What to do when a major donor cuts funding

What should you do in the first week?

A funding cut is stressful. The first step is to slow down and confirm facts. OpenAid guidance on responding to a funding cut says the notice, the agreement and applicable local obligations decide what stops, what continues and when action is needed.

In the first days:

1. Find the notice and the grant agreement, with all amendments.
2. Identify the effective date, the affected work, which costs are still allowed and what responses are required.
3. Escalate unclear instructions to the donor in writing before you commit any affected funds.
4. Form a small decision group of the director, finance lead and programme lead.
5. Start a decision log: what was decided, by whom, on what evidence.

Do not spend or commit funds you cannot confirm. Do not tell staff or partners decisions you have not made yet.

How do you manage the cash position?

OpenAid recommends updating expected receipts and payments over a period useful to your finance team, keeping restricted funds separate, showing uncertain receipts and identifying payments that need a decision.

Use the EMPO Budget Tracker or a simple spreadsheet. Check legal, tax and contract matters with your agreement or a qualified local adviser.

How do you look after people?

Staff, partners and communities all feel the impact. OpenAid advises using qualified local advice for employment and contract obligations and planning safe communications, continuity and handover with responsible staff before making commitments.

• Staff. Meet the team early. Share what you know and what you do not. Follow your HR policy and local law.
• Partners. Tell sub-partners promptly. Check what you owe them and what they owe you. Plan handover of activities where possible.
• Communities. The INTRAC reflection on aid cuts reminds us that the end of funding does not mean the end of need. Where services will stop or change, plan safe, honest communication so people understand what to expect and where else to seek help. Tell them in a way that does not create risk.
• Yourself. INTRAC lists creating space for leaders and teams to reflect and recover as a smart investment. Fatigue leads to poor decisions.

How do you close out properly?

Check actual close-out rules in your agreement: final reports, final financial statements, asset disposal, record retention and any audit. Assign an owner to each. OpenAid notes that confirming owners and unresolved questions should come before treating the award as closed. Keep records safe, with access controlled. If another organisation will continue the work, complete a handover record that lists activities, assets, data and contacts. Handle personal data of community members carefully; see ethics and consent in data collection.

How do you rebuild your funding mix?

INTRAC's discussion with organisational development consultants suggests several steps for civil society organisations under pressure:

1. Reaffirm your purpose and values.
2. Refresh your strategy and make hard choices: what will you not do in order to do other things well?
3. Think about immediate, medium-term and long-term needs at the same time.
4. Prioritise long-term partnerships that cover core costs.
5. Invest in new forms of resource mobilisation, such as domestic, private sector and digital, and approach existing funders about additional or bridging support.
6. Invest in "ending well" if the organisation is moving towards closure.

INTRAC also noted that organisations that were doing better tended to focus on their mission over donor agendas, to learn continuously and to build income sources such as domestic fundraising. Practical next moves are to update your donor map, review your funding mix, and check pooled funds that accept local partners.

What not to do

• Do not hide the problem from your board or team.
• Do not use restricted funds without written approval.
• Do not make promises that depend on uncertain money.
• Do not apply everywhere at once. Choose a small number of realistic options.
• Do not forget the people you serve.

How EMPO can help

EMPO is a reliable, Yangon-based training and consultancy provider and one of Myanmar's leading names in practical NGO training, with 1,200+ people trained and 15 partner organisations. We support organisational development, strategy and proposal writing, online or in person across Myanmar, in English and Burmese. See our services or contact us.

Sources

• Respond to a Funding Cut — OpenAid
• Sparking resilience in a time of aid cuts — INTRAC, 2025