US Aid Freeze: Analysis of the OMB Memorandum M-25-13 on U.S. Aid Programs

USAID Freeze
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January 28, 2025

This is Part 4 in my ongoing series examining the ongoing US Aid Freeze. For a better understanding, check out the other posts in the series, as I have tried to document this evolving situation:

Updates:

Rescission of the OMB memorandum on January 29. News outlets reported that on Wednesday, January 29, Matthew Vaeth, the acting OMB Director, notified federal agencies that the January 27 Federal financial assistance program funding freeze memo has been rescinded. See:

Note this does not unfortunately change the situation for USAID funded programs as they are covered under the new Administration’s executive order on foreign aid. and the Jan 28th Order by USAID’s Office of Acquisition & Assistance (OAA) Director Jami Rogers that implements a blanket pause unless a waiver.

Acting Director Vaeth’s brief memo to the heads of executive departments and agencies said simply that: “OMB Memorandum M-25-13 is rescinded. If you hae questions about implementing the President’s Executive Orders, please contact your agency General Counsel.”

Administrative stay in lawsuit. On January 28, 2025, Judge Alikhan issued a temporary stay. “ORDER. For the reasons stated in the attached document, it is hereby ORDERED that an ADMINISTRATIVE STAY is entered until 5:00 p.m. on February 3, 2025 . It is further ORDERED that Defendants shall respond to Plaintiffs’ request for a temporary restraining order by 5:00 p.m. on January 30, 2025, and that Plaintiffs shall file a reply, if any, by 5:00 p.m. on January 31, 2025. The parties shall convene for a hearing on Plaintiffs’ motion at 11:00 a.m. on February 3, 2025, in Courtroom 21. Signed by Judge Loren L. AliKhan on 1/28/2025. (lclla3) Modified to add event title on 1/29/2025 (znmw).”

The newly inaugurated Trump administration has today delivered a new and devastating blow to the humanitarian and development sector, exceeding the worst predictions of experts.

Acting Director of the White House Office of Management and Budget, Matthew J. Vaeth, issued a detailed memo on Monday requiring Federal agencies to:

  1. Temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.
  2. Complete a comprehensive analysis of all their Federal financial assistance programs.
  3. Submit to OMB detailed information on every program, project, or activity by February 10.

To be clear, this isn’t just a targeted freeze on USAID funding; it’s a complete shutdown of all Federal financial assistance, jeopardizing billions of dollars in life-saving aid and creating a humanitarian crisis of unprecedented proportions.

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Office of Management and Budget (OMB) Memorandum M-25-13,

Office of Management and Budget (OMB) Memorandum M-25-13 confirms the fears voiced in a recent Devex Pro Briefing, where panelists warned of the cascading effects of such a freeze. Now, those warnings are a stark reality.

Yes, It Likely Affects You

If your organization is in any way connected to U.S. government funding, whether directly or indirectly, the answer to whether this freeze affects you is, unequivocally, yes. This freeze is effective immediately. Agencies are ordered to halt all activities related to the obligation or disbursement of funds as of January 28, 2025, 5:00 PM.

This includes organizations that:

  • Receive direct funding from USAID: This was the initial focus, but it’s just the starting point.
  • Receive funding from other U.S. government agencies: The new expanded freeze encompasses the Department of State, HHS, USDA, Treasury, CDC, Peace Corps, Millennium Challenge Corporation, and more.
  • Are sub-grantees or sub-contractors: Even if you don’t have a direct relationship with the U.S. government, if the funds you receive can be traced back to a U.S. source, you are impacted. This freeze affects both obligations (commitments to spend money) and disbursements (actual payments).
  • Partner with organizations that receive U.S. funding: The ripple effects will disrupt collaborative projects and partnerships.

