Improving humanitarian financing
- Page updated on18 de April de 2025
The shortcomings and limitations of the current humanitarian funding mechanisms are becoming more and more evident as the gap between humanitarian needs and the money available to meet them increases. This is why attempts to reform the system are seeking to improve humanitarian funding to make it sufficient, agile and more flexible.
Table of contents:
Funding increases but remains insufficient
Is it a problem of quantity of funds? In part yes, although it is a contentious issue. Over the last decade there has been a progressive increase in humanitarian needs and, although the available funding has also been increasing, it has always been around 60%.
In absolute terms, the gap is widening every year. And possibly even more so if we consider that costs and population have also been increasing. However, there are also those who want to see the glass half full, based on the fact that there has never been as much humanitarian funding as today, and that in the past there have also been times of great humanitarian needs, without us having access or capacity to obtain data of the detail and quality that we have today.
Humanitarian funding is insufficient to meet humanitarian needs and always has been. But simply asking for "more funds" is meaningless if it does not also address problems in the funding mechanisms.
Funding is rigid, fragmented and unevenly distributed.
The architecture of the humanitarian funding system, while it has of course enabled humanitarian assistance to reach millions of vulnerable people, is far from ideal.
The fragmentation of the system is a reality. Each donor country has its own mechanisms, procedures, priorities and deadlines for humanitarian funding. In addition, most calls for funding are for rapid response or have annual cycles, and are tightly bounded for specific priorities, sectors, objectives and actions, defined in projects. In most cases, the percentage of multi-year funding received by humanitarian organizations does not exceed 20% of their total (and is lower for NGOs and national and local actors). This generates a heavy workload for proposal formulation (of which only a portion gets funded) and leaves little flexibility to plan coherent programs to respond to protracted humanitarian crises or adapt a project to a changing reality.
The system also prioritizes direct funding to large humanitarian actors, mainly UN agencies, ahead of international NGOs, and well ahead of national and local actors. In this way, the management and coordination of the other implementing partners is transferred to an intermediary. This gives rise to strong competition among humanitarian actors, who need to obtain project funding to cover a small percentage of indirect costs (overheads). These overheads are necessary to sustain the basic structure of the organizations, to maintain the capacity to identify and formulate new projects, and to be able to continue competing in the next round of funding.
How can improved humanitarian funding be made effective?
The Grand Bargain and its successive updates reflect the prioritization of a number of key ideas, including increased multi-year funding, increased unearmarked funding for specific purposes (not earmarked) and increased direct and quality funding directed to national and local actors.
To achieve effective change, the Grand Bargain recommends that donors increase to at least 30% the proportion of funding that is multi-year. It is also recommended that all other actors develop multi-year strategies, programs and response plans where possible, involve local people more in the design of projects and programs, evidence the positive impact (if any) of multi-year funding on long-term objectives beyond immediate results, and improve communication between actors throughout the implementation period.
Humanitarian actors engaged in the Grand Bargain beyond 2023 have also highlighted the need to improve aid transparency, accountability and traceability. All are requested to report all necessary data on the FTS or IATI platforms.
Finally, it also emphasizes the priority that quality financing should also reach national and local actors, to increase their capacities and leadership, as an essential part of efforts towards localization.
Related blog articles:
Reforms and changes to the system
External links
- Humanitarian Funding Forecast, 2024. Underfunded Crisis Index.
- Humanitarian Funding Forecast, 2023. Humanitarian Recession Index.
- Development initiatives, 2023. Global Humanitarian Assistance Report 2023.
- Grand Bargain Caucus on Quality Funding, 2022. Outcome document.
- IRC, 2021. Focus on the Frontlines: How the Grand Bargain can deliver on its promise to improve humanitarian aid.
- IRC, 2020. A win-win: Multi-year flexible funding is better for people and better value for donors.
- NRC, 2020. Catalogue of quality funding practices to the humanitarian response.
- Stoddard, 2017. Efficiency and inefficiency in humanitarian financing.
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