The Global Humanitarian Funding Crisis and Its Implications for Impact Investors

The global humanitarian funding crisis has reached a critical juncture. As of July 2025, the Global Humanitarian Overview (GHO) reports a staggering $45.48 billion funding requirement to assist 181.2 million people across 72 countries, yet only $7.64 billion (16.8%) has been secured—a 40% decline compared to the same period in 2024 [1]. This shortfall disproportionately affects conflict-affected low- and middle-income countries (LMICs), where compounding crises of violence, climate disasters, and institutional fragility have created a perfect storm of unmet needs. For impact investors, this represents both a moral imperative and a strategic opportunity to reallocate capital toward high-impact, high-return investments in resilient infrastructure, health systems, and local NGO partnerships.

Underfunded Crisis Zones: A Map of Urgency

The most acute funding gaps are concentrated in Latin America, the Middle East, and Sub-Saharan Africa. In Colombia, only 17% of the $342.3 million required for its Humanitarian Response Plan has been secured, despite 9.1 million people in need [1]. El Salvador and Guatemala face similar challenges, with 12.1% and 2.8 million people in severe food insecurity, respectively [1]. Syria’s 2025 Humanitarian Response Plan requires $8.58 billion but has received just 15.9% of its initial $2 billion target [1]. These underfunded zones are not isolated; they are part of a broader trend where five of the six least covered humanitarian appeals globally are in Latin America and the Caribbean [1].

The consequences of inaction are dire. In Sudan, 80% of communal kitchens have closed, leaving millions without food [3]. In Afghanistan, 298 nutrition sites remain shuttered, depriving 80,000 acutely malnourished children and pregnant women of treatment [3]. These gaps are not just humanitarian failures—they are economic liabilities. The World Resources Institute (WRI) estimates that every $1 invested in resilience generates over $10 in benefits over ten years, particularly in health and infrastructure [2].

High-Impact Opportunities: Resilient Infrastructure and Health Systems

Impact investors can address these gaps by prioritizing three areas: resilient infrastructure, health systems strengthening, and local NGO partnerships.

1. Resilient Infrastructure: Projects like the World Bank’s $211.5 million initiative in Madagascar—focusing on climate-resilient roads, bridges, and ports—demonstrate how infrastructure investments can safeguard communities against both conflict and climate shocks [2]. Modular bridges and rapid-response infrastructure not only improve connectivity but also reduce long-term disaster recovery costs.

2. Health Systems Resilience: The Sanofi Global Health Unit (GHU) offers a blueprint for impact investing in health systems. By supporting local startups and integrating mentorship programs, the GHU has improved healthcare access in 40 countries [1]. Similarly, the Health Impact Investment Platform (HIIP), backed by WHO and multilateral development banks, mobilizes $1.5 billion in concessional loans to strengthen primary health care in fragile contexts [4]. These models align with the principles of health systems resilience (HSR), which emphasize adaptability and transformation in response to crises [3].

3. Local NGO Partnerships: The humanitarian cluster approach—prioritizing community engagement in infrastructure and health projects—has proven effective in building trust and ensuring sustainability [5]. For example, the Humanitarian and Resilience Investing (HRI) initiative’s Peace Bonds in northern Ghana and Burkina Faso reduced conflict risks and lowered financing costs by 2 percentage points through community-led land dialogues [6].

Financial Returns and Strategic Reallocation

Critics may question the financial viability of investing in conflict-affected regions, but evidence suggests otherwise. The Global Fund’s Eighth Replenishment, which invests in HIV, tuberculosis, and malaria programs, generates $1.8 billion in economic returns for every $100 million invested, saving 125,000 lives [4]. Similarly, the MacArthur Foundation’s Catalytic Capital Consortium leveraged a $2 million first-loss investment to attract $7.42 million in additional capital for housing projects in fragile contexts [6].

Blended finance and risk-mitigation strategies, such as concessional funding and first-loss guarantees, further enhance returns. For instance, the Rockefeller Foundation’s partnership with SunFunder to provide electricity in rural Sub-Saharan Africa used first-loss capital to de-risk investments while achieving scalable impact [6]. These models show that impact investing in crisis zones is not only ethical but economically prudent.

Conclusion: A Call for Systemic Action

The humanitarian funding crisis is a systemic failure that demands systemic solutions. Impact investors have the tools to address this gap—through resilient infrastructure, health systems innovation, and partnerships with local NGOs. By reallocating capital to these high-impact areas, investors can generate both financial returns and transformative social outcomes. The cost of inaction—measured in lives lost, economies destabilized, and futures erased—is too great to ignore.

Source:
[1] Global Humanitarian Overview 2025 Monthly Updates, [https://humanitarianaction.info/document/global-humanitarian-overview-2025-monthly-updates/article/july-update]
[2] WRI study reveals ten-fold impact of climate adaptation and resilience investments, [https://impact-investor.com/wri-study-reveals-ten-fold-impact-of-climate-adaptation-and-resilience-investments/]
[3] Health systems resilience in fragile and conflict-affected settings, [https://pmc.ncbi.nlm.nih.gov/articles/PMC10763433/]
[4] Health Impact Investment Platform (HIIP), [https://www.who.int/about/collaboration/health-impact-investment-platform]
[5] Lessons from humanitarian clusters to strengthen health systems, [https://www.sciencedirect.com/science/article/pii/S2666623520300283]
[6] Five Impact Investing Tools Foundations Can Use in Times, [https://missioninvestors.org/Resources/Thought-Leadership/Crisis-Impact-Investing-Tools-July-2025]