Navigating Humanitarian Impact Finance

A first mapping of the humanitarian impact finance continuum to identify different sources of funding for each respective actor and thereby lower the barrier for innovation and successful implementation.

The humanitarian system and its financing are under immense pressure from ongoing crises affecting more than 339 million people in Ukraine, Gaza, Ethiopia, Syria, Yemen, South Sudan, and beyond. While traditional donors – governments, foundations, and private funders – have increased grant funding to emergency responders such as the United Nations, the International Red Cross and Red Crescent Movement, and non-governmental organizations (NGOs), from $33bn to $46.9bn over the last five years, the gap between needs and funding continues to grow. In 2023, only 39.5% of requested funding needs were covered.

Existing aid mechanisms are insufficient

In contrast to the barely growing or declining resources of governments and the limited capital pool of traditional philanthropy, the problems of poverty, underdevelopment, conflict and fragility, displaced populations, and environmental degradation continue to reach new heights. Put simply, existing aid mechanisms are insufficient to address today’s problems: new pools of capital are urgently required to meet the growing need. There is also a growing realization that some of the money for humanitarian efforts needs to shift from short-term funding via grants to long-term financing through additional financial instruments like debt, equity, and insurance. The shift from funding to financing will be built on partnerships and require cross-sector collaboration.

In response, humanitarian organizations are reviewing their operations and strategies to enhance short-term efficiency. Building a pipeline of investible projects requires field-based evidence to justify their viability and engagement in these markets. An increasing number of pilots to meet humanitarian needs across a wide range of approaches have been developed to test viability and market demand, often benefitting from catalytic foundation or government funding to reduce risks.

Concrete examples for change agents

This report provides a first mapping of the humanitarian impact finance continuum to identify different sources of funding for each respective actor (who does what, at what stage, and with what investment criteria) and thereby lower the barrier for innovation and successful implementation. It provides a playbook with concrete examples for change agents looking to develop projects that fulfill humanitarian objectives in more stable contexts of protracted crisis.

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