USAID Grants: Cancellations, Legal Fight, and Human Cost

USAID grants — the grants, cooperative agreements, and related awards the U.S. Agency for International Development used to fund foreign development and humanitarian work — no longer exist as a functioning program. USAID officially ceased operations on July 1, 2025, after the Trump administration dismantled it and folded its remaining work into the U.S. Department of State.1NPR. USAID Officially Shuts Down and Merges Remaining Operations With State Department The State Department reported canceling roughly 9,900 of USAID’s 13,100 awards, about 83 percent of the portfolio.2The Washington Post. USAID Foreign Funding Suspension Unlawful Litigation over the cancellations is still unresolved, and Congress has appropriated substantially more foreign assistance funding for fiscal year 2026 than the White House requested.

What USAID Grants Were

USAID used two main assistance instruments to move money to organizations doing public-purpose work abroad. A grant transferred funds to a recipient with limited federal involvement; a cooperative agreement transferred funds with “substantial involvement” by USAID over the life of the award.3Humentum. ADS 303 Grants and Cooperative Agreements to Non-Governmental Organizations Contracts, used to purchase goods and services directly, sat under a separate acquisition framework.

Recipients spanned U.S.-based nonprofits registered as Private Voluntary Organizations, international NGOs, faith-based and community groups, universities, and local organizations in developing countries.4Grants.gov. U.S. Agency for International Development The scale was large. USAID obligated $22.1 billion through grants and cooperative agreements in fiscal year 2022 and $16.3 billion in fiscal year 2023.5Devex. How Much of USAID’s Money Went to Local Grantees in 2023 The signature programs funded through this pipeline included:

The 2025 Shutdown

On January 20, 2025, President Trump signed an executive order titled “Reevaluating and Realigning United States Foreign Aid.” It paused all new obligations and disbursements of foreign assistance and directed agency heads to review every program within 90 days. The order stated that no foreign assistance would be disbursed “in a manner that is not fully aligned with the foreign policy of the President.”9The White House. Reevaluating and Realigning United States Foreign Aid

USAID was among the earliest agencies targeted by the Department of Government Efficiency. Within weeks, it lost roughly 97 percent of its staff, dropping from thousands of employees and contractors to a few hundred.10Federal News Network. Former USAID Employees Mark One Year Since Major Agency Cuts On July 1, 2025, the agency stopped implementing foreign assistance and merged its remaining operations into the State Department.1NPR. USAID Officially Shuts Down and Merges Remaining Operations With State Department

Secretary of State Marco Rubio said the 9,900 canceled awards involved programs that did not serve U.S. national interests.2The Washington Post. USAID Foreign Funding Suspension Unlawful USAID remains a “statutory entity,” but the USAID Inspector General has reported that its remaining staff are focused primarily on program terminations and closeouts.11USAID OIG. Top Management Challenges Facing U.S. Foreign Assistance in Fiscal Year 2026

What the Cancellations Meant for Recipients

The terminations landed hardest on humanitarian implementers. The International Rescue Committee reported at least 46 award terminations and estimated at least 2 million people would lose access to health care, nutrition support, and emergency relief, particularly in Sudan, Yemen, and Syria.12International Rescue Committee. United States Terminates Thousands of Aid Programs Mercy Corps reported being cut off from safe drinking water programs in Sudan, and the UN Refugee Agency halted distribution of basic supplies to conflict-affected communities in Colombia.13Stanford Social Innovation Review. NGOs Funding Cuts Cost Evidence

PEPFAR-supported HIV services saw immediate disruption. Clinic enrollment fell from 19.4 million in 2024 to 17.4 million in the fourth quarter of 2025, and HIV testing dropped from 84 million people tested in 2024 to 67 million in 2025. Thirty-one countries saw drops in PEPFAR-supported antiretroviral therapy coverage after January 2025, totaling a 3.7 million-person decline; Lesotho reported a coverage drop exceeding 50 percent.14Center for Global Development. Millions Lost Access to PEPFAR-Supported HIV Drugs During U.S. Foreign Assistance Pause A limited emergency waiver issued January 28, 2025, allowed continuation of life-saving HIV treatment for the more than 20 million people directly on PEPFAR-supported antiretrovirals, but pre-exposure prophylaxis services for non-pregnant populations remained paused indefinitely.15UNAIDS. Impact of U.S. Funding Cuts By the end of fiscal year 2025, coverage in most countries had largely rebounded, aided by host governments and other donors filling gaps.

