By Dr Samar Verma*
Recent policy shifts under President Donald Trump’s administration have led to the suspension of the United States Agency for International Development (USAID) funding, including to India, prompting a re-evaluation of its impact within the broader context of India’s philanthropic and development landscape.
USAID has long been a partner in India’s development journey, contributing to various sectors such as health, education, and environmental sustainability. The agency has collaborated with Indian states to deploy rooftop solar systems, promote energy-efficient technologies, and improve forest management to address climate change and strengthen forest-dependent communities. Their work has benefited millions of Indians over the last decades, and there seems to be a widespread apprehension of its deep and long-term impact in India. On the human side, millions have, and will likely, lose jobs as a result of this action. Many organisations will struggle to reset themselves to the new reality.
There is little doubt that a more structured exit policy- as opposed to a sudden freeze- would have allowed Indian partners to prepare better for the longer-term sustainability of their work.
However, USAID’s financial input is relatively modest compared to India’s expansive domestic philanthropic efforts and the significant role played by Indian Civil Society Organizations (CSOs). The total USAID contribution has remained largely flat in the last decade. In the fiscal year 2023, USAID allocated approximately $140 million (Rs 1,200 crores) to India, distributed across key development sectors, with Health Initiatives, Environmental Efforts and Social Infrastructure receiving $55 million, $18 million and $7.8 million respectively. This was a mere 5.2% of total foreign giving in India. In the fiscal year 2023, foreign private donations to India were estimated at ₹23,000 crore (approximately $2.8 billion).
The promise of India’s development arises from subterranean transformative shifts in domestic philanthropic space, wherein also lie the key drivers that are gradually taking shape to enable the nation to achieve the aspiration of Viksit Bharat@2047. Recent reports indicate that India’s philanthropic landscape is poised for continued growth, particularly in domestic contributions. According to the India Philanthropy Report 2024 (by Bain & Company and Dasra), private philanthropy saw a 10% growth, reaching $15 billion (INR 1.2 lakh crore) in 2023. This growth was primarily driven by family philanthropy and retail donations. In contrast, corporate social responsibility and high-net-worth individual donations grew by 7%. The report also highlights that family philanthropy, which accounts for 28% of private donations in India, amounted to $3.9 million. Within family philanthropy, ultra-high-net-worth individual giving grew by 60% in fiscal year 2023 to $826,205, driven by wealthy philanthropists such as Azim Premji and Shiv Nadar.
These trends suggest that domestic sources of philanthropic capital are expanding more rapidly than foreign contributions, further diminishing the relative size of foreign aid, including USAID funding, in India’s development financing. These suggestions are also backed by the significant growth that India’s domestic philanthropy sector has experienced over the past decade, outpacing foreign contributions. Key trends in fiscal year 2022 included:
- Family Philanthropy: ₹29,600 crore, reflecting a 12% growth over the past five years.
- Corporate Social Responsibility (CSR) Spending: ₹27,000 crore, with a 13% growth over the same period.
- Retail Giving (Individual Donations): ₹32,700 crore, expected to grow at 9% annually, contributing about 29% of total private giving by fiscal year 2027.
While there are no firm estimates of the economic contribution of Indian Civil Society Organizations (CSOs), one report estimates its contribution at ₹3.56 trillion to the national economy, accounting for approximately 2% of India’s GDP. These organizations – large Indian corporations, high-net-worth individuals (HNWIs), and local non-profit organizations – also are estimated to employ around 5 million full-time workers, contributing significantly to employment and service delivery in the country. Their contribution on the softer side, including service delivery is invaluable, as India has been a land of giving from time immemorial. Giving by individual households is estimated to be Rs 27,000 crores in 2021-22, a significant jump as compared to INR 23,700 crores donated in 2020-21.
In this broader economic context, USAID’s $140 million (approximately Rs 1,200 crores) annual contribution despite supporting critical interventions, is small in size compared to the massive scale of India’s CSO-driven development efforts.
Also read: USAID to help Indian Railways achieve Net Zero Carbon Emission
Overall foreign private giving too, although being a component of India’s philanthropic ecosystem, has shown consistent but slow growth in India and constitutes a smaller share compared to domestic contributions.
Implications of the Suspension of USAID Funding
Several factors indicate that India’s development sector is well-equipped to sustain progress without USAID support:
Growing Domestic Philanthropy: Indian corporations, family foundations and retail donors have consistently increased their philanthropic contributions, ensuring continued funding for critical development initiatives.
