Summary : "Falling short ? Humanitarian funding and reform"

The Global Humanitarian Assistance Report has been published for over 20 years by Development Initiatives.

Thanks to a wealth of accurate data, it provides a detailed picture of international humanitarian aid. Here you will find a summary of the latest report, “Falling Short? Humanitarian Funding and Reform”.

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Click here to access the PDF of the full Development Initiatives report.

Summaries of GHAR 2018, 2019, 2020, 2021, 2022 and 2023 can be found on the Défis Humanitaires website, in the “ Studies ” section.

Introduction:

The report ‘Falling Short? Humanitarian Funding and Reform’ highlights the growing crisis in global humanitarian funding, which is failing to keep pace with increasing needs. Although international humanitarian assistance reached a historically high level of $43.4 billion in 2023, there was a considerable shortfall of $32 billion to meet targeted needs. This unprecedented gap marks a critical moment for the humanitarian sector, as it faces stagnating funding and increasing global crises. The report highlights that urgent structural reforms are needed to close these gaps and ensure that millions of people are not denied the aid they desperately need.

Humanitarian needs and global funding trends:

In 2023, the number of people in need of humanitarian assistance reached a record 311 million, compared to 168 million just five years ago. This dramatic increase in needs is due to protracted conflicts, natural disasters exacerbated by climate change and global economic shocks, such as the war in Ukraine. However, despite these growing needs, humanitarian funding has stagnated, with only 43.4 billion dollars raised, a drop of 1.1% compared to 2022. This slight drop hides a more worrying reality: the funds needed for global humanitarian appeals continue to grow, widening the funding gap more than ever. In 2023, only 45% of UN-coordinated response plans were funded, down from previous years. This is the lowest percentage on record, prompting inter-agency response plans in 2024 to narrow their focus and prioritise the use of more limited resources. According to our projections, funding is set to fall further in 2024. In 2023, only 12 of the top 20 donors increased their humanitarian funding and 8 reduced their humanitarian portfolio. Compared to the previous year, 15 of the top 20 donors increased their international humanitarian aid in 2022.

The report highlights that this funding gap is not just a short-term problem, but part of a longer-term trend. Projections for 2024 indicate that humanitarian funding could fall further, with a central estimate of $38.5 billion, marking an 11% decrease on 2023. This reduction is particularly alarming, as it coincides with growing needs across the world, with 311 million people in need of humanitarian aid. For example, UN OCHA’s biannual Global Humanitarian Outlook update noted that lack of funding had led to an estimated 3.5 million Afghans ‘[losing] access to their annual wheat consumption, including 50,000 female-headed households’, while more than 100 million targeted people worldwide have not received water, sanitation and hygiene assistance due to lack of funding and attacks on infrastructure.

The shortage of funding has also led humanitarian actors to prioritise where they deliver humanitarian aid (the percentage of people in need who are targeted has fallen to 60% in 2024 – the lowest percentage ever). A striking example was provided by the World Food Programme, which warned that the lack of funding in 2023 would lead to cuts in more than half of its operations worldwide, with a significant impact on the food security and nutrition of affected populations. This finding aligns with the wider conversation taking place across the sector about the funding shortfall. Humanitarian agencies are facing staff cuts, with the International Rescue Committee and Save the Children reporting plans to reduce staff numbers. So the joint statement by international NGOs that the number of people in need has fallen by 64 million is not positive enough, as it also states that this fall is also ‘the result of prioritisation, offering aid to some while excluding others’. In addition, another analysis indicates that the adjustments made to reduce the number of people targeted have significantly reduced the funding requirements for 2024, thereby offsetting the variations in the number of people in need. So, if the financial needs for 2024 are lower, it is partly because the humanitarian system has redefined its priorities to determine who should be included in the ‘needs’. As Janez Lenarčič, European Commissioner for Crisis Management, pointed out at the launch of the Global Humanitarian Outlook 2024, ‘these figures are more the result of prioritising actions and refocusing on the most vulnerable populations…’

The report also focuses on changes in donor contributions. While the United States remains the largest individual donor, increasing its contribution by $2.4 billion (an increase of 18%), other major donors such as the United Kingdom (down 16%), Germany (down 7.5%) and Canada (down 24%) have significantly reduced their budgets for humanitarian aid. These cuts have been partially offset by increases in contributions from countries such as Norway (62% increase) and Japan (64% increase). The report also highlights the growing dependence on a narrow donor base. In 2023, the three main donors (the United States, EU institutions and Germany) will account for 63% of total public humanitarian funding, compared with 61% in 2022. This concentration of funding among a few donors raises concerns about the resilience and sustainability of the humanitarian funding system. If major donors continue to reduce their contributions, as is expected in 2024 and beyond, the funding gap could widen.

