Go local – Trusting communities in an age of aid austerity

2025 has been a year of reckoning for the aid sector.

Funding is shrinking across the board: Belgium, France, Germany, the Netherlands, Sweden, Switzerland, the UK and the USA have all signalled slashes to their foreign aid budgets, putting up to $60 billion of official development assistance (ODA) – nearly a quarter of 2023 levels – at risk globally. There are a variety of reasons given for cuts, some financial, some ideological, but they’ve all been made politically possible because of the widespread misperception that aid is ineffective – that the money is “wasted”.

But aid is far from ineffective. The evidence – and our experience – shows the contrary. Supporting community-led organisations is one of the best ways to ensure aid is money well spent. When communities come together to drive their own development, they can make dramatic improvements to their lives in ways that are cost-effective, equitable and sustainable.

As aid budgets shrink, if communities know what they need, why aren’t we trusting them to lead?

A proven alternative: invest in communities

With money drying up, hard choices must be made. A growing body of evidence supports long-term investments in health, education and livelihoods, delivered by and for communities – with support from local governments and private actors. When communities lead, development outcomes are stronger, fairer and more resilient.

BRAC offers an example of an organisation that puts people “at the centre” of decision-making, says Kam Morshed, a director. Its Ultra-Poor Graduation programme has helped 14 million people lift themselves out of extreme poverty in Bangladesh by providing assets, training, mentoring and a path to social inclusion. Independent studies by Oxford University and the LSE confirm its effectiveness.

The Aga Khan Foundation supports successful local development initiatives across Africa, Asia and the Middle East. For over 40 years, its Rural Support programme in Pakistan has helped establish Village Organisations where communities decide what they need most – better irrigation systems, schools, or a clinic. A World Bank evaluation found that average household incomes more than doubled during the programme’s first 18 years.

Reimagining development from the ground up

Community-led development is fundamentally about trust and relationships. “What makes it very distinct from other forms of development,” says Gunjan Veda of the Movement for Community-led Development, “is the question of power – the power to decide, the power to implement, the power to change things, the power to adapt. And in community-led models, that power rests with the community.” Progress happens when people are bound by trust and accountability enforced not by distant institutions, but by neighbours, families and shared values. If locals fail to serve their community, they may lose their social standing.

The argument for community-led development is not only that it leads to better outcomes. It is also a better use of resources. “We’re talking about shrinking ODA, but the reality is the biggest resources have always been in the community, and the biggest resources are the community members themselves,” says Veda.

Supporting local development goals is not only the right thing to do, but also in the interests of foreign donors. In Ghana, educated communities are a buffer against the criminality that can corrode international business supply chains. In Syria, flourishing farmers resist recruitment into violent extremist groups. Development makes the world safer and more prosperous.

In the coming months, instead of short-term posturing, decision-makers should focus on how to do better with less – and choose to trust the people closest to both the challenges and the solutions. Investing in community-led development, which improves lives while generating prosperity and political capital, must be prioritised. In an age of aid austerity, trust is the capital of the future.