Government-Driven Development Initiatives: India has launched several large-scale government programmes, such as the National Health Mission (NHM), Swachh Bharat Abhiyan (Clean India Campaign), and Pradhan Mantri Awas Yojana (Housing for All Initiative), which address critical social and economic challenges. These initiatives have significantly reduced reliance on foreign aid.
Diversified Foreign Support: Besides USAID, India receives funding from multilateral institutions (e.g., World Bank, Asian Development Bank) and private foundations. These actors play a more substantial role in India’s development financing than bilateral aid agencies like USAID.
Looking ahead, India’s philanthropic capital is forecasted to grow significantly, with foreign philanthropy’s share shrinking in relative terms. Data from the Bain & Dasra Philanthropy Report 2024 provides a projection of philanthropic capital growth across various funding sources, as illustrated in the table below:
Declining Size of Foreign Philanthropy in India’s Development Future
This data underscores a clear trend: while domestic philanthropic contributions are projected to grow rapidly, foreign philanthropy is expected to grow at a much slower pace—just 3% annually.
With family philanthropy and retail giving emerging as the largest sources of funding, India’s self-reliance on domestic capital will continue to increase. This signals a paradigm shift in India’s development finance model—one in which foreign aid, including USAID funding, plays a small- although not insignificant- role.
The Promise of Domestic Funding: Future driver of India’s development story
Going forward, as India continues to grow as a global economic power, it is likely to become a net donor rather than a recipient of foreign aid. This transformation underscores a key reality: India’s development success is no longer contingent on foreign aid assistance but on the strength of its own people, institutions, and philanthropic capital.
In this context, the latest India Philanthropy Report 2024 points to some interesting developments that promise a more robust and meaningful role of domestic philanthropy in India’s development story. Emerging data highlights the heterogeneity in family philanthropy, signified by the giving approaches of diverse cohorts, especially women, Now-Gen (first-generation wealth creators), Inter-Gen (the current generation of traditional family philanthropists), and professionals. Women-led philanthropy is on the rise and gaining prominence, which is in sharp contrast to the low historical share of women in wealth. The report highlights that ‘women show greater accountability through their funding initiatives and focus on intersectional approaches incorporating gender equity, diversity, and inclusion (GEDI) to address complex societal challenges’. Second, despite their focus on traditional sectors like education and healthcare, the Now-Gen and Inter-Gen givers’ cohort prioritizes systemic change as an approach. Now-Gen and Inter-Gen givers have a deeper interest in giving to GEDI and climate action and aspire to invest in strengthening philanthropic infrastructure in the future. Further, while businesses have historically spearheaded family philanthropy in India, the country is now witnessing ‘more professionals accumulating wealth and subsequently engaging in philanthropy (about 20% of GivingPi members currently). They are keen to give toward strengthening the ecosystem (57% vs. 35% for business owners)’.
Moreover, as the Report mentions, ‘Donors are increasingly becoming open to collaborating with other stakeholders and bringing the power of many to the table. Although the collaborative landscape in India is evolving, the past decade witnessed a substantial rise in the number of collaboratives, including networks, platforms, and pooled funds. Beginning in 2020, based on a long list of active collaboratives in the Indian landscape, the number of new collaboratives established yearly has surged by about five times. Collaboratives are beginning to tackle underfunded issues, especially since 2020, with approximately 53% of collaboratives focused on climate action and ecosystem strengthening’.
Hence, the sudden suspension of USAID funding to India does not present an existential challenge to the country’s development efforts. USAID’s $140 million contribution represents only 5% of total foreign philanthropy, 1% of total philanthropic funding in India, 1.2% of total domestic funding and less than 0.03% of India’s GDP, making it a relatively small share of India’s broader development financing picture. When seen with the fact that total private philanthropic funding in India is itself only 5% of total social sector spending- with 95% coming from the public sector (government)-, USAID’s size of financial contribution in India is tiny, and can easily be filled in by domestic public and private sources.
There remains little doubt that more than the drop in USAID funding, it is the suddenness of the decision that will likely cause some short-run challenges for the affected communities and CSOs. However, such exigencies also highlight the risks of disproportionate dependence on foreign sources of funding in building long-term resilience and work programmes and offer an opportunity to begin to shift focus towards the increasingly more responsible, responsive and rising domestic philanthropy in India. Besides, there has been an increasing focus on channelling foreign aid towards low-income and vulnerable countries, which in any case would have shifted foreign funding away from emerging nations. Foreign philanthropy brings value. Domestic philanthropists should now become nation-builders of new India.
*The writer is an economist and public policy professional with over two decades of experience in leading global programmes for international development agencies.
