The most prominent non-governmental organization (NGO) across the Karnali region is the Karnali Integrated Rural Development and Research Center (KIRDARC), officially registered in Jumla.

This organization, dedicated to advancing health, nutrition, food security, and social inclusion, has been rendered defunct. This critical setback is a direct consequence of the cessation of operations by the United States Agency for International Development (USAID).

KIDARC, a pivotal contributor to Karnali’s social development for 26 years, is now devoid of projects, an outcome that has already impacted the 145 individuals it once employed.

Similarly, the Samriddhi Foundation, registered in Banke, persists merely in a nominal capacity. Ahmad Khan, the foundation’s program coordinator, reports that the entity, which spearheaded initiatives against child marriage and in the education sector, is now wholly constrained to voluntary activities. He said, “We currently possess no active projects. The organization retains no employees; some of us are operating solely as volunteers.”

The condition of Aasaman Nepal in Dhanusha, which for 25 years has mainly focused on 29 districts of the Terai and provided support in health, nutrition, education, children, women’s empowerment, and governance system improvement, is similar to that of KIRDARC. This NGO, registered with the District Administration Office, Dhanusha, is crippled due to a lack of budget. This organization had been working on 29 projects in various sectors.

The NGO Federation of Nepal (NFN), the representative body of NGOs, has lost a project worth approximately Rs 300 million. The Federation was implementing a three-year project, with financial assistance from USAID through the Asia Foundation, to support capacity building for small NGOs working in the areas of youth, women, gender minorities, and Dalit communities in Madhes and Lumbini provinces. More than 100 organizations would have benefited from this.

Besides this, a project worth approximately Rs 250 million being spent through the Asia Foundation, which focused its work on Lumbini and Madhesh provinces, has also been shut down.

Ajay Das, former program director of the Asia Foundation, says, “The project was being implemented for five years, with 56 organizations collaborating.

Less than half of the amount had been spent when it was shut down midway. 30 people immediately lost their jobs at the Asia Foundation itself.”

Many NGOs dependent on the Asia Foundation’s resources are currently like fish without water. Domestic and foreign NGOs, once considered major partners in Nepal’s development campaign, have reached an existential crisis.

After the US president Donald Trump was elected for a second term as president of the US, his administration decided to shut down USAID. This had a major impact on NGOs. Trump had, in fact, labeled the aid provided by USAID as ‘fraud.’

He even mentioned Nepal by name, calling the assistance given to some projects fraud. According to the data from the Ministry of Finance, the closure of USAID has affected programs worth approximately Rs 95 billion in Nepal. This has impacted Nepal’s development programs overall.

60 percent budget cut

Mohandas Manandhar, an expert on NGOs, says that institutions from European countries are the largest providers of development assistance to Nepali NGOs. He explains that the aid they provide to Nepal began to decrease because the Covid pandemic severely affected the economies of those countries.

He says, “The problems for NGOs here began after the Covid-19 pandemic started around the years 2019 to 2020, when donors began cutting the amount of development assistance coming to Nepal. Donor countries are rapidly cutting aid and diverting it elsewhere. Some have increased spending in their own countries.”

Most bilateral and multilateral donor agencies have stopped launching new aid programs after fulfilling their previous commitments. After the projects they agreed upon concluded, NGOs have stopped receiving new projects. In the fiscal year 2019/20, approximately 240 large projects worth about Rs 12 billion were operational.

However, this amount decreased to Rs 3.4 billion in the fiscal year 2020/21. At that time, aid decreased by almost 70 percent. Manandhar states that although the amount of aid increased in the following years, aid coming from Europe has begun to be cut after the Russia and Ukraine war.

Since that time, NGOs have been gradually reducing their scope of work. According to a survey conducted by the NGO Federation of Nepal this year, facts were collected indicating that there has been approximately a 60 percent budget cut in Nepali NGOs. However, the Federation has kept this report confidential after the NGOs themselves refused to make it public.

Officials working in the NGO sector state that organizations such as Americares, Caritas Internationalis, World Education, and Helps International, which have been providing significant aid, are gradually reducing their presence in Nepal. Some organizations are working only in limited areas with small budgets. Keshab Man Shakya, a former minister and long-time worker in international NGOs, says, “The aid Nepal receives for capacity building, skill transfer, and policy support is gradually decreasing. Donor support is expected to decline further in the coming days.”

According to Arjun Bhattarai, chairman of the NGO Federation of Nepal, the Russia–Ukraine war has also affected donor support. He says, “Aid coming to Nepal from European countries has been cut. There is a possibility that aid coming from European countries will be cut by more than five percent.”

Changes in donor priorities have also affected the aid received by NGOs in Nepal. Some have adopted a policy of providing aid directly through the government. Foreign donors have also started taking a special interest in the relevance of the support and the accountability of local entities. Those working in the sector say this has reduced the dynamism of the non-governmental sector.

Multilateral organizations like UNICEF and UNDP are active in Nepal, but the presence of private international NGOs is gradually decreasing.

