Humanitarian financing mechanisms
- Page updated on18 de April de 2025
Humanitarian funding always falls short of meeting all the needs that exist. Even in the years when it increases the most (e.g. 2022), it rarely increases at the rate that conflicts, natural disasters or displaced populations increase. However, it is not just about seeing the glass half full or half empty, but understanding how humanitarian funding mechanisms work and what could be done differently or better. How humanitarian action is funded (where it comes from, where it goes, and how it gets there) will determine, to a large extent, what can be done and how it can be done, as well as the ethical dilemmas that must be faced.
Table of contents:
Volume and origin of humanitarian funding
What volume are we talking about?
It is very difficult to have a good estimate of all available humanitarian funding, since there is no obligation to report it systematically. There are, however, OCHA or OECD platforms, or initiatives such as International Aid Transparency. Thanks to these efforts to improve the information available on humanitarian funding we know that the annual volume of humanitarian funding is estimated at around US$30 billion.
However, the amount varies from year to year. In 2022, for example, coinciding with the deterioration of the crises in Ukraine, Afghanistan and East Africa, it increased to over $40 billion. In the immediately preceding years, however, the funds were between $20 billion and $25 billion.
Most of the funding comes from donor countries.
80% of all humanitarian funding comes from governments and public institutions. Within this block there is great disparity among donors and small variations from year to year. In 2023, of all public funding for humanitarian emergency response, the United States contributed around 37.5%. They were followed at a good distance by Germany (10.8%), the European Commission (8.6%), and other donor countries such as Japan, Saudi Arabia, Sweden, Norway or the United Kingdom (between 3% and 4%). In the same year, Spain contributed US$132 million (approximately 0.4%).
Only 20% of the economic resources destined to humanitarian action come from private donors This block includes companies, foundations or individuals like you and me.
OCHA also manages financial funds for humanitarian response.
A relatively small portion of crisis and emergency response funding is managed by OCHA at the global, regional or country level. These humanitarian funding mechanisms include the UN's Central Emergency Response Fund (CERF) and Country Based Pooled Funds (CBPF).
CERF: Central Emergency Response Fund
The United Nations Central Emergency Response Fund (CERF) was established in 1991 and enhanced in 2005. It is a global fund managed by the Emergency Relief Coordinator (ERC), in order to respond rapidly to acute humanitarian crises or to help finance humanitarian response in emergencies that have not received sufficient funding through other channels.
Initially set at US$50 million per year, the fund's ambition has progressively grown to a target of US$1 billion per year today. However, it is financed by voluntary contributions from donor countries and usually reaches an annual volume of between $500 million and $800 million. CERF can only directly fund UN Agencies, although these can then subcontract international and national NGOs as implementing partners. It is estimated that, in 2021, 18% of CERF ended up reaching national and local NGOs.
The CBPF: Country-Based Pooled Funds
The Country-Based Pooled Funds (CBPF) are established in the different countries when new humanitarian emergencies occur or existing ones deteriorate. They are managed by the Humanitarian Coordinator (HC) of the country, are funded by voluntary contributions from unrestricted donors (they are not earmarked) and are used to finance actions of the country's Humanitarian Response Plan, or to respond to unforeseen emergencies.
In 2023, CBPFs were established in 16 countries, with a combined total volume of $1.16 billion. CBPFs can finance local NGOs directly, without intermediaries. In fact, around 30% of all CBPFs' funds in 2023 have directly financed local NGOs.
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Countries and organizations receiving humanitarian funding
These funds reach many different countries...
In recent years, although the countries in crisis and humanitarian responses have been changing, humanitarian funding has been directed to more than 150 countries.
Major donors usually choose the countries to which they allocate almost all of their funding. Some countries, however, also devote a small portion to financing global and regional funds, coordinated by UN agencies and other humanitarian organizations. Countries such as Japan and Sweden allocate between 30% and 50% of their funding to such funds.
Complex and protracted humanitarian emergencies tend to receive the most funding. The ten largest humanitarian responses, each year, receive approximately 60% of all humanitarian funding. In 2023, the humanitarian crises receiving the most were Ukraine ($2.2 billion), Syria ($1.8 billion), Yemen ($1.6 billion), Ethiopia ($1.3 billion), Afghanistan ($1.3 billion), and Somalia ($1.1 billion).
Donor countries may also decide to finance the Humanitarian Response Plans of each country, or independent interventions external to these plans. In fact, in general, financial contributions are not usually sufficient to implement the actions prioritized in these plans. Of the major humanitarian emergencies, only Ukraine had funding that exceeded half of what was required (56%). Ethiopia and Syria barely reached 33%. Crises such as those in Honduras or Mozambique barely reached 15% and 16%.
...through numerous organizations
Taking 2023 data as a reference we can see that humanitarian funding is distributed among very many humanitarian organizations of different types.
It is estimated that more than 60% of the funding goes directly to a United Nations Agency. In fact, the three humanitarian organizations that received the most funding in 2023 were the World Food Program ($8.174 billion), UNHCR ($3.774 billion) and UNICEF ($3.208 billion). These agencies, however, channeled many of these resources through international and national organizations, which acted as implementing partners.
The remaining 39% of funding went directly to an international organization. The International Committee of the Red Cross received $1.768 billion, while the International Federation of Red Cross and Red Crescent Societies received $604 million. Many National Societies also received significant contributions. A few international NGOs such as Norwegian Refugee Council, Save the Children or International Rescue Committee received more than $300 million. Others such as Danish Refugee Council, Action Against Hunger, CARE international, Deutsche Welthungerhilfe, Mercy Corps and World Vision received between $100 million and $250 million. Most international NGOs, however, received much smaller contributions.
Only 1% went directly to local or national NGOs. Most of the funding that local NGOs received came through contracts with international organizations.
Humanitarian funds finance projects and indirect costs
Between 80% and 90% funding is restricted to be used in a specific way (earmarked). This, in practice, means that they can only fund actions of a specific project. Only a small percentage of humanitarian funding gives sufficient flexibility to adapt its use with agility, within a general framework of intervention.
Because of this, humanitarian funding mechanisms determine, in large part, how the project cycle works. To be eligible for funding, humanitarian organizations must assess the needs of the population, identify the actions that are required to address them, and reflect them in an intervention framework. Once funding has been requested and received, they must use it for what they had indicated and justify it with reports.
In any case, these funds do not only cover the direct costs of interventions. Most humanitarian funding mechanisms allow a small percentage of the budget to cover indirect costs (overheads). Organizations need these overheads to cover structural costs, cope with risks or unexpected expenses, or prepare to respond to potential crises. The percentage allocated to these indirect costs is normally around 5-10%, although it depends on each organization and the agreements it reaches with donors.
In many cases, the organization that receives the funding directly (and is responsible for using it appropriately and justifying its use with reports) works with other actors who act as implementing partners. In these cases, the funding of their indirect costs is negotiated between the two parties. Depending on what they agree, implementing partners may receive additional contributions to cover their indirect costs, share the amount that is available with the main partner, or receive only direct cost funding. This largely conditions the level of autonomy that local organizations manage to develop.
Humanitarian system
External links
- OCHA. Financial Tracking Service.
- Development initiatives, 2023. Global Humanitarian Assistance Report 2023.
- OCHA, 2023. Global Humanitarian Overview 2024.
- IASC, 2022. Overhead cost allocation in the humanitarian sector.
- ICVA, 2021. Demystifying humanitarian financing.
- OCHA. Country-Based Pooled Funds.
- United Nations. Central Emergency Response Fund.
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