With humanitarian organizations increasingly working on the front lines in 2026, a major challenge is emerging: the need for humanitarian assistance is growing, while available funding is shrinking.
For NGOs working in conflict zones, refugee crises, natural disasters, and areas facing food insecurity, this is becoming more than a fundraising challenge. It is turning into an operational crisis. Organizations are expected to support more people, respond to more emergencies, and deliver better results, often with smaller and more restricted grants.
The impact is already being felt around the world. Food assistance is being reduced in some crisis-affected regions, international aid agencies are cutting staff and scaling back operations, and local NGOs are being asked to take on greater responsibilities without receiving enough resources to strengthen their capacity.
The Global Humanitarian Assistance Report 2026 highlights the scale of the problem. In 2025, UN-coordinated humanitarian appeals received only 35% of the funding requested, the largest funding gap recorded in the report. Around 95% of this funding went toward prolonged crises, showing how long-running emergencies continue to consume a large share of limited humanitarian resources.
So, what happens next? As traditional aid becomes less predictable while humanitarian needs continue to rise, NGOs will need to rethink how they raise funds, build partnerships, manage resources, and demonstrate their impact. There is no single solution, but becoming more financially diverse, locally connected, and sustainable will be essential for the future.
The Humanitarian Funding Crisis Is Becoming a Long-Term Problem
Humanitarian funding has always been unpredictable, but the current situation is especially concerning. Prolonged conflicts, climate-related disasters, rising food insecurity, displacement, and economic and political pressures are all happening at once. This is creating a difficult situation where humanitarian needs are growing while available funding is shrinking.
The scale of the problem is clear. According to UNHCR’s 2025 Global Report, the organization aimed to support 129.4 million forcibly displaced and stateless people but received only $3.932 billion, covering 37% of its funding needs, down from 48% in 2024. UNHCR also reduced its workforce capacity by about one-third by January 2026.
These cuts affect more than large international organizations. When major agencies lose funding, local NGOs can receive fewer and smaller grants, leading to staff reductions and fewer community programs. For smaller organizations, losing even one major donor can have a serious impact, making financial resilience more important than ever.
Humanitarian Needs Are Moving in the Opposite Direction
What’s concerning, though, is that declining funding comes at a time when humanitarian needs are actually increasing. In 2024 alone, there are 295 million people in 53 countries and territories experiencing high levels of acute food insecurity, a nearly threefold increase since 2016, according to the FAO. Meanwhile, millions more are in situations of conflict, climate shocks, and economic volatility, and increasingly, these same challenges can be mutually amplifying and contribute to the problem at hand.
For instance, the destructive effects of conflict can decimate local farming; environmental disaster, whether drought or flood, can destroy people’s homes and means of earning money; and inflationary economic pressures can drive prices out of reach of even more families.
These multiple challenges leave people relying longer and more heavily on humanitarian aid: today’s humanitarian food parcel will prevent immediate hunger, but helping this family build better storage systems, regain access to agricultural input, and reconstruct their livelihoods will mean they are less likely to need future food parcels. This is the reasoning that underlies the FAO’s own 2026 appeal, an approach based on supporting agricultural growth and capacity rebuilding along with feeding those in crisis. According to the FAO website, its 2026 appeal “aims to support more than 100 million people across 54 countries by requesting US$2.5 billion.” This represents a significant pivot not only for countries and NGOs dealing with the challenges it highlights but perhaps for the funders as well, who increasingly seek long-term solutions.
Funding Cuts Are Already Affecting Real People
This data on funding may seem to be purely theoretical, but underlying every percentage is an ongoing, potentially impacted program. Some examples of cuts or delays include the number of food pantries might dwindle, mobile health services will make fewer visits to villages, mobile child welfare staff won’t be able to aid as many, refugee enrollment may be cut, and trained NGO members might leave the workforce when their grant is no longer available. One recent crisis that highlights how quickly a lack of funding translates to fewer lives served happened recently in the West Bank when the World Food Programme stated (in 2023) it was reducing its delivery of aid from 400,000 people to 200,000, starting January 2025, due to insufficient funding.
The organization reported it needed a six-month total of $386 million to fund services for 2 million food-insecure Gazans and West Bank residents.
No NGOs decide to reduce services on impulse based on an assumption that need can only be limited due to available funds.