Understanding the Scope: It’s Bigger Than You Think

Initially, the focus was on USAID’s substantial FY2024 discretionary budget of $35.4 billion. But the OMB memo lays bare a far more catastrophic picture. The OMB memo itself highlights the sheer scale of federal financial assistance, quoting a projected total of $3 trillion for FY2024. While not all of this funding will be affected by the freeze, this figure underscores the vastness of the programs potentially at risk. The actual amount impacted remains to be determined, but it will undoubtedly be substantial, affecting billions of dollars in vital aid and development programs. This isn’t just about USAID; the freeze extends to all federal financial assistance programs across multiple agencies. While the full scope of the financial implications is still being assessed, here’s what we know from publicly available data:

Programs and Agencies Affected:

  1. Department of State: Humanitarian programs, refugee assistance, and conflict resolution efforts are now on likely on hold. In FY2024, the State Department had a discretionary budget of $63.1 billion, much of which supported global stabilization efforts.
  2. Department of Health and Human Services (HHS): Global health initiatives, including vital programs through the CDC, face an immediate cutoff. The FY2024 discretionary budget for HHS was $144.3 billion, funding critical programs such as pandemic response and disease prevention.
  3. Department of Agriculture (USDA): The USDA’s FY2024 discretionary spending amounted to $31.1 billion, primarily supporting agricultural development and food security initiatives.
  4. Department of the Treasury: Contributions to multilateral development banks, which leverage funding for large-scale development projects, are potentially halted. Treasury’s FY2024 discretionary budget was $16.2 billion, directly impacting global economic stability efforts. Specific allocations included $1.48 billion to the International Development Association (IDA), $224 million to the African Development Fund, $107.2 million to the Asian Development Fund, $233.3 million to the International Bank for Reconstruction and Development (IBRD), and $54.6 million to the African Development Bank (AfDB). These contributions are part of multi-year commitments designed to support critical development initiatives such as infrastructure projects, health systems strengthening, and climate change mitigation.
  5. Peace Corps: Volunteer operations around the world are jeopardized. The FY2024 discretionary budget for the Peace Corps was $495 million, a crucial element for grassroots development work.
  6. Millennium Challenge Corporation (MCC): Programs focused on economic growth and poverty reduction are frozen. The FY2024 discretionary budget for MCC was $1.1 billion, supporting long-term development projects.

USAID’s FY2024 $35.4 Billion Portfolio: A Record of Impact Now Frozen

In FY 2024, the U.S. Agency for International Development (USAID) oversaw an unprecedented $35.4 billion portfolio spread across more than 7,200 activities in 165 countries. This vast investment spanned emergency response, global health, governance reforms, agricultural development, and education—each program serving as a vital link in the chain of international development. Now, with funds abruptly frozen, the entire ecosystem of implementing partners and beneficiary communities stands on precarious ground. Detailed information can be found at USAID_Foreign_Assistance_Obligations_FY2024_Complete

Humanitarian Assistance: $9.9 Billion Now at Risk

In FY 2024, USAID allocated $9,910,983,811 for humanitarian assistance. Of this total:

  • $9,523,236,493 funded Emergency Response, providing urgent relief—food, water, shelter, medical care, and protection—in the immediate aftermath of conflicts and natural disasters.
  • $387,927,318 supported Disaster Prevention and Preparedness, helping communities build resilience against future crises.

This funding was the bedrock of international relief efforts. With it now frozen, the capacity to respond to new and ongoing emergencies is severely compromised. For example, in FY 2024, the World Food Programme alone depended on $3.4 billion from USAID to sustain its life‑saving interventions worldwide.

Global Health Programs: $9.5 Billion Cut Off at the Knees

USAID’s global health programs—totaling $9,479,228,109 in FY 2024—were a cornerstone of international efforts to combat infectious diseases, improve maternal and child health, and strengthen health systems. Now, with funding frozen, decades of progress hang in the balance.

