by Florian Kemmerich, MSc, Co-Founder & Managing Partner at Human Planet
Last year at the Humanitarian Finance Summit in London, I described the mood in the room as a sense of déjà vu. We were once again confronting a widening gap between humanitarian needs and available funding. We were once again calling for innovation. And we were once again asking whether the system was truly prepared to evolve. Twelve months later, this urgency has only grown.
The United Nations estimates that achieving the Sustainable Development Goals in developing countries requires 3.9 trillion dollars every year. Yet, current public and private flows add up to just 1.4 trillion dollars, barely a third of what is needed, leaving a 2.5 trillion dollar gap each year. Humanitarian financing is part of this broader development architecture and faces the same imbalance between ambition and resources. Meanwhile, crises are evolving. Conflicts last longer, climate-related shocks are more frequent and severe, and fragility now affects a broader range of contexts. In many countries, humanitarian and development challenges increasingly overlap, straining traditional funding models.
Image credit: United Nation SDGs
This is why I believe we are at an inflection point. Let me explain why. An inflection point is more than a moment of stress; it signals when incremental changes are no longer enough. The current model still operates, but with diminishing returns. The real risk is a gradual decline in effectiveness, not sudden collapse. If there is one design flaw that stands out as the pivotal leverage point, it is the misalignment of financial incentives with shared outcomes. As long as donors, implementers, and investors are rewarded for individual activities rather than collaborative results, the system will continue to fragment and lose impact. Addressing this core misalignment—by structuring incentives around shared, measurable results could do more than any other change to shift humanitarian finance from gradual decline to systemic renewal.
Let’s look at the three structural pressures defining this moment.
The first is fiscal constraint. Many donor countries face ongoing budget pressures. Domestic priorities, geopolitical tensions, and rising debt limit the potential for increased grant-based aid. Traditional models already struggle to meet growing needs, and relying solely on public finance is no longer realistic. However, fiscal constraint does not always mean paralysis. Innovative blended finance mechanisms, such as the Humanitarian Impact Bond for physical rehabilitation centers, have enabled institutions like the ICRC to secure millions in upfront capital from both private and public investors, stretching limited budgets and tying repayment to results achieved. Examples like this demonstrate that even when government spending is under pressure, bold reallocations and creative partnerships can expand impact beyond traditional resource limits.
The second is the accountability imperative. Financing linked to clear, measurable outcomes is becoming mainstream. Results-based finance ties funding to predefined outcomes, emphasising transparency, accountability, and cost-effectiveness. Field trials have shown the potential of this approach: for example, a randomised evaluation of an education outcomes fund in Sub-Saharan Africa found that when payments were tied to student completion rates, learning outcomes improved significantly compared to traditional input-based funding. Similarly, piloting results-based finance for health clinics in fragile contexts has demonstrated increased service coverage and greater efficiency, as documented in recent project evaluations. In times of limited resources, paying for outcomes is a political and moral necessity, not just a technical improvement.
The third is mobilising private capital. Blended finance uses development and philanthropic funds to attract private investment for sustainable development. Its goal is to adjust risk-return profiles in high-risk contexts. In fragile and crisis-affected settings, this adjustment is essential for private capital to contribute effectively. Yet instruments alone will not define whether this inflection point becomes transformative.
What is required is a system redesign.
Much of humanitarian financing remains short-term, input-focused, and fragmented across multiple funding streams. Project cycles are often misaligned with the protracted nature of crises. Rather than acting as one-off transactions, incentives among donors, implementers, and potential investors should foster shared learning loops. By co-creating feedback cycles in which all actors continuously learn, reflect, and adapt together, stakeholders can better align around shared outcomes. In protracted crises, such “learn-reflect-adapt” loops enable ongoing course correction and collective accountability for results, thereby strengthening both impact and resilience.
If we simply add new instruments to an unchanged system, we will repeat the same patterns. Innovation requires changing incentives, not just introducing new tools.
A credible transition requires at least four shifts.
First, standardise impact frameworks. Investors and outcome funders need clear theories of change, key performance indicators, and evaluation methods. As an illustrative example, a universal KPI set could include metrics such as lives protected, livelihoods restored, and capital leveraged. By anchoring measurement around a trio like this, stakeholders can focus on outcomes that cut across sectors and contexts. Without common measurement standards, transaction costs stay high and scalability remains out of reach.
Second, improve investment readiness. While many impactful initiatives exist, few are structured with clear governance, risk allocation, and financial models suitable for blended or outcome-based capital. Building a pipeline of financeable projects is a strategic priority.
Third, ensure disciplined additionality. Concessional capital should catalyse new investment, not subsidise returns that would occur regardless. In fragile contexts, guarantees, first-loss tranches, or outcome payments can encourage participation, but additionality must remain central to maintain legitimacy.
Fourth, adopt platform thinking. After a decade of experimenting with various impact bonds, the sector must now shift from isolated transactions to scalable facilities with standardised documentation, shared data standards, and predictable capital structures. What gives platforms true power is their ability to unlock network effects: when many actors can connect and transact with each other, a virtuous cycle emerges in which more shared data attracts more capital, and more capital, in turn, generates richer data and new partnerships. In a many-to-many environment, each new participant increases the platform’s value for everyone involved, enabling pools of capital to find opportunities more efficiently and innovators to access broader markets. This leap in scalability and liquidity is what distinguishes platform approaches from one-off deals, turning fragmented experiments into an interconnected ecosystem with exponential growth potential.
When I spoke at the Summit last year, I asked whether we were prepared to treat the funding gap as a structural design challenge rather than a cyclical budget problem. That question remains relevant.
The humanitarian system has shown operational ingenuity, adapting logistics in conflict zones, deploying digital cash transfers at scale, and coordinating under pressure. The financing architecture must now match this innovation and discipline.
Our choice is not between grants and markets, but between a fragmented funding landscape and a coherent ecosystem where grants, concessional capital, and private investment work together. If this is truly an inflection point, it will be defined by our willingness to realign incentives, focus on measurable outcomes, and design structures that mobilise capital at scale while upholding humanitarian principles, not by the number of new instruments introduced.
The conversation in London should move beyond inspiration and focus on system architecture. Success in this area could finally turn the sense of déjà vu into real progress for humanitarian finance.
“Impact lives, share profits!”