One of the most critical findings of the report is the increasing focus on protracted crises, where conflicts or disasters require long-term humanitarian responses. The proportion of funding dedicated to these crises has exploded over the last decade. In 2014, only 29% of international humanitarian assistance was allocated to protracted emergencies. By 2024, this figure had risen to 91%, underlining the entrenched nature of many global crises. Countries such as Ukraine, Yemen and Syria dominate the list of protracted crises, and the report highlights that without addressing the underlying political and economic causes of these conflicts, humanitarian needs will continue to grow. The report calls for more multi-year planning and funding to address the challenges posed by these protracted crises, stressing the importance of linking the humanitarian, development and peacebuilding sectors to create long-term solutions.

Funding for local and national players :

One of the central commitments of the ‘Grand Bargain’, launched in 2016, was to increase funding for local and national actors – those on the ground and often best placed to respond quickly to crises. Despite this commitment, progress remains slow. The report finds that only 4.5% of all humanitarian funding in 2023 was channelled to local and national actors, well below the 25% target set by the Grand Bargain. Even more worryingly, only 0.6% of this funding went directly to local organisations, with the majority going through international intermediaries such as UN agencies or large NGOs.

This lack of direct funding has major consequences for the effectiveness of humanitarian responses, as local actors often lack the necessary resources to fully implement their programmes. The report calls for greater transparency in the way funds are channelled to local actors and stresses the need for donors to respect the commitments made in the Grand Bargain.

Cash and vouchers (CVA):

The report highlights cash and voucher assistance (CVA) as a growing trend in humanitarian responses. CVA assistance allows crisis-affected populations to receive direct financial support, giving them the flexibility to choose and purchase the goods and services they need. Although the use of CVA has increased significantly over the last decade, 2023 marked the first year in which its volume decreased, mainly due to the general reduction in humanitarian funding. In 2023, $7.8 billion was allocated through the CVA, down slightly from a peak of $8.4 billion in 2022.

This is partly due to where humanitarian CVA programming is possible. Previous research has shown that context determines where and to what extent CVA can be implemented. For example, the large-scale use of cash in the Ukraine response continues to contribute to the increase in overall CVA volumes – despite signs that volumes in Ukraine may have declined by 2023. CVA is not uniformly applied in all humanitarian contexts.

Using UN OCHA’s FTS, CVA funding could be identified for around $4 billion in financial flows in 2023. This represents 41% of global humanitarian VCA volumes. In this dataset, four contexts accounted for 53% of CVA in 2023: Ukraine, Turkey, Syria and Bangladesh. These four contexts account for only 24% of all humanitarian aid. This suggests that, compared to the humanitarian sector as a whole, the use of cash is even more concentrated in a smaller number of humanitarian responses than international humanitarian aid as a whole. It also confirms the argument that the growth of the humanitarian CVA depends on the importance of the role played by this distribution modality in responses to crises which attract a large proportion of funding.

Despite this decline, CVA continues to be seen as an effective and dignified method of delivering aid. However, the report stresses the need to better integrate CVA with local actors to ensure that these programmes truly meet the needs of affected populations. Without greater investment and coordination, the CVA risks becoming a missed opportunity to promote more effective, localised responses. The CVA is not applied uniformly in all humanitarian contexts. Some contexts lend themselves better to the use of CVA as a distribution modality, particularly where markets function well, beneficiaries can be easily identified and registered, and well-established payment systems are in place. In other contexts, the absence of these conditions can make CVA more difficult, as can national government policies, protection risks and donor risk appetite.

Anticipatory action and pre-arranged funding mechanisms:

The report also explores the concept of anticipatory action, which refers to pre-arranged funding mechanisms designed to respond to foreseeable crises, such as droughts or floods. Research has shown that early action can save lives, protect livelihoods and reduce the long-term costs of humanitarian responses. By 2023, funding for anticipatory action frameworks had increased but still represented less than 1% of all international humanitarian assistance.

The report calls for greater investment in these frameworks for anticipatory action, which enable humanitarian actors to respond more quickly and effectively when disasters strike. However, it also notes that challenges remain in evolving these frameworks and ensuring that local actors are fully involved in their implementation.

Recommendations and conclusion:

To meet the challenges outlined in the report, the first step is to increase multi-year and flexible funding to meet the needs of protracted crises, reduce reliance on short-term interventions and create more sustainable solutions. The report therefore calls on donors to commit to providing at least 30% of their funding in the form of multi-year funding, in line with the recommendations of the Grand Bargain.

Secondly, the report calls for improved transparency and accountability, as the lack of clear data on funding flows in the humanitarian system, particularly to local actors, hampers efforts to monitor progress. The report therefore recommends that all donors and intermediaries improve their reporting practices to ensure that funding is traceable and that local actors receive the necessary support.

Thirdly, the report calls for proactive action to be extended by devoting additional investment to these frameworks.

Finally, the report highlights the need for wider reform of the humanitarian system, including reducing reliance on international intermediaries and ensuring that more funding reaches local actors, who are at the frontline of crisis response.

Summary written by Ahmed Elbanna

Click here to access the PDF of the full Development Initiatives report.

I invite you to read these interviews and articles published in the edition :