Can INGOs survive the looming financial crisis?

PositiveMinds | Positive Stories | Edition 055

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At a face-to-face meeting of Oxfan programme leaders in Johannesburg this week, some of the most pressing issues facing international development and humanitarian organisations came to the fore—decolonisation, civic space and the need for impact-driven strategies. A recurring theme in these discussions was the decline in official development assistance (ODA) and shrinking funding pipelines across the sector. These conversations underscored a stark reality: a financial crisis is looming for international non-governmental organisations (INGOs). Yet, as the sector grapples with this challenge, familiar patterns are emerging—self-preservation and opacity are taking precedence over collective action and transparent approaches.

In this context, INGOs continue to pursue growth in size, scope and reach, often at the expense of a focus on quality and long-term impact. This is precisely the challenge highlighted in The New Humanitarian article, which states that International aid agencies pay the price for boom and bust. How do we manage these pressures without losing sight of our core mission? The answer lies in striking the right balance between growth, sustainability and meaningful impact.

The power and responsibility of size and scale

A senior sector leader recently highlighted the delicate balance INGOs must strike:

"When we talk about scaling down, it's not just about the organisation—it's also about the financial sustainability of our local partners."

This observation underlines the fact that while size is often seen as synonymous with influence, it also comes with significant responsibilities.

As INGOs face constant pressure to grow and expand their reach, it's important to remember that size itself is not inherently negative—it's how it's used that matters. Size enables organisations to build partnerships, influence policy and drive systemic change. However, growth for growth's sake can lead to inefficiency or, worse, disconnection from the people and communities organisations seek to support.

Size should not be seen as a stand-alone measure of success—it must be linked to impact, ensuring a focus on quality of work, not just scale or reach.

Evaluations across the humanitarian sector show the tangible impact of getting this balance wrong. As funding declines, so does the capacity to respond effectively. Preparedness is weakened, and critical areas such as safe programming, business support and local humanitarian leadership (LHL) are stretched thin, putting organisations and their partners at risk. If cuts are made too broadly, we risk diminishing the essential capabilities needed to achieve humanitarian goals. A strategic size, coupled with purpose, must be maintained to ensure the continued delivery of mission-critical objectives.

The quality of funding: Breaking the 'optional' mindset

"The humanitarian system is failing to reach more than 100 million people, and last year only 43% of the humanitarian aid needed was funded," said a humanitarian policy expert from Oxfam. This alarming statistic points to a fundamental flaw in the way the global community views humanitarian aid - as something optional.

It's not just about getting more funding; it's about the quality of funding. Flexible, long-term funding allows organisations to plan for the future and respond effectively rather than reacting to crises as they happen.

The current system, with its reliance on short-term, reactive funding, prevents the development of the resilience needed to meet future challenges.

In a world facing more frequent, protracted and severe crises, the way humanitarian aid is funded must change. INGOs and their local partners can no longer be seen as mere emergency responders, constantly at the mercy of unpredictable funding cycles. Instead, the sector must push for funding mechanisms that enable both the preparation and empowerment of local partners and the communities they serve.

Decolonisation and localisation: Tinkering or transformation?

The challenge of shifting power from global organisations to local actors goes beyond rhetoric—it requires real, structural change.

One communications professional in the sector asked a critical question:

"How can we decentralise and localise when the civil society economy is so resistant to change?"

This goes to the heart of the decolonisation debate. To move beyond buzzwords, localisation must mean a real change in the way INGOs operate. This means reallocating resources and decision-making power to local partners, even in the face of financial constraints. However, with funding cuts affecting key areas such as safe programming, business support, and preparedness, INGOs risk exposing their local partners and communities to greater vulnerability, potentially undermining years of progress.

Localisation cannot be tokenistic—it requires real investment in local capacity and leadership.

My article, 'Decoding Development Buzzwords: Understanding the Meaning of Localisation and Decolonisation,' provides a thorough analysis for those wishing to explore the concepts of localisation and decolonisation in more depth.

The challenges facing the sector are not unique to any one organisation —they are collective challenges that affect the entire humanitarian and development ecosystem. Finding solutions will require unity within the sector, working in solidarity to promote the systemic changes that are needed. This is not a time for siloed strategies or quick fixes—it is a time for collaboration, transparency and bold action.

As INGOs and local partners face these common challenges, the sector must come together to strengthen its collective resilience. Like a well-coordinated team, each organisation has a role to play, with interconnected efforts strengthening the whole.

The current crisis is not just a test of our capacity, but an opportunity to rethink how we work together to ensure that we emerge from this moment stronger, more agile and better equipped to meet the needs and rights of those we serve.