Financing humanitarian aid remains a major challenge. Governments have the primary responsibility to prepare for, respond to, and support recovery from crises in their own territories. However, many humanitarian and major prolonged crises take place in countries where domestic capacity and revenue sources cannot meet the scale of needs. International humanitarian assistance and development aid is therefore essential for alleviating suffering and addressing the longer-term developmental needs often underpinning and exacerbating crises.
The humanitarian system and its financing are under immense pressure from ongoing crises affecting over 200 million people in Syria, Yemen, South Sudan, Nigeria, and beyond. The gap between needs and funding continues to grow even while traditional donors–governments, foundations, and private funders–increase their grant funding to traditional emergency responders such as the United Nations (UN), the Red Cross Movement, and non-governmental organizations (NGOs). The global humanitarian assistance budget keeps increasing and yet there is never enough “humanitarian money.” There are more crises, they are lasting longer, and humanitarian aid is covering more aspects than it ever has before (Development Initiatives 2018).
The World Humanitarian Summit in 2016 put the financing gap on the global agenda with the Report to the UN Secretary General from the High-Level Panel on Humanitarian Financing (2016). The gap still remains a major challenge. UN-coordinated appeals are central to a humanitarian response. Total funding received by UN-coordinated appeals increased by USD 2.4 billion to USD 14.9 billion, the largest volume of funding ever received. Despite this increase, there was a funding shortfall of more than USD 10 billion against appeal requirements, the largest shortfall ever.
The biggest contributors of humanitarian aid to developing countries are also the main providers of development assistance reporting to the OECD’s Development Assistance Committee. All funding for humanitarian aid is allocated from the aid budgets of these donor countries. Over the last decade (2007–2016), official humanitarian assistance has grown at three times the rate of official development aid. It has risen by 124 percent, from USD 8.7 billion to USD 19.5 billion, while overall development aid has grown by 41 percent, from USD 119 billion to USD 167 billion ( OECD 2017).
There is a growing realization that there will never be enough quality money to fund responses to humanitarian crises. The growing gap between demand and supply has led to an emphasis on the failures to adapt the humanitarian system, and what has been called a dysfunctional and inefficient financing architecture (Scott 2015).
Several key issues and challenges are emerging in this debate. One is to improve the predictability of funding. This should include more systematic multiannual funding commitments from donors. There is also a need to expand the financing pool for protracted crises. The various post-2015 processes provide many opportunities for improving coherence between humanitarian and development actors working in longer-term crises.
Crises in middle-income countries pose a special financing challenge, and the solution requires a paradigm shift about how to approach crises in these countries. Financing to meet crises in middle-income countries is a growing and complex problem: 53 percent of all humanitarian funds requested in 2015 were for crises in these countries, and there was limited access to anything other than dedicated humanitarian budgets. Finally, there is a pressing need for the money to effectively reach those in need, and to increase the value for money of humanitarian programming. Delivery of humanitarian aid needs to become more cost effective. The cost of delivering humanitarian aid varies greatly between different countries and institutions. This is exaggerated by tied aid and the use of Northern resources and institutions in the delivery of much humanitarian aid. Likewise, the prevalence of corruption also increases costs.
Beyond current reform efforts to make humanitarian crisis funding faster, more consistent, and more effective, there is a sense that donors need to move from grant-making to using a wider range of financial tools–and private finance has a part to play in new partnerships where grant funding can leverage investment finance (Willitts-King 2019).
There is also an appetite among traditional donors and foundations to explore different uses of grant funding to attract greater capital input from investors. New partnerships and financial instruments from across the philanthropic–commercial spectrum could be used to address the challenges facing humanitarian financing. This has become known as innovative financing, and it opens up opportunities but also includes challenges, such as the potential conflict of interest for private corporations involved in the delivery of humanitarian aid.
References
Development Initiatives (2018) Global Humanitarian Assistance Report 2018. http://devinit.org/.
High-Level Panel on Humanitarian Financing (2016) Too Important to Fail. Addressing the Humanitarian Financing Gap. Report to the Secretary-General. https://reliefweb.int.
OECD (Organisation for Economic Co-operation and Development) (2017) Increased Effectiveness in Humanitarian Contexts. World Humanitarian Summit. Putting Policy into Practice, The Commitments into Action Series, http://www.oecd.org.