  • HIV/AIDS – $5,351,044,021 This funding, largely channeled through PEPFAR (the President’s Emergency Plan for AIDS Relief), provided life-saving antiretroviral treatment to millions. Critical contributions to the Global Fund to Fight AIDS, Tuberculosis, and Malaria are also at risk, threatening to reverse hard-won gains.
  • Basic Health – $2,229,942,107 These resources supported immunizations, health worker training, and essential medical supplies, ensuring that vulnerable populations receive the care they need.
  • Maternal and Child Health, Family Planning – $1,356,401,367 Programs aimed at reducing maternal and child mortality, improving nutrition, and expanding family planning access now face severe disruptions.
  • Water Supply and Sanitation – $414,447,590 Investments here helped improve clean water access and sanitation infrastructure. Cutting these funds exacerbates risks of waterborne diseases.
  • Health, General – $111,701,437 This covered broader health system support, from outbreak monitoring to health workforce development.
  • Non-communicable diseases (NCDs) – $15,691,587 While smaller in comparison, this funding helped tackle chronic conditions like diabetes, cancer, and cardiovascular diseases that are escalating in developing regions.

With this funding in limbo, life-saving interventions are suspended, and millions worldwide stand to lose vital health services.

Governance and Stability: $6.9 Billion in Limbo

The US allocated $6,914,720,546 in FY 2024 to strengthen governance and promote peace. Now frozen, these funds target anti-corruption, decentralized governance, free elections, and social programs. Over $6.5 billion supported Government and Civil Society, with major allocations for public sector policy, civic engagement, and corruption oversight. Another $262.6 million bolstered conflict prevention, mediation, and security reform. Social services received $120.5 million for employment creation, housing, and protection programs. Without this support, efforts to modernize institutions, uphold rights, and foster stability may falter—leaving vulnerable communities without crucial services.

Food Security and Agriculture: $1.1 Billion Withering on the Vine

USAID dedicated $1,145,930,188 in FY 2024 to boost agricultural productivity, strengthen market access, and provide emergency food aid worldwide. Key allocations included $1.1 billion for policy and administrative management, $23.5 million for alternative development, and nearly $6.1 million for general agricultural development. Research, water resources, and forestry—although smaller in funds—play vital roles in innovation and sustainability. Now frozen, these investments face disruption, potentially deepening global hunger, slowing progress on climate resilience, and undermining support for smallholder farmers.

Education: $1.1 Billion for the Future, Now Frozen

USAID committed $1,114,331,436 in FY 2024 to expand learning opportunities worldwide. That included $808.7 million for basic education—covering adult life skills, early childhood, and primary schooling—plus $222 million for post-secondary programs. Upper secondary and vocational training received $58.9 million, while $24.7 million supported educational infrastructure, policy, and research.

With this funding frozen, countless students may lose access to quality instruction, safe learning environments, and teacher training. The potential setback in literacy, workforce readiness, and economic productivity could reverberate for years to come, leaving vulnerable communities even further behind.

This snapshot only scratches the surface of the global impact from suspending USAID’s extensive funding. Beyond the stark dollar figures lies a human toll measured in livelihoods disrupted, lifesaving services curtailed, and fragile gains undone. Whether it’s preventing a public health crisis or delivering clean water to rural communities, these programs represented decades of accumulated expertise and trust. Without urgent resolution, the freeze threatens not just immediate humanitarian relief and development work but also the enduring relationships and achievements that underpin U.S. international leadership.

Devex Briefing Insights: A Predicted Catastrophe Now Unfolding

Just yesterday, I attended a Devex Pro Briefing, a specialized call where experts, including former USAID officials and legal professionals, convened to discuss the potential impacts of a US aid freeze. What was presented as the worst-case scenario on that call has, unfortunately, materialized in the form of this OMB memo.

Panelist Susan Reichle, a former USAID counselor, highlighted the potential for immediate human suffering, particularly in conflict zones. Her warnings about Northern Syria, Gaza, and Sudan are now terrifyingly relevant. Legal experts like Robert Nichols and Jason Matichak warned of operational and financial chaos, and Olga Wall, a grants expert, detailed the contractual nightmares that could ensue. Now, we see their predictions unfolding in real time. The concerns raised about the targeting of specific programs, such as those related to DEI and climate change, are now explicitly confirmed in the memo’s language.

Panelists discussed an internal USAID process for prioritizing programs. This “rack and stack” system, where programs are ranked for potential waivers or continued funding, is now a critical factor in determining which initiatives survive.

