Slashed aid budgets leave door open for family offices

With the future of foreign aid plunged into uncertainty, family offices and wealth managers may help fill the void and play a more strategic role in this sphere.

The world’s wealthiest individuals and financial institutions have long played a vital role in philanthropy. As the bulk of US foreign aid has been slashed and as other donor countries, including the UK, also cut back, the responsibility of wealth managers, family offices and banks to help fill this void has never been greater. This is not just about doing good. It’s about ensuring stable and investable markets and building long-term financial prosperity for all.

Foreign aid reductions have far-reaching consequences. Surveys assessing the impacts of USAID cuts reveal that organisations and services in nearly every country and sector are affected. We receive phone calls every day from groups facing closure, despite delivering amazing programmes. The needs are immediate and cross-cutting.

However, the size of the funding hole is more than philanthropy can readily meet on its own, which points to the need for a strategic response. If we are heading towards a post-aid world, or certainly a more limited quid pro quo style of assistance, countries will need to strengthen their ability to invest in their own development. Many emerging markets, already burdened by unsustainable debt, corruption and illicit financial flows, will struggle even more without adequate support. This instability impacts not only local populations but also the global investment climate. For family offices and wealth managers who operate with a long-term view, ignoring these issues poses serious risks to their own investment strategies.

Debt sustainability

Philanthropy should take a systems change approach that will unlock new funding for development down to the local level. For example, one area where philanthropy can have an outsized impact is supporting debt sustainability. We calculate that 54 countries are already in a debt crisis, and another 57 are at risk of one. Servicing debt eats up government budgets, meaning little is left to meet local needs.

Philanthropists can support initiatives that work toward fairer debt relief structures and more accountable future debt commitments, enabling developing nations to become more self-sufficient. In Sri Lanka, philanthropic partners have supported a successful locally led push to link future debt to good governance, coordinated through groups such as Transparency International. This is not just a moral imperative; it is a pragmatic investment in future stability.

Another promising area is to strengthen domestic resource mobilisation. One great example is Tax Inspectors Without Borders, an initiative that helped developing nations increase their assessed tax revenue by more than $6bn in one year. That is funding that can then be spent on local development priorities. Of course, it is not automatic that allocated funds will end up where intended, so we also need to invest in institutional capacity, integrity, and civic oversight. This can be transformative as seen by the work of Janaagraha in working with local governments to improve the quality of citizenship and of infrastructure and services in Indian cities.

Let’s invest in constructive approaches that empower local actors, such as the work of Accountability Lab making governance work for people by supporting active citizens, responsible leaders, and accountable institutions. Supporting organisations that strengthen governance systems is a high-impact way for the financial sector to contribute to development and market integrity.

While many philanthropists remain hesitant to engage in these issues, the next generation is showing a marked shift in priorities. Younger philanthropists are prioritising climate change, economic justice, and good governance. This is a pivotal moment for family offices to reassess their giving strategies and align with the growing demand for more impactful and systemic solutions.

Wealth managers must also recognise that investing in systems change — for example through debt sustainability and anti-corruption efforts — is not only an ethical choice but also a sound financial strategy. The Chandler Foundation, a Singapore-based investor, exemplifies this approach, recognising that good governance and fair markets are essential for sustainable economic growth. Nicolas Berggruen, another billionaire investor and philanthropist, has similarly prioritised attention to practical improvements in governance

ESG backlash

By framing philanthropy as aligned to sound financial strategy and local resilience, investors can avoid the backlash against environmental, social and governance principles, which has made some hesitant to take a prominent stance in these areas, particularly due to opposition from certain US political factions.

Engaging in these issues need not be a heavy lift. There are straightforward steps that family offices and wealth managers can take. First, they must determine the geographies and parts of the system that they wish to prioritise. Once these areas are identified, they can connect with funder networks with relevant expertise, ensuring their contributions are effectively directed.

Finally, family offices can embed their efforts within global responses. One example is the Fourth International Conference on Financing for Development taking place this June in Spain. In a process coordinated by the United Nations, all countries and a mix of donors will come together to agree on how to maximise all available financial resources (revenues, debt, aid, philanthropy) for the next decade. It is the perfect opportunity to announce philanthropic commitments and align with other investors.

We are undergoing a seismic shift in international development. With governments rolling back aid and funding for accountability organisations drying up, the private sector must take the lead. The alternative will have dire consequences for both business and society. For those who see philanthropy as an investment rather than charity, this is a unique opportunity. By stepping up to support a systems change approach — including reinforcing good governance, debt relief and anti-corruption initiatives — wealth managers and family offices can shape a more stable, fair and profitable global economy. This is not just about giving; it’s about securing the future of the very markets they rely on.

Michael Jarvis is executive director of The Trust, Accountability, and Inclusion (TAI) Collaborative, a network of philanthropic funders committed to more equitable distribution of power and resources