President Donald Trump’s overhaul of U.S. foreign assistance has caused major disruptions within the aid sector, leading to financial challenges for hundreds of contractors. Many contractors, previously working with USAID, are grappling with unpaid invoices and forced staff layoffs due to stop-work orders issued by the State Department.
After Trump took office, he initiated a broad review of U.S. foreign aid, enlisting Elon Musk to scale down USAID, which is the primary arm of U.S. humanitarian assistance worldwide. The restructuring led to the furloughing and firing of USAID staff and the gutting of its operations, leaving contractors in a precarious financial situation.
Steve Schmida, co-founder of Vermont-based Resonance, a USAID contractor, described the situation as “existential” as his company faced a loss of 90% of its revenue. With millions of dollars in overdue invoices, Schmida laid off dozens of his employees, and others in the sector, like an official at a USAID partner organization, are facing similar financial pressures.
Contractors have also expressed distress over the abrupt firing of staff, which left some without health insurance and other benefits, creating personal and professional challenges. For example, Rose Zulliger, a former contractor for the President’s Malaria Initiative, faced job termination just days before her daughter’s surgery.
In fiscal year 2023, the U.S. allocated $72 billion in aid globally, funding essential projects from public health to clean water initiatives. However, the shift in policy has disrupted not only the livelihoods of contractors but also the broader U.S. strategy to maintain global alliances and combat the influence of rivals like China and Russia in developing regions.
The financial instability caused by these actions has forced many contractors to explore alternative financial measures, such as dipping into their retirement savings, as uncertainty looms over the future of the aid industry. Many workers have also begun seeking new employment, unsure of how the industry will recover.