The Human Cost: A Global Crisis Ignites

The funding freeze has caused unprecedented disruptions to humanitarian and development programs worldwide. I have heard multiple reports of major international organizations, many of which rely on USAID funding, are scaling down or ceasing operations entirely. The talk while not confirmed is that thousands of humanitarian workers are being laid off, destabilizing the already fragile response mechanisms in conflict zones. Additionally in both Ukraine and Sudan Key cash assistance programs that millions depend on for basic survival are being impacted as their USAID funding is suspended. Meanwhile, global health campaigns against HIV/AIDS, polio, and other infectious diseases face operational paralysis, risking the resurgence of ailments once under control.

The U.S. Agency for International Development (USAID) is also undergoing significant internal upheaval. The administration has placed over 50 senior officials on administrative leave amid an investigation into alleged efforts to obstruct the President’s executive orders.

The OMB’s Blueprint: Ideology Over Need

Beyond the immediate financial impacts, the OMB memo reveals a clear ideological shift within the new administration. The document explicitly targets programs related to ‘Marxist equity, transgenderism, and green new deal social engineering policies,’ labeling them a ‘waste of taxpayer dollars.’ This language, as discussed by panelists on the Devex Pro Briefing, signals a deliberate move away from the development priorities of previous administrations. It raises serious concerns about the future of programs focused on diversity, equity, and inclusion (DEI), LGBTQ+ rights, and climate action, all of which are now potentially on the chopping block

Operational Paralysis and Long-Term Control

The memo’s directives are designed to create operational paralysis within agencies and grant long-term political control over funding decisions:

  • Immediate Freeze: Effective January 28, 2025, at 5:00 PM, all activities related to the obligation or disbursement of funds are halted. This includes new awards, disbursements under existing awards, and even open NOFOs, validating the “stop means stop” warning from Jason Matichak on the Devex call.
  • Political Oversight: Senior political appointees will now oversee all financial assistance programs, ensuring alignment with vaguely defined “Administration priorities.” This shift from merit-based to politically-driven funding decisions, a concern raised multiple times during the Devex discussion, is deeply troubling.
  • Retroactive Review: The memo grants the administration the authority to retroactively review and potentially cancel previously awarded programs, creating chaos and uncertainty for organizations and beneficiaries alike.
  • Waiver Process - A False Hope: While the memo allows for exceptions, they will be granted by OMB on a “case-by-case basis.” Given the ideological framing of the document, the likelihood of waivers for programs in the crosshairs seems slim, aligning with the skepticism expressed during the Devex briefing about the fairness of the waiver process.

What Your Organization Needs to Do Now:

  1. Assess Your Exposure: Evaluate your funding sources and identify vulnerabilities.
  2. Document Everything: Maintain detailed records to support any future claims or advocacy efforts.
  3. Communicate with Stakeholders: Keep donors, partners, and beneficiaries informed about potential impacts.
  4. Explore Legal Options: Consult with legal experts to understand your rights and options.
  5. Plan for Contingencies: Develop strategies to mitigate disruptions and sustain critical operations.

A Collective Response

This freeze represents an unprecedented challenge to the humanitarian and development sector. A coordinated response is crucial. We must document the impacts, advocate for policy changes, and support each other.

Here’s How You Can Help

  • Contact Your Representatives If you’re American, urge your members of Congress—especially those on Appropriations and Foreign Relations Committees—to reverse the freeze.
  • Share This Blog Post Use hashtags like #HumanitarianCrisis #DefendAid #FundUSAID to amplify awareness.
  • Donate Support organizations on the front lines who are absorbing immediate losses from suspended funds.
  • Share Your Story If your organization is impacted, detail the consequences in the comments. Our collective narratives can drive policy action.

While this memo poses a formidable obstacle, remember our core mission: to aid those in need. The coming weeks and months are critical. We must act swiftly, strategically, and collectively to mitigate the devastating consequences and preserve the vital work of the humanitarian and development community.

What steps is your organization taking? Share your experiences and strategies in the comments below.

#FundingFreeze #HumanitarianAid #Development #USAID #OMB #Devex

Disclaimer: This analysis is based on currently available information and my interpretation of the OMB memo. Organizations should consult with their legal counsel for specific guidance.