Where Does the Money Actually Go?
In 2023, countries provided $223.3 billion in official development assistance (ODA), representing an all-time high since aid statistics were first collected in 1960.
Despite these seemingly high numbers, ODA frequently falls short of expectations, often failing to rally sufficient funds from contributing countries or distributing funds in ways that do not meet the needs of those working at the local level.
Added to these challenges are potential increases in funding shortages, with some studies suggesting there could be a 31% reduction to ODA between 2024-2029. In order to build a more inclusive, equitable, and sustainable world by 2100, one that truly meets the needs of next and future generations, it is crucial to understand, analyze and rethink these global financial flows.
The Basics of ODA
Official development assistance (ODA) is government aid that promotes development and wellbeing in developing countries.
ODA flows from the 32 members of the Development Assistance Committee (DAC), including places like the USA, European Union, and Japan, to countries identified as low or middle income countries based on their gross national income.
To ensure sufficient funds, the UN General Assembly asks DAC committee members to spend at least .07% of their gross national income on ODA – an amount that only five countries are currently hitting. ODA is a crucial component of sustainable development, supporting countries in advancing work ranging from climate adaptation to gender equity to conflict prevention. These initiatives are especially essential for young countries, where over 50% of the population is under 30, who are particularly vulnerable to climate risks and healthcare challenges.
A Challenging ODA Environment for Young People and Young Countries
When the data above is compared with statistics from the United Nations Department of Economic and Social Affairs, Population Division, five out of the top ten ODA recipient countries are some of today’s youngest ones.
Despite this, many young countries do not receive the ODA needed to invest appropriately in current and future generations. The key trends below are posing challenges for young people and young countries, and impacting our ability to create a more equitable future.
Funding Commitments Are Failing to Match Needs
According to the World Bank, an estimated $2.4 trillion is needed per year for developing countries to properly tackle conflict, climate change, and pandemics in the years leading to 2030. When compared to the $223.3 billion provided in ODA, the available funds simply do not fit the needs.
When broken down further by issue, the resources currently available for sustainable development are further shrinking. In 2021, only 11% of ODA went to projects with climate as a principal objective, a 16% decrease from the year before, and in 2022, only 7.6% of ODA was allocated for education, down from 9.3% in 2019.
As these ODA numbers shrink, DAC member countries have continued to raise military spending, totaling their combined military expenditures to $1.36 trillion in 2024. As countries prioritize defense budgets over development, they put the opportunities for a safer, more sustainable, and more inclusive world at risk.
Grants are Smaller and More Fragmented
While recent years have shown an increase in the amount in real dollars spent on ODA, the average size of distributed grants were reduced greatly. As SDG Action highlights, “Between 2000 and 2021, the average size of ODA grants shrank from USD 1.7 million to USD 0.76 million, a reduction of 230%. A larger number of smaller aid projects magnify the transaction and coordination costs of recipient countries, which disproportionally affect developing countries with lower income levels and weak institutional capacity.”
This fragmentation has an even greater impact on youth-led organizations, who already face challenges when working to scale and sustaining their projects.
Children and Young People Lack Support
Research from World Vision showed that between 2017-2021, only 5% of all ODA targets child-specific interventions, and only 7% went toward child-benefiting interventions. This total equates to less than one penny of ODA per person – a significant under investment in this population.
Similarly, a study from Women Deliver showed that less than 6% of total ODA from the top ten gender equality donors went to assistance programs with gender equality goals that were also focused on young people in 2020. The research also pointed to qualitative evidence that shows only a small percentage of ODA funding goes directly to young people, but the overall lack of data remains a significant challenge for advocates working to call out and address this under investment. These gaps in funding are particularly impactful now, when 72% of young people reported a decrease in their funding to Restless Development in 2022.
Reshaping the Financial Flows
As many young countries, especially developing countries in Africa and Asia, are expected to experience large population increases by 2100, there is an even greater need to support ODA funding that addresses the gaps outlined above.
Promoting ODA that is bolder, more coordinated, and accountable to the needs of young people and young countries is essential for sustainable development, ensuring the groundwork is set now to meet the potential of current and future generations.
When young people today constitute half of the world’s population, ODA cannot afford investments that ignore their needs, ideas, and partnership.
Built with Shorthand