The Treasury Department has frozen funding disbursements to the National Endowment for Democracy, a U.S.-government funded organization that promotes democracy around the world and is a longtime bugbear of the Chinese Communist Party.

The freeze has imperiled several China-related civil society groups, including think tanks and organizations that have long played a role in highlighting labor and human rights issues in China, as well as disseminating independent news about the country. Three recipients of NED funding told The Wire they received calls from NED representatives on Tuesday relaying that it had suspended payments to them because its own funding had been frozen. News of the funding blockage was first reported by The Free Press.

Two people told The Wire that the problem stems from Treasury’s payments system, which disburses money approved by Congress. Staffers from Elon Musk’s Department of Government Efficient (DOGE) gained access to the system last week. 

On his first day in office, President Donald Trump signed an executive order that suspends foreign aid for 90 days — an order that froze foreign aid distributed by the State Department and all but gutted the United States Agency for International Development (USAID). 

But according to a person familiar with the NED’s finances, NED’s funding should fall outside of the executive order’s purview. Only a small portion of NED’s budget come directly from the State Department’s foreign assistance funding, all of which was halted last week, the insider says. The vast majority comes — via the Treasury payments system — from the portion of the State Department’s budget allocated to internal operations and related agencies. It is unclear why the funding was cut off.

In a document NED shared with its funding recipients on Wednesday, a senior grants manager wrote that the organization has “no clarity on how long this might last.”

“While not technically suspended,” the document says, “the NED has exhausted funds for grantmaking on hand, and we do not know when we will have access to additional funds.”

The Treasury Department did not respond to a request for comment. DOGE could not be reached for comment. 

A lot of dissidents and activists don’t want to make it public but have received money from NED. It is unlikely that most of the organizations can get alternative funding.

Teng Biao, a prominent U.S.-based Chinese human rights lawyer

Advocacy groups say cutting off NED, which was allocated $315 million by Congress for the 2025 fiscal year, will make it harder to get information about what’s happening in China. It would also be a major victory for Beijing, which has publicly expressed its derision towards NED for decades, including imposing sanctions on its officials in 2020.

“The impact will be hugely negative,” says Teng Biao, a prominent Chinese human rights lawyer now based in the United States. “A lot of dissidents and activists don’t want to make it public but have received money from NED. It is unlikely that most of the organizations can get alternative funding.”

Last week Elon Musk reposted a list of “red flags” about NED “corruption” on X that seemingly came from Grok, Musk’s AI chatbot. The list included that NED’s staff and leadership were predominantly Democrats, that it “manipulates public opinion by funding media outlets and NGOs that promote narratives favorable to U.S. interests,” and that Russia had labeled NED an “undesirable” organization. Musk himself wrote that “NED is a SCAM.” 

Also last week, a conservative think tank founded by Russell Vought, the recently confirmed director of the White House’s Office of Management and Budget, released a paper accusing NED of a number of violations, including that it “abandoned” its bipartisan approach “in an overt effort to stop and then stymie President Trump” and funnelled grant money to “entities that promulgate the established ideological consensus within the State Department and CIA.”

The latter claim echoes longtime accusations made by the Chinese government, which for years has said NED is a front for the CIA and responsible for meddling and fomenting unrest in China. A lengthy report by China’s Ministry of Foreign Affairs last year accused it of committing “innumerable evil deeds.” In 2020, Beijing sanctioned four people affiliated with NED and an affiliate group, the National Democratic Institute, accusing it of destabilizing Hong Kong. 

Maya Wang, associate China director at Human Rights Watch, which does not receive government or NED funding, calls such accusations bogus. The type of organizations that NED supports are vilified by the Chinese government, she says, but “what they do is really what would be fairly common civil society work in a normal society, such as writing a report about the situation of human rights lawyers [or] funding a court case in which the defendant is subjected to torture and wrongful conviction.”

NED has historically enjoyed bipartisan support in Washington, including from many in Trump’s circle. Robert O’Brien, who served as Trump’s national security advisor from 2019 to 2021 and rejoined the administration on the President’s Intelligence Advisory Board on Tuesday, was elected to NED’s board just last month. Elise Stefanik, Trump’s nominee for ambassador to the U.N., also previously served on NED’s board. Before he was nominated as secretary of state, Marco Rubio was on the board of the International Republican Institute, an NED subsidiary organization. Four Republican senators — Senators Tom Cotton (R-AR), an outspoken China hawk, as well as Joni Ernst (R-IA), Lindsey Graham (R-SC) and Dan Sullivan (R-AK) — are also on the board of IRI. 

Chinese rights and advocacy groups have grown increasingly dependent on NED and U.S. government funding in part due to China’s stranglehold on civil society and growing influence abroad, says Human Rights Watch’s Wang. 

“China’s economic power means big donors anywhere in the world worry about the impact of their donations on their business ties,” she says. “Since China is no longer a developing country, other governments that offer development aid won’t give to Chinese civil society. The U.S. disproportionately donates to democracy and human rights groups more than other governments.”

One casualty already from NED’s funding freeze is China Labor Watch, a New York-based labor rights organization that has exposed abuses at countless factories in China, including Apple suppliers, and Chinese-run factories in countries involved in the Belt and Road Initiative. 

Li Qiang, who fled China and founded CLW in 2001, told The Wire that the organization had grown more dependent on U.S. government funding in the last three years after the Biden administration’s State Department expanded grants to his organization. With less than a month of operating runway at a given time, the 90-day suspension of foreign aid had left him no choice but to drastically cut costs, he said. News on Tuesday that NED was also freezing its assistance has only deepened CLW’s financial troubles. 

China Digital Times, an online news site that has received NED support since 2013, is also at risk. The site has long managed a repository of leaked Chinese government censorship directives and helped to amplify dissenting voices on the Chinese internet, serving as a vital source of information about China for researchers and governments. Just last week, the Canadian government said it used CDT’s research to identify a Chinese state-sponsored disinformation campaign targeting ex-deputy prime minister Chrystia Freeland, who is running to replace Justin Trudeau as prime minister. 

For CLW’s Li, Musk’s politicization of NED has an eerie familiarity. He sees DOGE’s hunt for fraud and waste as reminiscent of “the type of anti-corruption campaign in China where whoever stands up against [the government] gets audited or branded as corrupt.” 

“I left China precisely to escape from this kind of state-sanctioned repression of activism and civil society,” he says. “Now the U.S. is doing similar things. If people don’t stand up, then why don’t I just go back to China?”

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