The Pressure on Large Humanitarian Organizations Also Matters to NGOs
It is easy to assume that funding problems are mainly a concern for small NGOs.
In reality, major international organizations are also under significant financial pressure.
UNHCR, for example, is planning a 16% reduction in its 2027 budget to approximately $7.14 billion, alongside major workforce reductions. The organization is trying to prioritize emergency response, refugee protection, returns, and self-reliance while working with fewer resources.
When large organizations restructure their operations, their local partners can also feel the impact.
Partnership agreements may become smaller.
New projects may be delayed.
Existing programs may not be renewed.
More responsibilities may be transferred to local organizations.
This creates both a challenge and an opportunity for local NGOs.
Local NGOs Could Become More Important—but They Need Better Support
Local organizations have always played a critical role in humanitarian response.
They understand the language, culture, and local context. They often have relationships with community leaders and can continue operating when international organizations face access or security limitations.
But there is a major problem: local organizations are still not receiving enough direct and high-quality funding.
A 2026 ODI analysis found that just below 10% of international humanitarian funding reached local and national actors directly or indirectly in 2024. Direct funding was only 3.8%, far below the Grand Bargain ambition of 25%. ODI also found that local organizations frequently receive shorter, smaller, and more heavily earmarked grants than international organizations.
This creates an uncomfortable contradiction.
The humanitarian sector increasingly talks about localization and local leadership.
But local organizations still often have to operate with limited unrestricted funding, weak organizational infrastructure, and short project cycles.
If donors want local NGOs to take on greater responsibility, they also need to invest in their organizational strength.
That includes funding for staff, technology, finance systems, safeguarding, monitoring and evaluation, cybersecurity, administration, and leadership.
These are not unnecessary expenses.
They are what allow an NGO to deliver programs responsibly.
NGOs Need to Stop Depending on a Single Funding Source
For NGOs, one of the clearest lessons from the current funding environment is simple:
Donor concentration is risky.
If an organization receives most of its funding from one government donor, one foundation, or one international partner, a change in that funder’s priorities can immediately create a financial crisis.
Diversification does not necessarily mean finding dozens of donors.
It means building several different income streams that reduce dependence on any single source.
For example, an NGO could combine the following:
- Government and institutional grants.
- International foundations.
- Corporate partnerships.
- Individual donations.
- Monthly giving programs.
- Community fundraising.
- Major donors.
- Online fundraising campaigns.
- Fee-based social enterprise activities where appropriate.
- Crowdfunding.
- Diaspora fundraising.
- Partnership-based funding.
The right combination will depend on the NGO’s mission, location, and legal structure.
The important thing is to avoid building an organization where one donor effectively determines whether the NGO survives.
Sustainable Fundraising Is More Than Asking for Donations
One mistake NGOs can make during a funding crisis is focusing only on finding the next grant.
Grant funding remains extremely important, but sustainable fundraising requires a broader approach.
An NGO needs to build relationships before it needs money.
That means communicating regularly with supporters, sharing program results, explaining challenges honestly, and showing what donations actually accomplish.
People are more likely to support organizations they understand and trust.
Instead of simply saying
“Please donate to help children.”
An NGO can explain what the funding will make possible.
For example:
“A $50 contribution can help provide school materials to children returning to class after displacement.”
The second message gives the donor a clearer connection between their contribution and the organization’s work.
Good fundraising is therefore not just about requesting money.
It is about communicating purpose, credibility, and impact.
NGOs Need to Become Better at Showing Their Impact
In a competitive funding environment, a strong idea alone may not be enough.
Donors increasingly want to understand what their money achieved.
NGOs should therefore invest in simple but reliable impact measurement.
This does not mean every organization needs an expensive monitoring system.
Even a small NGO can track meaningful indicators.
- How many people were reached?
- How many completed the program?
- What changed after the intervention?
- Did beneficiaries gain access to services?
- Did household income improve?
- Did school attendance increase?
- Did health outcomes improve?
- Did the community become better prepared for future emergencies?
The key is to connect activities to outcomes.
Instead of saying
“We conducted 20 workshops.”
An NGO can explain:
“Twenty workshops reached 600 women, and follow-up assessments showed that participants had improved knowledge of available protection and support services.”