For this reason, small and rural-based organizations have begun to fall out of the donors’ priority list. After European Union countries, the United Kingdom, Japan, Korea, and Switzerland are key providers of aid for Nepal’s social development. Bhattarai states that aid coming from other countries is negligible compared to European countries.

He says, “Conservative individuals have been elected in some European countries. They are questioning why they should provide aid to other countries. That is also a reason why aid is being cut. At least 57 conservative members of parliament have been elected in Portugal. They are pressuring for aid cuts.”

On the other hand, Ajay Das, former program director of the Asia Foundation, says that Nepal’s graduation from a Least Developed Country (LDC) to a developing country in November 2026 will further accelerate the reduction of aid coming to Nepal.

He says, “Nepal is in a position to be capable after upgrading from LDC. Donors are increasingly thinking that aid should be directed to countries weaker than Nepal. This also suggests that the aid coming to Nepal will be reduced.”

Unclear definition and work

The NGOs in Nepal are registered under the Association Registration Act, 1977. The Act specifies that organizations must be registered with the District Administration Office. According to the Act, all organizations registered under it are autonomous and organized bodies with perpetual succession.

These organizations are stated to be non-profit, and in the event of the organization’s closure, its movable and immovable property shall be vested in the government. There is a legal provision that these organizations must be affiliated with the Social Welfare Council (SWC) if they receive foreign aid. NGOs dependent on domestic resources do not require SWC affiliation.

The definition of an organization provided by the Act states, “Organization means an association, institution, club, group, council, and study center, among others, established with the objective of developing and expanding social, religious, literary, cultural, scientific, educational, intellectual, theoretical, physical, economic, professional, and charitable works, and this term also includes friendship associations.” According to the Act, even mothers’ groups and sports clubs are defined as NGOs. Therefore, there is no official data on the total number of NGOs in Nepal.

Bhattarai, chairman of the NGO Federation of Nepal, says, “The definition and data of NGOs in Nepal are flawed. There is no accurate data on how many people are employed in these organizations. All organizations other than the government are included under the same definition and are required to register under the Association Registration Act, 1977. Improvement is necessary in this area.”

Not only is the definition of NGOs unclear, but their work is also not explicitly defined. NGOs mobilize foreign aid for tasks ranging from distributing fertilizer and seeds to farmers to distributing uniforms to students. Furthermore, NGOs utilize foreign aid for facilitating policy and plan formulation for local to federal governments and conducting programs like training and workshops for human resource capacity building.

Dislocation of 35,000 workforce

NGOs have long created significant employment opportunities in sectors ranging from education to health to women’s empowerment to sustainable development. Now, the situation is reversed. Many organizations have laid off staff due to budget shortages. As foreign donor commitments decline, the wave of project contraction and job cuts is affecting thousands of employees working in this sector.

Bhattarai, Chairman of the NFN, states that approximately 35,000 people working in the social sector have recently become unemployed.

At least 6,700 NGOs are affiliated with the Federation. Of these, about 1,500 organizations receive foreign aid. He mentions that some organizations are barely managing to renew their registration and keep themselves alive.

Bhattarai states that 120 large NGOs are registered in Nepal. Of these, only about 70 organizations are currently working actively. He reported that approximately 400 organizations in Nepal were affected by the US administration’s closure of USAID. Furthermore, Bhattarai states that the number of NGOs without projects is increasing as bilateral and multilateral aid ceases.

Nani Maiya Thapa, senior vice-chairperson of the NGO Federation of Nepal, says that there has been an excessive reduction in employment in the NGO sector recently. She says, “The non-governmental sector is not a field of permanent employment. However, it provided a livelihood base for many.

Now, due to donors cutting aid, jobs have been reduced. Friends tell me that some people who were working in the non-governmental sector are rapidly moving abroad.”

According to the NGO Federation of Nepal, approximately 30 to 40 percent of employees have become directly or indirectly unemployed in the last three years.

Khan, program chief of the Samriddhi Foundation in Banke, says, “Almost all organizations are laying off employees. Employees remain as long as the project is active. The job ends when the project concludes.

There is no scope for new appointments.” As projects conclude and the likelihood of new ones is low, people are quickly becoming unemployed.

NGOs have been working on capacity building in areas such as good governance promotion, access to education, women’s empowerment, awareness raising, climate change, food security, nutrition, health, and increasing access for gender minorities. Khan says that when donor support for these areas is cut, Nepal’s internal resources alone cannot sustain social development activities.

Non-governmental organizations (NGOs), which proliferated in Nepal following 1990, are currently entering an era of contraction. Furthermore, the role of these NGOs came under intense scrutiny after the Gen Z protest on September 8 and 9.

Officials of the NFN have publicly voiced their disapproval of this development. Bhattarai, the Chairman of the NFN, maintains that efforts to dismay organizations that mobilize resources from international sources to support crucial work in awareness raising, social assistance, and societal change within Nepal are detrimental and inappropriate.