By Daniel Hegedüs
The first part of this article recounts the background of the termination of US Government Assistance and its immediate financial consequences for the CSO sector in Central and Eastern Europe.
Since taking office in January, the new US administration has taken unprecedented actions against federal agencies and other congressionally funded public bodies that have for decades provided democracy assistance and civil society support around the world. The United States Agency for International Development (USAID), the State Department’s Bureau of Democracy, Human Rights, and Labor (DRL) and programs coordinated by US embassies, and the National Endowment for Democracy (NED) and its affiliated institutions have been primarily affected.
This piece does not aim to conduct a detailed legal analysis of the suspension and termination processes of foreign assistance programs. However, it is important to note that
the supposedly ninety-day review process announced after the stop-work order on January 24, 2025, was merely a pretext for the de facto mass termination of programs and the firing of federal employees without any fact- or merit-based review.
Rulings from federal courts and even the Supreme Court were disregarded by the administration in an effort to create a fait accompli and dismantle USAID to a degree that would render any sort of legal remedy ineffective.
These actions, which are non-compliant with US federal law and the US Constitution, have also culminated in the suspension of federal payments for already completed work (often including work done in in the fourth quarter of 2024) and even affected organizations not covered by the president’s executive orders, such as NED. This led to mass layoffs and the practical insolvency of numerous US democracy and development aid implementers, creating a void in the civil society support landscape throughout the globe.
The repercussions are severe both in the United States and beyond. While international media, implementers, and policy analysts have actively covered the fallout from the suspension of US development aid to food and health programs in the Global South,
the implications—though not life-threatening—are nonetheless disastrous for democracy assistance and civil society support in the European Union, particularly in Central and Eastern Europe.
Regarding the implications for democracy and civil society in the easternmost Member States of the EU, three distinct forms of negative impact can be identified:
- Immediate financial impact and long-term implications for the financial sustainability of civil society organizations (CSOs)
- Impact on the aid implementer landscape
- Indirect political implications
The US government, including USAID, defines ‘Central Europe’ as comprising the EU Member States of Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia, and Slovenia. While each country in Central Europe has distinct political and social characteristics—including the strength, organizational level, funding landscape, and culture of civil society—the region as a whole has faced common challenges related to democratic backsliding and shrinking civic space over the past decade and a half.
The immediate financial impact of the termination US foreign assistance in Central Europe amounts to $30–35 million annually.
This sum consists of the annual $20 million appropriation by Congress for democracy work in the region as well as its share of thematic congressional appropriations (for example, for women’s rights and LGBTQ+ rights) distributed through the DRL, US embassies, and NED.
The loss of this funding affects individual countries differently. First, US government (USG) funding was not distributed evenly among the eight countries in the region, with Bulgaria, Hungary, and Poland being the main beneficiaries.
The impact varies from country to country, depending on the availability of other external funding sources and the strength of the domestic philanthropic sector. Due to their stronger domestic philanthropic ecosystems—at least in comparison to the rest of Central Europe—, the consequences of the funding cut will be more moderate in Czechia and Poland than in Bulgaria and Hungary, where shrinking civic space and political intimidation negatively affect charitable giving and donor behavior.
Furthermore, due to the unavailability of EEA and Norway Grants in the country,
Hungarian civil society is the most severely affected by these developments.
At the same time, it faces the highest political pressure among all EU Member States.
The termination of US democracy assistance and civil society support to the region is part of a broader downward trend. When USAID relaunched its Central Europe Program in 2022—after an unofficial suspension in 2016—the grants it awarded did not provide additional funding for civil society in Central Europe. Instead, they largely served to offset the financial impact of the Open Society Foundations’ near-total withdrawal from the region.
Most Western countries fund their democracy, civil society, and rule-of-law assistance programs through development aid, which EU member states are not eligible for. This places Central European countries in an unfavorable position compared even to those in the Western Balkans and Eastern Partnership countries, where Western governments can provide democracy assistance and civil society support.
The EU’s Citizens, Equality, Rights and Values Programme (CERV) and the EEA and Norway Grants are the only available external funding sources for civil society in Central Europe. This is despite the significant democratic decline across the region and periods of autocratization in countries like Hungary and Poland.
Given the challenges the EU would face in significantly increasing the budget for CERV and the ongoing refocusing of private donors toward resilience-building in established democracies, Central Europe’s civil society sector does not appear sustainable in its current form and under the latest conditions. Without major changes in the donor environment, civil society funding levels in Central Europe will range between 30% and 70% of its 2022 level, varying according to the characteristics and political developments of individual countries. Hungary is expected to receive the least funding, while Czechia and Poland will be at the higher end of the range.
In the short term, the CSO sector will undergo significant contraction due to budgetary constraints and financial consolidation. Across the region, this will most severely impact fields relating to diversity, equity, and inclusion, such as advocacy for women’s rights, gender equality, and LGBTQI empowerment. Other CSOs at risk include those overly dependent on US funding, either due to their role as aid implementers or their failure to diversify their income sources. This will deal a severe blow to highly renowned and capable organizations throughout the region, most of which have already started laying off employees.
Unfortunately, offsetting the lost funding will be difficult due to well-known constraints.
Crowdfunding can provide partial relief for organizations with a significant public profile, but it is not a game changer for the sector as a whole.
Domestic private philanthropy and corporate donations tend to favor organizations and causes perceived as apolitical, offering only limited support for preserving the watchdog landscape. This was clearly demonstrated by the immediate cessation of Diversity, Equity and Inclusion (DEI) programs and charitable funding across much of the corporate sector following the US government’s policy shift on the issue.
Read the second part here.
Daniel Hegedüs is Research Affiliate at the CEU Democracy Institute and regional director for Central Europe at the German Marshall Fund of the United States.
