A U.S. government venture capital fund supporting efforts to end extreme poverty will stop accepting new grant applications tonight.
Friday’s announcement puts a hold on a program that provides seed funding for innovative initiatives like developing low-cost smart tractors in Nigeria and running a peer support group for pregnant women in Nepal.
Development Innovation Ventures (DIV) chief Anne Healy emailed grant recipients earlier this week that applications for funding will close at 11:59 p.m. tonight.
“We will temporarily suspend the DIV application window due to shifting resource constraints,” Healy wrote.
“This means we will no longer be accepting applications for new awards. We hope this will be temporary.”
U.S. Rep. Joaquin Castro, D-Texas, criticized the decision, blaming proposed budget cuts by the White House for the temporary suspension.
“A highly-successful USAID public-private partnership model is on the chopping block,” he told NPR. “Development Innovation Ventures helps find solutions to the world’s most pressing, complex development challenges. Eliminating its funding would be a tremendous setback to communities around the world.”
DIV is a part of the U.S. Global Development Lab, a program at the U.S. Agency for International Development (USAID). Since its founding in 2010, DIV has made nearly 170 awards for more than $90 million in more than 40 countries. Award recipients include NGOs, businesses, research groups and universities.
“This is a program that is important for us to continue in order to deploy foreign aid effectively and reach as many people as possible,” Ann Mei Chang, the former chief innovation officer at the U.S. Global Development Lab, told NPR. Chang is now a consultant.
“Hopefully, this will be a wake-up call for people during the budget process who want to allocate money to programs that are low-cost and have a big impact,” Chang said.
A USAID spokesman noted that “the temporary closure of the application window does not mean a closure of the DIV program. Every effort will be made to limit disruption to existing awardees of a DIV grant.”
There is no indication when the grants will reopen.
Chang believes the decision is the result of uncertainty about the U.S. foreign aid budget. A budget proposal by President Donald Trump for next year seeks to cut the foreign affairs budget by 32 percent — most coming from foreign aid and diplomacy. Republicans in Congress made clear that they will not enact the significant cuts, but it is unknown whether they will opt for modest reductions to the foreign aid budget.
A bipartisan bill co-sponsored by Castro and Rep. Michael McCaul, R-Texas, sought to protect Global Development Lab funding through fiscal year 2021. Both congressmen have praised the lab. According to a USAID spokesman, “the 170 breakthrough innovations” funded by DIV “have reached 13 million people in poverty and resulted in $5 in additional funding from outside investors for every tax dollar spend.
“The Global Development Lab has been critical to the U.S. development effort to help mitigate the effects of food shortages, conflict and other economic hardships abroad,” said McCaul in September 2016.
“By fostering public-private partnerships, and fusing together science, technology and innovation, the Lab has been able to produce cost-efficient, transformational breakthroughs that have improved the lives of millions in impoverished countries.”
The co-sponsors applauded Congress for passing the bill last fall. The bill is now waiting for the approval of the Senate Foreign Relations Committee before moving to a vote in the Senate.
DIV works in a similar manner to the way venture funds operate in the private sector. Money is made available at all stages of a company’s development to help it grow and succeed. Funded programs are monitored closely to determine whether they work and if they can scale up.
Groups are eligible for money ranging from $100,000 seed grants for new ideas to $5 million multiyear grants to expand innovations that already work.
In a recent round of DIV funding, more than $6 million was awarded to 12 organizations in October 2016.
Programs ranged from a pilot by the international charity CARE to use “a nanotechnology device and solar radiation to improve the quality of drinking water in lower Amazonian rural populations” in Peru to a mass media campaign by Development Media International to increase contraceptive use in Burkina Faso.
Such funding is “crucial,” Stephanie Hanson, senior vice president for policy and partnerships at One Acre Fund, said to NPR.
The nongovernment organization helps farmers obtain quality seed and fertilizer. It’s using DIV funding over the next three years to grow its programs in Uganda and Malawi. The goal is to expand the reach from 5,000 smallholder farmers to 35,000 farmers.
The USAID grant “was transformative for our work,” she said.
Tom Murphy is a journalist focused on foreign aid and development. His work has appeared in Foreign Policy, GlobalPost, Humanosphere and the Guardian. Tweet him @viewfromthecave.