The Freeze on Foreign Aid Has Major Consequences for the U.S. Credit Union System

You have likely seen in the last 48 hours the now shuttered offices of the U.S. Agency for International Development (USAID), an independent federal agency authorized and funded by Congress, and news of U.S. Secretary of State Marco Rubio’s subsequent declaration that he is now USAID’s acting administrator.

But for World Council of Credit Unions (WOCCU) and the U.S. credit union system’s connection to the wider global credit union movement, the gravity of what’s been taking place with the near blanket freeze on all foreign aid has been hitting home for well over a week.

Just days after the U.S. State Department announced a 90-day stop-work order for all USAID-funded projects, WOCCU received specific stop-work orders for the three projects we implement on behalf of USAID through credit unions in eight countries.

As a result, WOCCU has suspended work on:   

The USAID GROW Program in Ukraine. A program that serves entrepreneurs, micro, medium and small enterprises (MSMEs), cooperatives and farmers in the rural areas of Ukraine. GROW provides critical liquidity funds for credit unions during the high agricultural season. The ripple effects of the freeze extend far beyond Ukraine’s borders as the country is central to the global food chain.

The USAID Economic Program in Peru and Ecuador. An initiative that stimulates credit union lending and savings to Venezuelan migrants and refugees and allows them to integrate into their local economies, thereby stemming their migration to the U.S. For example, Venezuelan migrants enrolled in the project are earning more than double compared to their Venezuelan peers not enrolled in the project, with young Venezuelan adults earning four times as much. Based on a 2024 study, more than 95% of EIP’s Venezuelan migrant and refugee beneficiaries wish to remain in their host country and have established roots in their new communities.

The USAID Cooperative Development Program in Burkina Faso, Guatemala, Kenya and Senegal. A project that advances the ability of credit unions to provide value to their members, create jobs and contribute to the economy through increased financing to entrepreneurs and small and medium enterprises (SMEs). WOCCU’s partner cooperative institutions provide 100% of the loan capital for targeted businesses, financing critical sectors including agriculture, transportation, hospitality and commerce. Growth in these industries fosters job creation, economic stability, a more attractive investment environment and U.S. trade. With less than $10 million in U.S. Government funds, WOCCU has leveraged $2 million in private sector funding and will unleash $142 million in additional investment (loans) through credit unions.

All WOCCU’s and its local partners’ funding was obligated money, meaning it was already approved by Congress and committed to the organization.

Now, you may be asking yourself, why would any of this impact my credit union?

The Risks for U.S. Credit Unions

Simply put, if WOCCU is no longer able to strengthen the global credit union system with the help of U.S. Government funding, the U.S. credit union system will never be quite the same.

For over four decades, WOCCU’s international project work has strengthened the overall credit union system and supports stronger regulatory frameworks worldwide. The strength of our international system and the global impact data on an aggregate basis directly helps WOCCU advocate in front of international standard setters for proportional regulations, including those that will carry over to the U.S.

Many American credit unions have engaged in cross-border partnerships with emerging credit unions abroad, facilitating the expansion of member products and services, financial access initiatives and sharing best practices. Perhaps the most important of these is the shared cooperative values that are at risk – something that concerns us all.

U.S. credit unions are globally recognized as leaders in ethical banking, financial access and community-based finance. Members of our global credit union movement have looked to the U.S. system for leadership, given its size and position as the largest system in the world. In fact, many of these credit unions were created by U.S. credit union champions many decades ago, and the goodwill and solidarity of credit unions helping credit unions is being tested.

Regulatory agencies, including the NCUA, have increasingly emphasized financial access initiatives –but if international projects falter, this could reflect negatively on the broader credit union movement.

The WOCCU team and credit unions from the U.S. system are working hard to preserve the important impact credit unions have worldwide.

Next Steps

We are actively engaging with lawmakers, including key members of the U.S. House of Representatives and Senate. With the support of industry group representatives, we are urging Congress to protect financial assistance programs like those implemented by WOCCU, which has proven data to show the solid return for American taxpayers and benefits for both the developing world and the American people.

Now is an important moment for U.S. credit unions to inform their board of directors and members about the strategic importance of credit union development efforts worldwide and why U.S. leadership and funding support is crucial.

The potential termination of WOCCU-led international credit union development projects is a direct threat to the American credit union system, its leadership position and the cooperative values it upholds. Now is the time for industry leaders to speak out, engage policymakers and defend the role of credit unions in the global financial system.