This is its most serious financial crisis in its one hundred and sixty years of existence. The International Committee of the Red Cross (ICRC), a leading body on international humanitarian law in more than 100 countries, announced this week the dismissal of 1,800 of its 20,000 employees worldwide and asked Switzerland – one of its main donors – to overcome its significant financial difficulties.
These announcements have led to strong internal tensions. A letter gathering 2500 signatures from staff members was sent to management demanding accountability, the document denouncing a "budgetary drift" over the last decade.
These employees accuse the former leaders of the ICRC of having wanted to grow too quickly by investing massively in humanitarian assistance to the detriment of the organization's core activity, which is the protection of people affected by armed conflict.
The new president Miljana Spoljaric, who arrived in October, points to the lack of funding in a difficult international context, which has forced the organization to a massive savings plan of 440 million over the year 2023.
An ever-widening gap between needs and donations
While the causes of the ICRC's financial crisis are debated, the organization is not alone in having to scale back its budgetary ambitions. In 2022, the United Nations recorded a record deficit in its humanitarian missions with only $24 billion raised out of an estimated needed amount of nearly $52 billion.
According to Jens Laerke, spokesman for the UN refugee agency (OCHA), 2022 was marked by both a record number of donations and a record funding gap. "So the problem is this: the needs in the world are growing much, much faster than donor funding," he concluded.
For French NGOs, the situation is similar. According to the Coordination Sud study, funding for international solidarity associations jumped by 43% over the 2016-2020 period, driven by growth in public (+63%) and private (+22%) investment.
This increase in funding is part of the Sustainable Development Goals (SDGs), set by United Nations member countries by 2030 and which include the defense of human rights, the environment and the fight against poverty on a global scale. However, this increase in funding remains very insufficient in view of the exponential growth in needs.
"On the one hand, we have ambitious objectives on which we are very mobilized and on the other, crises that are multiplying, to which are added climate issues that generate enormous needs," says Isabelle Dedieu, head of social networks and media relations at the French Development Agency (AFD).
The Ukrainian steamroller
In recent years, two major international crises have focused media attention: the Covid-19 pandemic, which spread across the globe from the end of 2019, and then Russia's large-scale invasion of Ukraine, which began on February 24, 2022.
If this war on European soil has aroused in the West a massive outpouring of solidarity towards Kiev, other causes are much more difficult for NGOs to finance despite the urgency of the needs. This is the case of so-called "lasting" crises such as Afghanistan, Yemen, DRC, Venezuela or Haiti.
"This phenomenon is certainly not new but it is particularly visible with the war in Ukraine," said Pierre Micheletti, president of the NGO Action Against Hunger. "This conflict on our doorstep generates a very strong solidarity of proximity and it must be recognized that it strips a little the generosity brought to more distant crises".
The problem of earmarked funds
To fill this gap, international organizations rely on unearmarked funds, donations that are not dedicated to a particular cause but allow NGOs to respond to priority humanitarian needs. However, according to the ICRC, these are increasingly difficult to harvest.
"The International Committee of the Red Cross has the particularity of being financed solely by voluntary contributions from States," said the organization's spokesman in France, Frédéric Joli. "However, most governments prefer to direct the allocation of their funds. This issue is under constant negotiation," he said.
"The earmarking of funds is a problem that we all face in the humanitarian sector because more than 80% of government aid, which is our main source of funding," said Pierre Micheletti, president of the NGO Action Against Hunger. "By choosing their causes, states politicize humanitarian action and in fact promote compassion in variable geometry. We are trying to compensate for this phenomenon with the unallocated private donations we receive, but our means are insufficient," he said.
Inflation and insecurity
In addition to this growing imbalance, humanitarian organizations are also grappling with the soaring inflation of energy and food costs generated by the conflict in Ukraine. This problem has two combined adverse effects on NGOs, since it entails, on the one hand, additional expenditure, and on the other, affects the financial capacities of donors. From 4% in 2021, the increase in donations from the French has increased to 1% in 2022. Far from being able to compensate for the expenses of NGOs related to inflation.
Finally, growing insecurity in the humanitarian field has become a major problem in recent years, requiring significant and costly security resources on the ground. During 2021, more than 140 aid workers were killed in attacks, the highest level in eight years.
Model out of breath?
Faced with soaring costs and the growing difficulty of meeting humanitarian needs, actors in the sector are trying to reinvent themselves, fearing that this situation will continue. The political situation in the United States, the world's largest donor, is of particular concern, as is the possibility of a future recession due to the stalled war in Ukraine.
To break the deadlock, the ICRC, which expects to cut humanitarian aid budgets over the next few years, announced the closure of 26 sites around the world and the reduction of its financial aid programmes.
"Our budgetary constraints are now pushing us to return to our fundamentals: the protection of civilians in conflicts and the fate of captured combatants, in accordance with international humanitarian law of which the ICRC is the custodian," said his spokesman, Frédéric Joli.
To avoid such a pitfall, some NGOs have decided to diversify their sources of funding with a view to reducing their dependence on States. To support this approach, the French Development Agency (AFD) is currently raising awareness among the private sector, particularly French foundations. "90% of their humanitarian investments are focused on France. This is of course very useful, but we call on them to step up their actions also outside our borders," says Isabelle Dedieu.
Pierre Micheletti also advocates reducing dependence on states, but through a more restrictive framework. "The problem today is that 80% of public funding comes from a dozen donor countries, while some large states such as China, India or Brazil invest very little. In order to reduce dependence on these large donors, their number must be expanded through a mandatory contribution. If the 90 richest countries invested 0.03% of their gross national income in humanitarian aid, the gap between donations and needs would finally be closed," says the president of Action Against Hunger, author of a book on the subject.
"Admittedly, the humanitarian funding model as we know it today has become almost obsolete," he said. "The financial crisis that is hitting the ICRC today is another example of this. It is the very framework of this system that needs to be rethought."
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