Will US Foreign Aid Come Back?

(And Why It Doesn’t Matter)

This morning, an executive at a large international NGO asked me what I thought about the future of US bipartisan support for foreign aid and development.

It’s the question everyone in the humanitarian sector is asking right now. The January 2025 dismantling of USAID — a 97% workforce reduction, 92% of contracts terminated — sent shockwaves through the development community. Catholic Relief Services lost funding for eleven of thirteen international food aid programs. The International Rescue Committee laid off thousands. The Norwegian Refugee Council halted aid to 1.5 million people in twenty countries.

So will it come back?

My answer surprised him: Yes, probably. But not in a way that solves the displacement crisis. And that’s actually good news.

Let me explain.

The Pattern You’re Missing

US foreign aid has never been primarily about humanitarian compassion. It’s been about strategic competition.

Look at the history:

1948-1952: The Marshall Plan pumped $13 billion into Europe (equivalent to $173 billion today). Why? Not just generosity — strategic necessity. We needed stable democracies to counter Soviet expansion.

1950s-1980s: Aid tracked Cold War competition. Countries got US dollars if they aligned against the USSR. When Soviet influence receded in a region, so did our aid budget.

2001-2021: Aid spiked again during the War on Terror. Afghanistan received $146 billion over twenty years — not because of humanitarian need but because we had troops on the ground and a counterinsurgency strategy to fund.

2021-2024: The moment we withdrew from Afghanistan, development aid started declining. No troops, no strategic rationale, no budget.

The pattern is clear: Aid follows geopolitical competition, not simply humanitarian need.

When the US has a clear adversary to counter, aid becomes a tool of statecraft. When we don’t, it gets cut.

So What Brings It Back?

China.

Not because Congress suddenly remembers the 123 million forcibly displaced people worldwide. Because China is building influence through Belt and Road infrastructure projects across Africa, Latin America, and Southeast Asia — and we can’t afford to cede those relationships.

But here’s what most people in the humanitarian sector are missing: When aid comes back, it won’t look like the old USAID.

China’s competitive advantage isn’t humanitarian relief. It’s investment and infrastructure. If the US responds (and we will, eventually), it will be through the Development Finance Corporation — loans, equity investments, guarantees — not grants to refugee camps.

We’ll see three possible scenarios play out:

Scenario 1: Transactional Development Finance (Most Likely — 2027-2030)

DFC gets expanded authority and budget. The US starts competing with China by financing infrastructure, energy projects, and private sector development in countries where we need influence.

What returns: Investment in strategic countries.

What doesn’t return: USAID’s humanitarian relief budgets, refugee resettlement programs, or long-term camp assistance.

Scenario 2: Strategic Humanitarian Aid (Possible — 2028-2032)

A major crisis — climate disaster, pandemic, or migration flow that directly threatens US interests — forces renewed engagement. We rebuild targeted humanitarian programs tied to specific geographic priorities: Central America (to manage migration), Middle East (to prevent instability), maybe parts of Africa if China’s influence there becomes threatening.

What returns: Narrow, transactional humanitarian programs.

What doesn’t return: Universal commitments or the broad refugee resettlement apparatus. I do hope I’m wrong on this one.

Scenario 3: New Internationalist Coalition (Least Likely — 2030+)

A major political realignment brings back something like USAID, rebuilt under a different mandate focused on climate resilience, pandemic prevention, and migration management.

What this would mean: Even in this best-case scenario, budgets won’t return to 2020 levels. And the new paradigm will emphasize economic integration and self-reliance over dependency — because the old camp-based model demonstrably failed.

Here’s Why This Actually Matters Less Than You Think

In all three scenarios, the fundamental reality doesn’t change:

123 million people are displaced. Aid at its peak couldn’t serve them all.

Even when USAID was fully funded in 2022, humanitarian need exceeded available resources by 200%. The average displaced person lived in limbo for 20 years. Resettlement numbers were declining. The system was failing before it was dismantled.

The 2025 collapse didn’t create the crisis. It made visible what was already true: the humanitarian aid model cannot scale to meet global displacement.

So whether aid comes back or not, we need a different system.

The System That Works Whether Aid Returns or Not

This is where my answer to the NGO executive got interesting.

I told him: “Stop asking whether aid will return. Start asking what works in the absence of aid — because that’s the system we should be building either way.”

What works is economic integration through a blend of public and private capital.

Let me give you the data:

Uganda’s Opportunity Bank received a $9 million facility from the US Development Finance Corporation to lend to refugees and host community members. Results: 18,000 loans, 60,000 small enterprises created, 96.6% repayment rate. Not charity. Investment with real returns.

Kiva’s Refugee Investment Fund deployed $40.7 million to 51,400 refugee borrowers globally. Repayment rate: 96.6% — matching non-refugee borrowers. Turns out refugees are excellent credit risks when given the chance.

The EU’s Temporary Protection Directive granted 4.3 million Ukrainian refugees immediate right to work. Result: 25,000 businesses created in Poland alone in the first year. Ukrainian entrepreneurs filling labor shortages, paying taxes, contributing to growth.

