and religious holidays, and little of the total is publicly reported, which makes year-round programmes hard to finance.
Reporting built for someone else	Compliance systems were designed for international donors' audit and reporting rules. Domestic and Gulf funders often look for different evidence, such as cost per household or nutrition outcomes. Running two reporting systems is expensive at any size.

IV. Three Tracks of Adaptation

No single actor can absorb the pressures described above. The adjustment to a smaller aid system is happening on three tracks at once:

A.      The Government

B.      NGOs and CSOs

C.     Alternative Financing

IV.I.  Government: From Aid-Financed Subsidy to Fiscally Owned Social Protection

For several years, Egypt's reform programme has focused increasingly on targeted support.  Costly across-the-board subsidies have been phased down, while cash transfers to the poorest households have grown and are now paid for almost entirely from the domestic budget.[12] Because its main social programme does not depend on donors, the state has more room to adapt to the current global and national situation.

Food policy follows the same approach. From FY2026/27, ration cards are moving to a cash-valued "commodity wallet", piloted first in Port Said before a national rollout, and the food subsidy allocation rises to EGP 178.3 billion.[13] Domestic financing makes the system less dependent on donors, but it still needs accurate targeting, a working appeals process and regular monitoring and evaluation of its process and impact.

IV.II. NGOs and CSOs: From Grant Dependency to Localised Models

International NGOs affected by the cuts have responded in different ways, which made matters harder for local NGOs. Some have handed assets and programmes to local partners; others have sought more flexible funding, built social-enterprise income or moved fundraising online. Alongside these responses runs the longer push for localisation: moving decisions, money and delivery to organisations based in the country, which is more sustainable for these organisations in particular and for the state at large.

The aid cuts now force the question, but there is a difference between localisation by design and localisation by default. Simply put, when international partners leave abruptly, national organisations inherit the programmes, staff and beneficiaries without the authority that came with these programmes and their overheads. The Inter-Agency Standing Committee addressed part of this in 2022, with guidance that local partners should receive a fair share of overhead costs.[14] In Egypt, localisation by design could take five forms:

 

For NGOs and CSOs, this is an opening to act as a localisation hub: taking on the intermediary role that international agencies are leaving, which needs further investment in grant management, due diligence and data systems. The approach carries its own risk. If organisations diversify only to survive in the short term, they may neglect the partnership and accountability that localisation is meant to bring. The more durable course is to build local ownership and evidence systems that make this a sustainable long-term solution.

IV.III. Alternative Financing: Remittances, Gulf Capital and Domestic Philanthropy

Remittances reached a record $41.5 billion in 2025, up from $29.6 billion the year before.[16] They are household income and cannot be redirected by policy, but NGOs can reach a share of them through diaspora giving and digital donation channels, and can strengthen that appeal by showing clear, audited results.

Gulf development institutions have provided concessional loans and technical assistance across the region for decades, and South-South cooperation adds technical exchange in agriculture, water and social protection.  Gulf money still reaches Egypt as investment or as finance for the state; nevertheless, some of it reaches humanitarian and development organisations directly. For instance, one of the larger funds had extended some $3.4 billion across fifty loans by 2018.[17] Another one had provided about AED 4 billion (roughly $1.08 billion), in grants and concessional loans across 64 projects by 2017.[18] A notably different example came when one grant committee had financed 2,550 small and medium enterprise projects across 27 Egyptian governorates at a cost of around EGP 1.5 billion by early 2022.[19] Taken together, these figures suggest that cooperation between Egypt and the Gulf countries spans development as well as investment.

Domestic philanthropy is the largest source within reach of national organisations. Zakat, waqf and corporate giving are already substantial, but they are seasonal and largely unreported. Domestic giving can grow, but only if it is reported publicly and allocated by need. The EFB has made this a standing commitment: it reports in full where donations are allocated, to whom, and in what amounts.

V. Policy Options

Three broad options are open to Egyptian NGOs, CSOs and the institutions that work with them. We assess each against five criteria: feasibility under current law and capacity, cost and time to implement, risk, effect on the households served, and sustainability once in place.

 

Option A is not a strategy. Options B and C work best together: domestic funding gives organisations independence and localisation keeps international money flowing to local delivery. The recommendations below follow from this combination.

VI. Recommendations

The government measures depend on decisions due in the next six months. The measures for NGOs and CSOs can start now.

 

VII. Conclusion

This brief began by asking how to design resilient public policies when the external architecture that countries and organisations depended on has become unreliable. For Egypt's civil society and NGOs, part of the answer is to stop treating international funding as the foundation and to start treating it as a source among many.

For organisations like the Egyptian Food Bank, the post-aid era is a sharper version of an old challenge. Funding has always been shorter than need, and demand has always risen when prices or policies change. What is new is that international aid is shrinking and unlikely to return. The organisations that adapt best will treat domestic income, localisation on fair terms and close working ties with government as core strategy.

Building a strong relationship between the state and its NGOs and CSOs will help the state and its institutions and organisations absorb future global shocks through collaboration and engagement.

 

 

 

VIII. Bibliography

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