The decline in foreign aid to Bangladesh’s development sector, especially for marginalized communities, has raised concerns. Experts point to factors like reduced global donor interest, Bangladesh’s reclassification as a middle-income country, shifting international priorities, and changing aid policies. This highlights the urgent need for sustainable funding alternatives to support vulnerable communities.
This concern was raised at a roundtable discussion held on Thursday at the Brac in Dhaka. This discussion was organized by ActionAid Bangladesh on the theme: “Strengthening community support amid changing funding landscapes”.
Speakers highlighted that while Bangladesh received approximately $1 billion in foreign assistance in 2020, this figure has steadily declined.
According to the NGO Affairs Bureau, non-governmental organizations operating in the country received $655 million in foreign aid last year—an 11.6% decrease from the previous year.
Sudden policy shifts by major donor countries, including the United States, have resulted in the suspension of substantial funding, forcing many critical projects to halt operations. Development financing opportunities have narrowed considerably.
Rising trade tariffs and recent economic instability at both national and global levels are also expected to adversely impact marginalized communities, generating serious concern among stakeholders.
Experts emphasized that to sustain ongoing development efforts, greater focus is needed on resilient and sustainable funding models, such as microfinance, social enterprises, and corporate social responsibility (CSR) contributions from the private sector.
Dr Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), stressed the importance of a robust policy framework for utilizing CSR funds.
"As LDC graduation is set to significantly impact CSOs, we must explore south-south funding, adopt a CSR policy, that could be led by the Finance Ministry, to channel private sector support, promote digital and structural reforms in both government and CSOs, ensure democratic leadership transitions, and advocate for a dedicated Tk1000 crore budget to sustain rights-based social development amid shifting political mindsets," he said.
ActionAid Bangladesh’s Country Director Farah Kabir called for collective action and innovative solutions to overcome the ongoing crisis.
"The current funding shortage is disrupting access to essential primary healthcare and social protection services in underserved urban and rural areas. Women, children, and marginalized populations are particularly at risk,” she said.
“If left unaddressed, this situation could lead to deepening inequality, rising poverty, and diminished public trust in development initiatives. Active and collaborative steps are urgently needed to ensure the sustainability of community development efforts," she warned.
“In light of Bangladesh’s graduation from LDC (Least Developed Country) status, civil society organizations must undergo strategic and visionary transformation to continue contributing to the Sustainable Development Goals,” said M Zakir Hossain Khan, chief executive of Change Initiative.
He added: " Amid ongoing funding shifts and crises, we must adopt proactive, forward-looking strategies that prioritize nature-based solutions, renewable energy, and agrotechnology—engaging CSOs and communities in public-private partnerships, exploring government-monitored zakat funds for social safety nets, enabling youth-led natural resource monitoring, and ensuring governance frameworks that support evidence-based engagement and local resource conservation. "
Professor Dr Sharmin Nilormi of Jahangirnagar University’s Department of Economics said that while Bangladesh is progressing towards graduation from LDC status, mere planning is insufficient without robust implementation.
"As Bangladesh moves beyond LDC status, we must shift from just focusing on adaptation to scaling its implementation, ensure better monitoring of tax expenditure rebates and advocate for redirecting non-government tax benefits into seed funding for grassroots CSOs; at the same time, local CSOs need to update themselves with knowledge of evolving technologies and their practical application," she said.
The roundtable discussion concluded with a closing speech by AAIBS Board Chairperson Ibrahim Khalil Al-Zayad. The event was attended by representatives of various NGOs and civil society, researchers, academics, development experts, and media professionals.
The speakers emphasized the need for collective efforts to address the funding crisis.