That is a much stronger story for donors.
Flexible Funding Is Becoming Increasingly Valuable
Another major issue is not just how much money NGOs receive, but how flexible that money is.
Highly restricted grants can be useful, but they can also make it difficult for organizations to respond when circumstances change.
Imagine an NGO receives funding to provide food assistance in one community. Six months later, a flood affects another nearby area and creates an urgent need for emergency shelter.
If the original funding cannot be adjusted, the NGO may have the people and infrastructure to respond but not the financial flexibility to do so.
UNHCR describes flexible funding as essential because it allows resources to move toward emerging emergencies and underfunded crises. In 2025, UNHCR received $1.189 billion in flexible funding, representing 34% of its voluntary contributions.
For NGOs, this highlights the importance of building relationships with donors willing to provide core, unrestricted, or softly earmarked support.
These funds can help organizations maintain essential infrastructure between projects and respond more quickly when circumstances change.
Local Partnerships Can Make NGOs More Resilient
Partnerships will also become more important.
An NGO does not always need to build every capability internally.
It can collaborate with universities, local businesses, technology organizations, community groups, other NGOs, and professional networks.
For example, an NGO working in education could partner with a technology company to improve digital learning.
A health-focused organization could work with local clinics and universities.
An environmental NGO could collaborate with farmers’ organizations and local government.
A small organization might partner with another NGO to share training, monitoring systems, or administrative resources.
Partnerships can reduce costs while increasing expertise.
But partnerships should not simply be about obtaining free services.
Strong partnerships are built around shared objectives, clear responsibilities, and mutual value.
Technology Can Help NGOs Do More With Limited Resources
Technology cannot replace funding, people, or field expertise.
But it can help organizations use limited resources more efficiently.
This is especially relevant for smaller NGOs that may not have large administrative teams.
Technology can support grant research, donor tracking, budgeting, reporting, volunteer management, communications, and data analysis.
AI tools can also assist with repetitive tasks such as organizing donor requirements, creating first drafts, summarizing long documents, or identifying missing information in proposals.
However, NGOs need to use these technologies carefully.
Sensitive beneficiary information should not be uploaded into tools without understanding how that data is handled.
AI-generated information also needs human review because systems can produce inaccurate or misleading results.
The goal should not be to replace NGO professionals.
The goal should be to reduce repetitive work so people can spend more time on strategy, relationships, and communities.
NGOs Should Build a Stronger Grant Pipeline
Another practical response is to stop treating fundraising as something that happens only when an existing grant is about to end.
Organizations should maintain a funding pipeline throughout the year.
This can include:
- Potential donors.
- Upcoming grant deadlines.
- Foundation opportunities.
- Corporate partnerships.
- Government programs.
- International funding mechanisms.
- Existing donor renewal dates.
- Potential strategic partners.
The NGO should know which opportunities are highly suitable, which are worth monitoring, and which are not worth pursuing.
This saves time and prevents the common situation where an organization discovers a grant two days before the deadline and tries to rewrite its entire project around the funder’s priorities.
A strong pipeline gives NGOs time to prepare.
NGOs Also Need to Become Better at Financial Planning
Fundraising and financial management should not operate separately.
An NGO may receive a grant and still experience financial stress if it does not properly forecast expenses and cash flow.
Organizations should regularly review:
- Current cash reserves.
- Expected grant income.
- Upcoming grant expirations.
- Staff costs.
- Program costs.
- Administrative expenses.
- Emergency reserves.
- Unrestricted income.
- Potential funding gaps.
This allows leadership to identify problems before they become emergencies.
For example, if an NGO knows that 60% of its annual funding will expire within six months, it can begin fundraising immediately instead of waiting until the money has already run out.
Sustainability Should Be Designed Into Projects From the Beginning
Another important change is the way NGOs think about sustainability.
Traditionally, sustainability is sometimes treated as a section added near the end of a proposal.
But donors increasingly want to know what happens after their funding ends.
A stronger project considers sustainability from day one.
Who will continue the activity?
- Can local institutions take ownership?
- Can communities maintain the program?
- Can local government support it?
- Can income-generating activities contribute to ongoing costs?
- Can another donor support the next phase?
- Can the organization integrate the program into an existing system?
- The best humanitarian and development programs do not simply ask, “What can we do with this grant?”