The Legal Fight Over Canceled Funds

The funding freeze produced immediate litigation. On February 11, 2025, the American Bar Association and seven co-plaintiffs — USAID and State Department grantees and contractors — filed Global Health Council, et al. v. Trump, et al. in the U.S. District Court for the District of Columbia. Two days later, U.S. District Judge Amir Ali issued a temporary restraining order blocking the executive order’s effect on existing awards as of January 19, 2025, and barring the government from issuing stop-work orders or terminations on those awards.16American Bar Association. ABA Files Legal Challenges Against Federal Govt

Judge Ali later ruled that the administration must pay nearly $2 billion for humanitarian work already performed before February 13, 2025, finding that blocking congressionally allocated funds likely violated the Constitution. He also ruled that the State Department and USAID could legally proceed with canceling thousands of future contracts, noting he could not dictate how the administration spends funds going forward.2The Washington Post. USAID Foreign Funding Suspension Unlawful

The case reached the Supreme Court. On September 3, 2025, the district court issued a preliminary injunction directing the executive branch to obligate roughly $10.5 billion in foreign aid before it expired on September 30. The dispute narrowed to $4 billion the President had proposed rescinding under the Impoundment Control Act.17SCOTUSblog. Supreme Court Allows Trump Administration to Withhold Billions in Foreign Aid Funding On September 26, 2025, the Supreme Court stayed the injunction as to that $4 billion, finding the government had made a sufficient preliminary showing that the Impoundment Control Act might bar the plaintiffs’ claims.18U.S. Supreme Court. Department of State v. AIDS Vaccine Advocacy Coalition Justice Elena Kagan, joined by Justices Sotomayor and Jackson, dissented, noting the order effectively prevented the funds from reaching recipients because the fiscal year was about to end. The Court described its ruling as a “preliminary view,” not a final determination on the merits. As of 2026, the stay remains in effect pending the government’s appeal in the D.C. Circuit, and the underlying legal questions are unresolved.

Where Foreign Assistance Grants Stand Now

With USAID dissolved, the State Department has absorbed the surviving programs. The administration’s fiscal year 2026 budget request proposed $0 for USAID’s operating accounts and moved those responsibilities under State.19U.S. Department of State. FY 2026 Congressional Budget Justification PEPFAR is now managed by the Bureau of Global Health Security and Diplomacy.20U.S. Department of State. PEPFAR The request also proposed $3.8 billion for global health programs, $2.5 billion for international humanitarian assistance, and a new $2.9 billion “America First Opportunity Fund” for emerging priorities.21U.S. Department of State. FY 2026 Congressional Budget Justification – Updated

The transition has created oversight gaps. The USAID Inspector General reported that conflicting instructions about where awardees should report fraud or misconduct risk “leaving critical gaps in oversight,” with more than 300 active investigative matters involving fraud, corruption, and diversion of aid.11USAID OIG. Top Management Challenges Facing U.S. Foreign Assistance in Fiscal Year 2026

Congress Pushed Back

The fiscal year 2026 State and Foreign Operations conference bill provided $50 billion for the State Department and foreign affairs agencies, $19 billion above the President’s request, and rejected proposals to eliminate several programs and independent entities.22U.S. Senate Committee on Appropriations. FY26 SFOPS Conference Bill Summary Notable provisions:

The bill also added oversight provisions, rejecting what appropriators characterized as a request for “broad flexibility” and “a blank check,” and requiring additional reporting on the administration’s “America First Global Health Strategy.”22U.S. Senate Committee on Appropriations. FY26 SFOPS Conference Bill Summary

Projected Human Cost

Several studies have estimated what the loss of USAID-funded programs may mean in lives. A July 2025 study in The Lancet, led by James Macinko of UCLA, analyzed data from 133 countries that received USAID aid between 2001 and 2021 and found the programs were associated with averting approximately 91 million deaths over that period. The authors estimated that if the funding cuts become permanent, between 8 and 19 million additional people could die by 2030, including 4.5 million children.25NPR. Trump USAID Foreign Aid Deaths A February 2026 study in The Lancet Global Health, expanding the analysis to all donor-country official development assistance, projected between 9.4 and 22.6 million additional deaths across all ages by 2030 depending on the severity of defunding.26The Lancet Global Health. Impact of Two Decades of Humanitarian and Development Assistance and Projected Mortality Consequences UNAIDS estimated that if programs previously supported by PEPFAR are permanently discontinued, the result through 2029 would be an additional 6.6 million new HIV infections and 4.2 million AIDS-related deaths.15UNAIDS. Impact of U.S. Funding Cuts

As of mid-2026, the State Department is still integrating former USAID functions, the legal fight over whether the administration can withhold congressionally appropriated funds remains open, and the gap between the executive branch’s “America First” posture and Congress’s larger appropriations defines what happens to U.S. foreign assistance grants next.