The International Rescue Committee will make far-reaching staff cuts, in the wake of a surprise budget shortfall that has spurred months of cost-cutting and sparked anger among the NGO’s workforce.
“I am very sorry to say that departmental budgets for [fiscal year 2025] will involve quite significant reductions in levels of unrestricted funding,” David Miliband, IRC’s president and CEO, wrote in a 5 August email to staff obtained by The New Humanitarian. “All departments will be affected.”
Some 10% of staff roles funded by unrestricted revenue will be affected, Miliband wrote.
But the number of people this impacts is unclear. IRC’s budget woes hinge on shortfalls to its unrestricted revenue, which makes up between 20% and 25% of the NGO’s target $1.5 billion budget. The bulk of IRC funding comes from restricted funding, which donors tend to earmark for specific programmes or themes.
News of the cuts was met with outrage by IRC staff who spoke to The New Humanitarian. They accused the leadership of negligence, and of keeping most staff in the dark through the process.
“It seems like staff have been finding out things through other colleagues rather than an informed approach through leadership,” said one staff member, who asked not to be named in order to speak freely. “Generally, there’s a lot of distrust in this leadership. And this is further fuelling it.”
Others say that deficit-related cuts have been happening for months.
Among staff, critics point to high salaries of the IRC leadership team (Miliband’s annual salary topped $1.25 million in 2022, according to US tax filings). And they say IRC has been far too focused on unrealistic growth and expansion, without adequately planning for the contraction in public funding that donors (and other aid groups) have long warned about.
Wrapped up in the critiques are continuing internal tensions over IRC’s stance on Israel’s destruction of Gaza – seen by many staff as too passive and now silent, rather than taking a stand.
In an emailed response to questions – sent in recent days by The New Humanitarian – about the financial situation and staff cuts, the IRC did not elaborate on the number of people affected.
“Like every organisation in the humanitarian sector, we face some rapidly rising costs, not just in our international programs but also in the US where refugees face high and rising rents just like the rest of the population,” read the statement, which was not attributed to a named person. “We are determined not to compromise on the quality or scale of our programs, and so continue to develop a deficit reduction plan that protects both.”
Ballooning deficit and pay cuts
IRC began the year with an unexpectedly large budget shortfall to its unrestricted funding. This was driven by a mix of rising costs, lower-than-expected revenue from private fundraising, and poor budgeting and forecasting practices, according to internal correspondence and briefings shared with The New Humanitarian.
Miliband partially addressed this latter point in his letter to staff this week: “Some causes of the deficit are within our control. Notably, some of IRC’s systems have not kept pace as we have doubled in size in the last five years.”
IRC leaders say they learned in January that the organisation had closed its 2023 fiscal year, which ended at the end of September, “with a larger deficit than we had anticipated”, Miliband wrote in a March email to senior leaders and other staff, which was shared with The New Humanitarian.
This deficit turned out to be around $14 million*, IRC says. Its annual report for 2023 was publicly released around 31 May.
What had been a “planned deficit” of $23 million at the start of the 2024 fiscal year ballooned to at least $50 million by May, IRC’s acting finance chief, Martin Bratt, told staff in a briefing that month. A recording was shared with The New Humanitarian.
This represented a “substantial” share of IRC’s unrestricted revenue, Bratt said.
The shortfall – and fears for larger problems ahead in the coming fiscal year – spurred months of re-forecasting, and a “strategic resource allocation” project that led to the announcement of this week’s staff cuts.
Before this, the measures to slash costs include hiring “pauses” and new guidelines to reduce travel. There were also temporary pay cuts for high-earners: 10% for people earning $200,000 a year, and 15% for senior leaders, according to a May email that Bratt sent to senior leaders, and that was also seen by The New Humanitarian. These pay cuts were to last four months, ending in October (the start of the 2025 fiscal year).
Mega-crises and aid expansion
IRC’s money troubles shed light on fundraising practices behind the scenes at a major aid organisation.
The biggest global aid outfits often rely on emergencies that draw media headlines and massive public interest – Ukraine, for example, or the Taliban’s return to power in Afghanistan – to raise funds and grow. In his March email to senior leaders and other staff, Miliband alluded to this awkward reality – and the supposed absence of such a crisis – as a contributor to IRC’s deficit.
“There have been headwinds facing private fundraising and meanwhile no humanitarian emergency that has significantly buoyed our unrestricted income since the Russian invasion of Ukraine,” he wrote.
The budget woes also reflect broader unanswered questions across the humanitarian sector as aid groups navigate a grim funding landscape alongside spiralling polycrises.
Groups like IRC have been locked in a cycle of growth, driven in recent years by these so-called mega-crises and donor largesse through the COVID-19 pandemic.
IRC’s annual revenue jumped from less than $800 million in 2019 to $1.4 billion in 2022 – the peak year for humanitarian funding.
As aid funding tightens, the IRC and other organisations are restructuring. But in practice, their budgeting suggests that aid organisations are still banking on donor funding coming through one way or another.
In its statement, the IRC says it’s projecting “sustained annual income” north of $1.5 billion – which would be more than what it made at the height of the pandemic.
“IRC’s annual revenues continue to grow,” the statement said.
Edited by Andrew Gully.
(* This figure was updated on 8 August 2024. IRC says this represents the true deficit for the fiscal year. An earlier figure showed a larger gap, which was due to accounting methods for recording the spending of funds that were earned in previous fiscal years.)
