As the Trump administration cuts funding and quits several international bodies amid criticism that the UN has failed to advance American interests, the United Nations warns it could face a funding crisis in July.
In a Jan. 28 letter from U.N. Secretary-General António Guterres to ambassadors, he cited record unpaid contributions and rigid budget rules that have left the organization exposed.
Guterres said the UN is trapped in a “Kafkaesque cycle” in which strict budget rules force it to return “unspent” funds, even if those contributions were never paid. He said outstanding contributions reached a record $1.568 billion at the end of 2025 and collections accounted for only 76.7% of assessed contributions, leaving the organization dangerously exposed.
Unless collections “improve dramatically”, the secretary-general warned, the UN will not be able to fully implement its 2026 budget and could face a liquidity crisis by mid-year.
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President Donald Trump (L) meets with United Nations Secretary General António Guterres during the 80th session of the UN General Assembly (UNGA) at United Nations Headquarters on September 23, 2025 in New York City. World leaders gathered for the 80th session of the UNGA, with the theme of this year’s annual global meeting ‘Better Together: 80 Years and More for Peace, Development and Human Rights’. (Chip Somodevilla/Getty Images)
According to the source, key contributors had pushed for efficiency and reform for years, but meaningful action was delayed. When the reforms were eventually introduced, the source said, they were applied broadly rather than through targeted cuts in areas where real savings could be made, harming even UN bodies considered critical to the organization’s mission. “He will go down as the worst secretary general in the history of the UN,” the source said.
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Guterres’ warning comes as the United States, the world’s largest contributor, has cut voluntary funding for several UN programs and refused to make some required payments, exacerbating the cash crunch described in the Secretary General’s letter.
A Security Council meeting on the situation in Sudan, on July 13, 2023, at United Nations Headquarters. (AP Photo/Mary Altaffer, File)
Wider U.S. cuts in foreign aid due to the Trump administration’s foreign policy realignment. In January 2026, the United States formally withdrew from the World Health Organization and began leaving dozens of international bodies, including several UN entities, citing a misalignment with U.S. priorities.
The funding squeeze has already forced the United Nations to cut spending at several agencies. Separate reports from Reuters show that UN bodies including the World Food Program and refugee agencies are preparing layoffs and program cuts as overall contributions fell to their lowest level in a decade.
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United Nations Secretary-General António Guterres speaks about the ceasefire between Israel and Hamas outside the Security Council at United Nations Headquarters in New York City, January 15, 2025. (REUTERS/Eduardo Munoz)
Dugan said the organization has struggled for decades with inconsistent revenue and outdated financial practices, arguing that alarmist messages are unlikely to restore donor confidence without visible internal reforms.
He said Guterres, who has about 11 months left in his job, appears focused on ensuring the institution does not close under his watch.
“The doors will remain open, maybe just, but that’s his legacy,” Dugan said.
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A view of the United Nations Headquarters in New York City, United States on July 16, 2024. (Jakub Porzycki/NurPhoto via Getty Images)
Asked about President Trump’s recently announced peace council, Dugan said it should not be seen as a competitor to the United Nations or as a replacement for the charter-based system.
“I don’t see it as a replacement for the principles of the UN,” he said, describing the initiative as operational rather than ideological.
Dugan compared it to previous efforts such as the Clinton Global Initiative, saying it focuses on deal-making and coordination rather than replacing the international order.
US President Donald Trump during the United Nations General Assembly (UNGA) in New York, US, on Tuesday, September 23, 2025. (David Dee Delgado/Bloomberg via Getty Images)
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Despite mounting criticism of its performance and finances, Dugan said the UN still has an enduring advantage.
Referring to the annual debate in the UN General Assembly, Dugan said: “When the UN convenes a meeting today, it is routine to have more than a hundred heads of state in the room,” he said. “The power to assemble is no small feat.”