This isn’t theory. It’s happening right now, at scale, generating returns.

Why This Approach Survives Any Scenario

If aid stays dead (Scenario 1): Private capital is the only game in town. What is called “refugee lens investing” becomes essential infrastructure.

If aid returns strategically (Scenario 2): Private capital complements limited government resources. Together they create sustainable solutions.

If aid fully returns (Scenario 3): Even the new aid paradigm emphasizes economic integration and livelihoods — exactly what refugee lens investing provides.

In other words: There is in fact hope, no matter the scenario.

The question isn’t whether to build this system. The question is how fast we can scale it.

What the Humanitarian Sector Gets Wrong

Most NGO executives I talk to are still operating in the old paradigm. They’re lobbying for aid restoration, hoping a new administration brings back USAID, writing op-eds about American moral leadership.

That’s an important fight, but it’s also the wrong fight.

Here’s what they should be doing instead:

1. Retool for investment and blended capital, not grants.

Your field relationships, your trust with displaced communities, your on-the-ground presence — these are assets that can source deal flow, provide technical assistance, and de-risk private investment. But only if you stop thinking like aid distributors and start thinking like investment intermediaries.

2. Partner with DFIs, not just donors.

The US Development Finance Corporation, European Investment Bank, the Swiss Agency for Development and Cooperation, Japan’s JICA — these institutions have $100+ billion in deployment capacity and mandates to invest in emerging markets. They need pipeline. You have it. Build the bridge.

3. Measure what investors care about.

Stop reporting on “people served.” Start reporting on businesses created, jobs generated, loan repayment rates, tax revenue contributed. The average investor doesn’t care about your inputs. They care about outcomes and returns.

4. Accept that displaced people are contributors, not just vulnerable people.

Refugees have a 13% entrepreneurship rate in the US versus 9% for native-born Americans. They paid $25 billion in taxes in 2019. They launch businesses at higher rates because they’ve already demonstrated extreme resilience and in many cases often have no other choice. And while not everyone can be or should be an entrepreneur, most people, regardless of where they come from or what their background is, wants to live a life of dignity and contribution. But for the world’s displaced, too often that’s an option because other people limit their potential by perpetuating narratives of need or fear.

If you’re still framing them as vulnerable populations in need of help, you may be part of the problem.

The Answer I Gave

So here’s what I told the NGO executive this morning:

“US foreign aid will probably come back in some form — smaller, more strategic, more focused on investment than grants. But it doesn’t matter. Because even at peak funding, aid couldn’t solve this problem. You’re asking the wrong question.

The right question is: How do we build a system where 123 million displaced people aren’t waiting for governments to act? Where they’re accessing capital, building businesses, creating jobs, and integrating into economies as contributors, not forced into cycles of aid dependency?

That system is refugee lens investing. And it works whether USAID exists or not.”

He paused. Then: “So what do we do?”

“Stop focusing on lobbying Congress. Start calling investors.”

What Happens Next

I’m not naive. I know the political fight for aid restoration must continue. Faith communities, advocacy groups, and parts of the development sector will push to rebuild USAID or something like it.

Good.

But while they’re focused on Washington, the rest of us should be focused on what can work now: deploying private capital to create economic opportunity for displaced people.

Because here’s the thing about displacement that most people still don’t understand:

Displacement is not a temporary emergency. It’s a permanent feature of the 21st century.

Climate change is accelerating. Conflict is rising. 123 million displaced people may become 200 million by 2030. Humanitarian aid — even if it comes back — will never scale to meet that need.

But capital markets can.

Global impact investing is a $1 trillion+ market. If even 1% of that capital deployed through a refugee lens, we’d have $10 billion in annual investment — more than USAID’s entire refugee budget at its peak and more than would be needed to fill UN Refugee Agency’s funding gap (last year’s gap was around $6.68 billion).

That’s not a fantasy. That’s math. And the infrastructure to make it happen is being built right now.

The System We’re Building

My co-author Christine Mahoney and I have spent the last decade documenting what refugee lens investing looks like in practice — from Uganda to Jordan, Mexico to Poland, New York to North Dakota.

Through our work with the Refugee Investment Network, we’ve identified six categories of investment (R1-R6), built due diligence frameworks, measured outcomes, and shown that this approach generates competitive returns while creating durable economic integration.

Our book, Banking on Belonging: Why Investing in Refugee Entrepreneurs Benefits Everyone publishes in July 2026. It’s the first comprehensive guide to refugee lens investing — the framework, the evidence, the playbook for practitioners.

But the book is just documentation of what’s already happening. The real work is scaling the system.

So Will Aid Come Back?

Yeah, probably. In some form. Eventually.

But here’s what I know for certain: 123 million people can’t wait to find out.

They need economic opportunity now. They need access to capital now. They need pathways to self-sufficiency now.

Refugee lens investing provides all three — whether governments are engaged or not, whether aid returns or not, whether the political winds shift or not.

That’s the system we’re building. And if you’re still waiting for USAID to save you, you’re already five years behind.