Amid Shrinking Foreign Aid, Latin America Needs New Approaches to Sustain Responses to Venezuelan Displacement

WASHINGTON, DC — Sharp cuts to U.S. foreign aid starting in early 2025, alongside reductions in the development budgets of other major donors, have reshaped the funding landscape for Latin America's responses to Venezuelan displacement. Countries in the region now need new funding strategies and instruments to sustainably support migrant and refugee inclusion in this more constrained funding environment. Failure to diversify funding sources and secure more stable support risks undermining hard-won gains in migration management and immigrant integration, a new report from the Migration Policy Institute (MPI) contends. 

In The Shifting Financing of Responses to Venezuelan Displacement, the authors map the complex ecosystem that supported the regional response between 2019 and 2024, with a focus on Colombia and Ecuador and drawing on interviews with local and donor governments, civil society, intergovernmental organizations, the private sector and philanthropies. Examining how this ecosystem operated before the overall decline of international aid can help the region prepare for what lies ahead.

The analysis also examines data from the UN Office for the Coordination of Humanitarian Affairs' Financial Tracking Service and publicly available data from multilateral development banks and other financing institutions.

Since mass displacement from Venezuela began in 2015, Latin American countries have made significant, though uneven, progress in supporting and integrating migrants and refugees, relying in part on financial support from the United States and other donors. More than 6.9 million Venezuelans remain in neighboring countries, many of which have become long-term destinations. Yet international support has consistently fallen short of the scale of need, and the withdrawal of the region's largest donor has dramatically changed the foreign aid ecosystem.

The report, from MPI’s Latin America and Caribbean Initiative, finds that donor attention to Venezuelan displacement has remained modest and episodic relative to other major crises. Donors from outside the hemisphere have also engaged in the response to varying degrees, at times shifting attention and resources toward crises perceived geographically or politically closer. Particularly in the early stages of the response, speed often took precedence over strategy, contributing to duplication and missed opportunities for collaboration as new actors entered the regional response.

The analysts examine the uneven and nonlinear transition from humanitarian assistance to longer-term development support. As displacement became protracted, donors and host countries increasingly framed migration as a catalyst for development and called for a shift away from humanitarian aid. Yet new crises prompted donors to reprioritize short-term assistance, while many organizations remained constrained by mandates focused on humanitarian response.

“Humanitarian relief and development assistance should be framed as interdependent rather than sequential. Many contexts require sustained humanitarian infrastructure even as development programs take place,” María Jesús Mora, Diego Chaves-González and Luciana Gandini write.

The report recommends policymakers and other stakeholders consider:

• Clarifying roles and reinforcing government leadership, with donors and operational partners coordinating based on their comparative advantages and host-country governments establishing clear and consistent migration policies and frameworks. 
• Bridging humanitarian and development responses from the outset, recognizing that many contexts require sustained humanitarian infrastructure even as development programs take place. 
• Linking migration strategies to broader development priorities and funding, including by aligning proposals with national development goals and donor priorities. 
• Replicating and scaling promising private-sector-led integration models, including by mapping existing programs, promoting knowledge exchange and building partnerships to scale effective models rather than reinventing similar programs. 
• Investing in innovative financing models that leverage public, private and philanthropic capital to diversify funding pools and reduce dependence on traditional donors. 

The report also highlights the role of local governments and private-sector actors, which have emerged as strategic actors in the response. Local governments have leveraged international collaboration to access resources, secure donor funding and exchange best practices, while private-sector actors have funded, implemented and promoted initiatives supporting the economic inclusion of Venezuelans. Both bring valuable understanding of local realities and community needs, yet their potential has yet to be unlocked. 

Read the report here: www.migrationpolicy.org/publication/financing-responses-venezuelan-displacement.  

For a version of the report in Spanish, click here.

For more from MPI’s Latin America and Caribbean Initiative, visit: www.migrationpolicy.org/initiative/latin-america-and-caribbean-initiative.