They ask:
“What can this grant help us build that will continue creating value after the grant ends?”
NGOs Should Invest in Organizational Capacity, Not Just Projects
One of the biggest mistakes in the humanitarian funding system is treating organizational capacity as secondary.
A project cannot operate without people.
People cannot work effectively without systems.
And systems cannot function without adequate funding.
Organizations need capable finance teams, trained program staff, strong safeguarding procedures, monitoring systems, secure data management, and effective leadership.
ODI’s research on local organizations highlights how inadequate funding for overheads can undermine staff retention, safety, compliance, program continuity, and organizational resilience.
This is particularly important for smaller NGOs.
A donor may see a 10% administrative cost and think it should be reduced.
But that 10% might pay for financial reporting, audits, staff training, cybersecurity, safeguarding, and program management.
Without those systems, the remaining 90% of program funding may not be delivered effectively.
The Future May Require a Different Humanitarian Funding Model
The current funding crisis is forcing the sector to reconsider an uncomfortable question:
Can the humanitarian system continue operating through short-term emergency grants while crises themselves become increasingly long-term?
FAO reports that 35 countries and territories have appeared in the Global Report on Food Crises for nine consecutive years, while more than 80% of people facing serious acute food insecurity are in protracted crises.
These are no longer temporary emergencies.
Communities may remain affected for years.
That means the funding model also needs to evolve.
Humanitarian response, development, climate adaptation, livelihoods, and resilience cannot always operate in separate boxes.
An organization responding to hunger may also need to support agriculture.
An NGO working with displaced families may need to focus on livelihoods and education.
A disaster-response organization may need to invest in disaster preparedness before the next crisis happens.
The future of humanitarian funding will likely require more connections between immediate response and long-term resilience.
What NGOs Can Do Right Now
The funding environment may be difficult, but NGOs are not powerless.
Organizations can begin by reviewing their current funding exposure.
Ask:
- Where does most of our money come from?
- What happens if our biggest donor leaves?
- How many grants expire within the next 12 months?
- How much unrestricted funding do we have?
- Which programs are financially sustainable?
- Which donors align closely with our mission?
- Do we have a pipeline of future opportunities?
- Are we measuring our impact effectively?
- Can we explain our work clearly to someone who has never heard of our organization?
These questions can reveal vulnerabilities that are often hidden during financially stable periods.
From there, NGOs can begin building a more diversified funding strategy.
Donors Also Have a Role to Play
The responsibility cannot fall entirely on NGOs.
If humanitarian needs are growing while funding declines, donors also need to reconsider how aid is provided.
More flexible funding can help organizations respond to changing needs.
Multi-year grants can reduce the constant pressure of preparing new applications.
Direct funding to local organizations can strengthen the organizations that are already embedded in affected communities.
Adequate overhead support can help NGOs build the systems necessary for responsible delivery.
And better coordination between donors can reduce duplication and administrative burdens.
The ODI findings are particularly important here: less than 10% of international humanitarian funding reached local and national actors in 2024, with direct funding at just 3.8%.
If localization is genuinely the future of humanitarian action, funding practices need to reflect that ambition.
A Difficult Period Could Also Become a Turning Point
Humanitarian funding cuts are undoubtedly putting enormous pressure on NGOs.
But they may also force the sector to address problems that have existed for years.
Organizations will have to become more financially diversified.
Local leadership may become stronger.
Partnerships may become more important.
Technology may reduce administrative workloads.
Impact measurement may become more meaningful.
Donors may increasingly recognize the importance of flexible and multi-year funding.
And NGOs may move away from viewing sustainability as something that begins after a grant ends.
The humanitarian sector cannot solve a growing global crisis simply by asking organizations to do more with less.
There is a limit to how much can be achieved when funding continues to shrink while needs continue to rise.
But NGOs can become more resilient by changing how they approach fundraising, partnerships, technology, financial planning, and long-term sustainability.
The goal should not simply be to survive the next funding cycle.
It should be to build organizations that can continue serving communities even when the funding environment changes.
And perhaps that is the most important lesson from the current humanitarian funding crisis: funding is not only about keeping today’s projects running. It is about creating organizations, partnerships, and community systems strong enough to withstand tomorrow’s crisis.
