The humanitarian sector is grappling with a future in which its biggest donors are making heavy cuts. New data shows the trends hidden behind once-dominant US funding, why smaller donors are pivotal, and what it means for 2025 and beyond.
Official development assistance fell for the first time in five years, according to preliminary 2024 data released on 16 April by the intergovernmental Organisation for Economic Co-operation and Development, or OECD.
Members of the OECD’s Development Assistance Committee (DAC) – mainly donor countries from the Global North – gave $212.1 billion in development assistance, including some $24.2 billion in humanitarian aid. This was a 7.1% drop in development assistance from the previous year, and a 9.6% drop in humanitarian aid.
A look behind the numbers shows how funding was backsliding well before this year’s sudden US cuts. They show differences in how donors prioritise their overall aid funding, and why better coordination across these decisions is even more crucial now.
If 2024 funding is the last snapshot of the former humanitarian system as we know it, then there are lessons for the humanitarian sector – and its reduced funding ecosystem – for the years ahead.
The (hidden) financial cliff began in 2023
The headline from the OECD is an estimated 9.6% drop in humanitarian funding in 2024, but this isn’t the most useful pulse check on humanitarian finance. A more telling set of figures are the trend lines when the biggest funder – the US – and the biggest recipient – Ukraine – are removed.
Ignoring US funding to focus on the wider base of donors, the numbers show how humanitarian funding reached a peak in 2022, when donor governments gave 52% above their 2015 levels. When including US funding, however, humanitarian aid continued to rise in 2023 before starting its decline.
High US funding in 2023 more than compensated for the drop by other governments. This drove overall humanitarian ODA to its all-time high in 2023, a 66% increase from 2015 funding levels.
In short, increased US funding obscured a wider stagnation of humanitarian aid.
It was clear at the time that it was unsustainable for a single government to fund more than a third of global humanitarian aid. But few people predicted how quickly the sector would have to shake off its dollar dependency.
With aid budgets already cratering this year, it is likely the sector will see total funding figures slip further down in 2025. The OECD estimates official development assistance could drop between 9% and 17% in 2025.
Humanitarian funding is a drop in the bucket of donor wealth
Despite becoming a popular punching bag for right-wing politicians, ODA is small compared to donor governments’ wider spending, or to their overall national income. This is even more so for humanitarian spending.
One benchmark for this is a voluntary target – established by the EU Council for its member states – of 0.07% of Gross National Income to be allocated to humanitarian aid.
Only four DAC countries – Luxembourg, Norway, Sweden, and Denmark – are spending more than 0.07% of their GNI on humanitarian aid. This modest cutoff is only 10% of the long-standing but rarely achieved ODA target of 0.7% of GNI.
The good news is that there are some countries that have increased their proportion from where they were a decade ago (Luxembourg up from 0.11% to 0.17%; Norway up from 0.10% to 0.15%; and South Korea up from 0.00% to 0.03%).
However, the overall trend is largely unchanged in a decade. In 2015 as well, only four DAC countries spent at least 0.07% of GNI on humanitarian aid. The number of donors reaching this threshold has always been small, and it’s hard to see it getting bigger in the near future.
What donors are prioritising: a mixed picture
Despite all the talk of a humanitarian-development-peace nexus over the past decade, recent trends have shown an overall decline in development and peace funding compared to humanitarian funding in extremely fragile settings.
The discourse over aid cuts in right-leaning DAC donor countries has seemingly leaned into this shift – away from development and peace assistance towards a more basic humanitarian focus.
This was seen most recently with the proposal for a new “US Agency for International Humanitarian Assistance”, to replace the dismantled USAID. This has prompted worries of a vicious cycle: If too many donors retreat into humanitarian aid and continue to back away from development and peace support to the most fragile settings, demand for humanitarian funding may only increase as crises intensify.
However, 2024 data suggests a different picture, in which donors significantly deprioritised humanitarian aid in relation to overall ODA. Of the top DAC donors, only Sweden and the UK prioritised humanitarian aid within overall ODA spending – Sweden by cutting humanitarian aid proportionately less than its overall ODA cuts, and the UK by increasing humanitarian funding while making overall ODA cuts.
It is difficult to say how these trends will play out over the course of 2025, as the US and other countries now seem poised to place more emphasis on humanitarian aid over development cooperation. But the figures from 2024 should not be taken as an indication that donors are stepping in with longer-term development assistance as an exit strategy for humanitarian aid cuts. Humanitarian assistance has remained the main form of funding to extremely fragile settings, and the deprioritisation there is unlikely to be filled by other forms ODA.
As stakeholders gather for the World Bank and International Monetary Fund spring meetings in Washington next week, keeping development cooperation engaged in the most fragile settings and finding ways to prevent debt distress in countries that are already prone to disasters should be at the top of the agenda.
Donors have different interpretations of how to make the most impact. This could be good – or chaotic
How donors allocate their money has become even more of an urgent issue amid recent funding cuts. The humanitarian system faces pivotal questions: What does a needs-based aid system really look like, and what does it prioritise?
Donors have been criticised for skewing towards more politically motivated agendas in their allocations. But the data shows key differences in what donors prioritise.
Responses in Ukraine and Palestine have been two of the most high-profile and geopolitically significant humanitarian crises in recent years. But donors have responded in different ways.
Larger donors spend proportionately less on the headline geopolitical crises – none of the 10 largest donors gave more than 40% of their overall humanitarian spend to both Ukraine and Palestine in 2024.
Smaller donors employ different strategies to maximise their impact – some significantly focused on Ukraine and Palestine, with 6 donors spending more than 40% of their funding on these two crises combined. Others seem motivated to maximise the marginal value of their funding by addressing crises that are not as visible or well supported.
In some ways, this mix of approaches reflects a healthy funding ecosystem, in which different funders play different roles to support a comprehensive global response to humanitarian need.
But this flexibility was also enabled by the presence of a single large donor providing a broad base of funding for a majority of humanitarian crises, alongside core funding for many humanitarian agencies. While humanitarians may hope that US funding to address urgent needs will return, it is clear that the size and focus of this funding will be radically different. This creates a wholly changed ecosystem where stronger transparency and coordination are required in order for different funders to play their roles efficiently.
There is now no room for error or waste, no patience for duplicative efforts, and no justification for the overfunding of certain headline-friendly crises. How can smaller and mid-size donors in particular enhance their collective efficiency by ensuring funding is more evenly spread across crises?
The bottom line
The pressures facing donor governments are huge: They must make the best possible choices under high degrees of scrutiny from their peers in the aid sector, their political leaders, and, in some cases, their domestic media.
Necessary conversations on the sustainability and health of the funding architecture of the humanitarian system have been avoided for years. These conversations are now happening rapidly in freefall.
These conversations need to acknowledge that the challenges the sector faces are not just a consequence of over-dependence on a single funding source, but due to fundamental weaknesses in the funding ecosystem. Factors that were once tolerable – diversity in donor approaches with minimal coordination, an over-preference for funding politically attractive crises – are now huge risks to efficiency.
With funding in decline, it’s all the more important for remaining donors to coordinate and complement each other’s gaps: Now, more than ever, they must ensure their diverse approaches build cohesiveness rather than cacophony.
The authors are collaborating on the 2025 Global Humanitarian Assistance report, to be released in June 2025 by ALNAP. Formerly produced by Development Initiatives, the report is an annual examination of international humanitarian financing.
Edited by Irwin Loy.
