The humanitarian system is running out of road. Funding is shrinking, crises are lasting longer, and the familiar model of a crisis erupting, donors responding, and agencies delivering assistance was built for a world that no longer exists. Today’s conflicts often last for decades. Displacement has become a long-term reality for millions, while climate shocks repeatedly devastate the same communities. These are no longer temporary emergencies. They have become enduring conditions.
The numbers tell the story. Refugees spend an average of 20 years in displacement. Humanitarian appeals receive well under half of the funding requested. At the same time, many donor governments are shifting their attention towards domestic priorities, with portions of former aid budgets redirected to defence spending. Humanitarian agencies are left trying to operate an emergency response system inside crises that never truly end.
The pressure on leadership has become immense. Increasingly, humanitarian leaders spend less time shaping strategy and more time fighting for organisational survival. They restructure budgets, reduce programmes, lay off staff, justify funding requests, and struggle to secure enough resources to survive another funding cycle. It is exhausting work that leaves little opportunity to think beyond the next appeal, let alone imagine a different future for the sector. Meanwhile, the people caught in these crises remain as vulnerable as ever, with few realistic pathways towards recovery.
Any honest conversation about reform must begin here. The problem is not a lack of commitment or capable leadership. It is that the system itself no longer matches the reality it is trying to address. Permanent crises cannot be managed with tools designed for six-month emergencies, and leaders cannot redesign a broken model while using all their energy simply to keep it alive.
The sector has already started, but progress has stalled. To be fair, this is not a conversation the humanitarian sector has ignored.
The humanitarian-development-peace nexus has shaped policy discussions since the Grand Bargain. Agencies such as WFP and the IRC have invested in anticipatory action and forecast-based financing to respond before disasters escalate. Cash-based assistance has moved from being an innovative idea to becoming standard practice across much of the sector. Development finance institutions have also established dedicated windows for fragile and conflict-affected settings such as the Kakuma-Kalobeyei Challenge Fund, a joint programme managed by the International Finance Corporation (IFC) and UNHCR.
These initiatives matter, but none has achieved the scale needed to transform the system. There is a reason for that.
Many of the financial tools used by development finance institutions, including guarantees, first-loss capital, blended finance and currency hedging, were designed for markets with functioning institutions and a reasonable degree of predictability. Fragile and conflict-affected environments challenge almost every one of those assumptions. That is why development finance portfolios in these contexts remain relatively small. This is not a ready-made solution waiting to be transferred into humanitarian work. It is a difficult problem that both the humanitarian and development finance communities have approached from different directions without fully bridging the gap.
That is precisely why humanitarian leadership needs to embrace investment governance. Investment governance is not a complicated financial concept. At its core, it is simply the discipline of making better decisions about money: deciding where capital should go, understanding the risks before committing it, putting the right safeguards in place, measuring whether it is achieving its purpose, and holding people accountable for results.
In humanitarian terms, it means asking a different set of questions. Instead of asking only, “How much money do we need to respond to this emergency in a cost-effective way?”, investment governance asks:
- How can today’s funding reduce dependence on aid tomorrow?
- What risks stand in the way, and how can they be managed?
- Can guarantees or blended finance attract private or diaspora capital to support recovery?
- How do we measure long-term resilience instead of only immediate outputs?
- How do we ensure today’s spending creates opportunities for people to rebuild their lives rather than simply survive until the next funding cycle?
It is a different way of thinking. It shifts the conversation from simply spending money to using capital strategically to create lasting impact.
In practical terms, adopting investment governance would change Monday morning for humanitarian agencies. Programme teams would map financial risks alongside operational ones; recovery interventions would include capital plans, not just grant budgets; diaspora investment platforms would be designed with real guarantees rather than aspirational language; and cash programmes would incorporate mechanisms that track whether transfers build assets over time. None of this replaces humanitarian action. It strengthens it by ensuring that every dollar spent today expands the options available tomorrow.
That is why investment governance matters. The argument is not that humanitarian organisations should become investment funds or abandon humanitarian principles. It is that they should adopt the discipline investment governance brings: rigorous risk assessment, stronger accountability, long-term thinking, and financing models designed to deliver sustainable outcomes.
