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Budget cuts: an opportunity?
Development and humanitarian response budgets are experiencing severe cuts, especially in unrestricted funding. Major donor, such as Germany and the Netherlands have announced these cuts in their recent budgets and key international organisations are reacting. Save the Children International and the International Rescue Committee (IRC) announced massive staff reductions to close the gap in funding they expect based on the budget cuts to the development and humanitarian budgets. The New Humanitarian cites the CEO Miliband of the IRC saying, “Some 10% of staff roles funded by unrestricted revenue will be affected”.
What results from these cuts are, first of all, many very frustrated staff members who feel neglected by their leadership and contest that the right decisions are being taken. At the same time, these budget cuts were not decided because we expect humanitarian crises and development challenges to subside. Rather, we can expect that these challenges will worse and that the budget cuts are decisions by mostly “Northern based” donors to re-prioritise.
The cuts and the necessary rethinking by international organisations have sparked a debate with the underlying question whether they are a necessary step to focus on efficiency in the sector and will force organisations to restructure their operations by “cutting slack” or if these cuts force organisations to save on the wrong ends.
The efficiency paradox
Previously Save the Children had invested inbuilding out its local structures by increasing staff and operations at the local, country level. With the announced cuts, the organisation has now released a “Fit for the future” document. The organisation aims to create a flatter structure in which headquarters and regional office will become slimmer and merge into global teams. From the outside, that might actually seem like the right step, and you may think “okay, at least they are not cutting positions at the local offices”. However, as the New Humanitarian states, the previous buildout of regional structures was meant to decrease the work pressure on country offices.
One could see this merge as a necessary step to make Save the Children’s structure more agile and coordinated. Global teams can oversee operations better and support in-country teams with a better birds-eye vision, sharing resources, expertise and guidance. However, a huge unanswered question comes to my mind here: has anyone thought about how much knowledge will walk out the door and how long it will take for new people to settle in new roles?
For global teams to work effectively and be able to increase efficiency by fostering knowledge sharing and collaboration, would mean that they need to share knowledge a lot more effectively and be a lot more of a learning organisations in the way that they need more with less resources. They would need to start putting learning at the centre. Or in fact, it means they should have put learning at the centre years ago because no employee who is about to be let go and does not feel listened to is very inclined to share all their hard-gained expertise with the organisation letting them go.
Where do we go from here?
As organisations like Save the Children undergo drastic restructuring, we should ask ourselves: how can these changes become an opportunity to build more resilient, knowledge-driven organisations for the future? If the goal is to be genuinely "fit for the future," we should ensure that organisations are set up not only to survive these cuts not for their own sake but to thrive in the face of future challenges.
The biggest risk with these budget cuts and staff reductions is the loss of institutional knowledge. When staff leave, they take with them years of experience and hard-earned insights that are vital to understanding local contexts, maintaining relationships, and executing effective programmes. This knowledge, accumulated over years of work, is not easily replaced and losing it sets organisations back significantly. Without a robust knowledge-sharing infrastructure in place, new staff will spend an immense amount of time trying to find their footing instead of hitting the ground running.
To ensure that organisations emerge stronger, it’s time to seize this moment to invest in systems that prioritise knowledge and learning. These changes cannot simply be about trimming down structures. They must also involve reinforcing the core capabilities that allow organisations to act quickly and effectively, especially in crisis situations.
Investing in knowledge systems
Organisations need to invest in knowledge systems that foster real-time learning, collaboration, and adaptability. A robust learning infrastructure, where knowledge is shared across teams and regions, should become the backbone of every major decision. This requires a cultural shift, moving away from the traditional, top-down models toward a more horizontal, peer-to-peer learning approach.
Building systems that capture the expertise of staff at every level, whether through better use of technology, mentoring programmes, or revised processes, will be key to ensuring that organisations do not just survive this moment but are equipped to face future crises more sustainably. By putting learning at the heart of their operations, organisations can significantly reduce the time it takes for new teams to get up to speed, ensuring continuity and efficiency even amid major transitions.
Rethinking Multilateralism
In parallel, this moment offers a chance to rethink the way multilateral organisations operate and how donor priorities are set (check out the new dialogue series on this topic by ODI). As noted in recent discussions on Northern-based donor dominance, there's growing recognition that the current model of international development and humanitarian response is becoming increasingly outdated. The severe budget cuts from key donors like Germany and the Netherlands underline the urgency of exploring alternative approaches that empower local actors and promote more equitable decision-making processes.
Multilateralism should be reimagined with a stronger focus on regional partnerships and local knowledge. By ensuring that future funding models prioritise and invest in local expertise, we can build more sustainable, resilient systems that don't crumble with every shift in donor priorities. This means breaking away from the idea that Northern donors should dominate the conversation and instead fostering an environment where Southern-based partners are given equal say in shaping the future of humanitarian and development work.
Reinier van Hoffen recently asked: “Does the INGO need re-imagination? Or does it require reaffirmation?” […] “There is nothing to shift, there is a lot to acknowledge.”. In the context of my argument here, while I agree that power is starting to sit with civil society and NGOs in some contexts, I believe we still need to address the how of power distribution, rather than merely affirming the status quo. The“#ShiftThePower” conversation, I would argue, isn’t just about where power theoretically resides; it’s about acknowledging that, in practice, international systems often hinder local ownership and decision-making.
The budget cuts we're seeing from major donors and the subsequent restructurings within INGOs provide an opportunity, not just for re-affirmation of old aid effectiveness principles but for a re-imagination of how the sector operates. It’s not about abandoning the principles agreed upon in Paris, such as harmonisation or alignment to country systems. Rather, it’s about understanding that those principles have not been fully realised in practice, and the power dynamics still skew heavily in favour of Northern-based INGOs and donors.
Building a future-ready system
If organisations take these lessons seriously, they can turn these budget cuts into an opportunity to build leaner but smarter systems. This means ensuring that, moving forward, they are better prepared for future crises, not by expanding indefinitely but by becoming more agile, adaptable, and knowledge driven. Organisations should use this period of restructuring to future-proof themselves by embedding learning and adaptability at their core.
In the long run, if donors and international organisations focus on investing in knowledge and rethinking the old paradigms of donor-driven development, they can create a more resilient and efficient sector, one that is truly fit for the future.
Development Matters // Knowledge Matters.
Sarah Abdelatif is a social entrepreneur in organisational learning and international development and the Co-founder of Propel – a team who built a solution to democratise knowledge and transform learning for NGOs and INGOs to accelerate the needed systems change.