Closing this gap requires more than good intentions. It requires practitioners who have spent their careers structuring investments, assessing risk, negotiating guarantees, and understanding why these instruments succeed in some contexts and fail in others.
Many promising ideas have remained pilots because that expertise has rarely been embedded within humanitarian institutions with the authority to take them to scale. Resilience bonds remain niche instruments. Diaspora capital is frequently discussed but seldom mobilised because the guarantees, reporting standards and risk-sharing mechanisms needed to unlock it do not yet exist in a usable form. Even cash transfer programmes continue to be funded almost entirely as grants, despite opportunities to structure elements of them with greater financial discipline and long-term sustainability.
A glimpse of what this could look like already exists. In Jordan, the concessional financing arrangements that supported Syrian refugees, combining guarantees, risk‑sharing, and private‑sector participation, demonstrated that even fragile contexts can attract structured capital when the right safeguards are in place. Similarly, small-scale resilience bonds piloted in the Horn of Africa have shown that predictable, multi‑year financing can reduce long-term costs by investing early in community assets. These examples are still modest, but they prove the principle: when risk is properly governed, capital can be mobilised for resilience rather than only relief.
This is not about turning refugees into an asset class. It is about giving humanitarian leaders better tools to finance recovery, reduce dependency and create lasting resilience. A financing model that depends on more than annual donor appeals would also free leaders to spend less time fundraising and more time leading.
Responding to the principles debate
Some will argue that introducing investment thinking into humanitarian work risks compromising neutrality, impartiality or independence. Such a concern deserves to be taken seriously, but it misunderstands what those principles are designed to protect.
Humanitarian principles govern how assistance is delivered and ensure that aid is provided according to need rather than political or military interests. They do not prohibit investment in recovery, livelihoods or economic resilience.
A displaced family that receives cash instead of food aid and uses it to build a small business has not undermined humanitarian principles. Helping people rebuild their independence does not weaken impartiality. It simply recognises that people living in displacement for years are not merely beneficiaries of aid. They remain workers, entrepreneurs, parents and economic actors with aspirations beyond survival.
If anything, the greater failure lies in a system that keeps people dependent long after the emergency phase has passed because it offers no practical route towards self-reliance.
Dignity is a humanitarian value. A system that provides only enough support to survive, but not enough to rebuild, has narrowed its own ambitions. This is not because humanitarian principles demand it, but because the financial architecture to do something different has never been fully developed.
What needs to change
The shift required is not ideological. It is practical.Â
This shift is also realistic given major donors are already signalling that future humanitarian financing will prioritise sustainability, risk-sharing, and economic recovery. The sector can either adapt to this trajectory or be overtaken by it.
The goal is not simply to help people survive crises, but to create credible pathways out of them. At the same time, humanitarian leaders need a way out of permanent crisis management so they can focus on leadership instead of constant institutional survival.
That means recognising protracted crises as a distinct financing category rather than treating them as prolonged emergencies. It means building guarantees and risk-sharing mechanisms capable of attracting blended finance and diaspora investment into environments that everyone accepts are difficult. It means embedding development finance and investment governance into recovery programme design, led by people who understand both the potential and the limitations of these approaches. It also means designing livelihoods and economic recovery programmes with investment discipline alongside grant funding, rather than relying exclusively on traditional humanitarian financing.
Perhaps most importantly, it requires leaders willing to have uncomfortable conversations. They must be prepared to challenge long-standing assumptions within the humanitarian community while also acknowledging, alongside development finance professionals, just how difficult financing fragile contexts really is.
The next phase of humanitarian leadership will require courage: the courage to redesign financing models, to embed investment expertise inside humanitarian institutions, and to insist that resilience is not a luxury but a necessity. The foundations exist. What is needed now is a generation of leaders prepared to turn promising pilots into system-wide practice.
Because the future of humanitarian action will no longer be defined by how well we respond to crises, but by whether we build the financial and institutional architecture that prevents people from remaining trapped in them.
Leadership in permanent crisis cannot be reactive. It must be architectural.
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Dr. Wale Osofisan, PhD, is a seasoned governance strategist and policy analyst with over 23 years of experience advancing African-led, evidence-based solutions to political transitions, humanitarian crises and development challenges.
