A struggling humanitarian sector amidst a global polycrisis: What lies ahead?

Transformative philanthropy ─ why it’s crucial and what it will demand

The world is facing a global polycrisis of multiple, intersecting emergencies and disasters that require humanitarian intervention. We can no longer focus on solving a single problem at a time. We need a new social development model that can deal with highly complex problems while making provision for an array of variables and unknowns – and we need it within two years. Such a model will require widespread collaboration and significant transformative changes across the philanthropic ecosystem: from the outside in (sector changes), from the inside out (organisational changes) and from the bottom up (funding changes).

The humanitarian sector in 2024/2025: A case of transform or die?

A vulnerable humanity facing a global polycrisis

In an attempt to describe a world in constant turmoil, world leaders, policymakers and economists attending the 2023 annual meeting of the World Economic Forum started talking about a “global polycrisis”. At the heart of the concept is the understanding that we are facing multiple intersecting crises that are creating compounded impacts. Consider floods caused by climate change that trigger infectious disease outbreaks that, in turn, escalate into food insecurities due to conflicts and empty state coffers. This is why nearly 300 million people around the world will need humanitarian assistance in 2024.

The scale of change requires a new social development model

Since there are no longer “single” crises, the implication for philanthropy is that there can no longer be “single” solutions. To add to this complexity, the humanitarian sector is already in a precarious position. Despite some positive developments since 2020 – such as using outcomes-focused monitoring and evaluation as the baseline and an increased focus on diversity, equity and inclusion – the polycrisis is putting renewed pressure on the sector. As a result, the sector faces the threat of a permacrisis over the next two years, with a myriad of challenges, including:

• An increase in legislation on the one hand but a lack of governance and benchmarking on the other.
• Uncoordinated efforts fuelled by a lack of data and research.
• Overcrowding – too many and too small interventions that lack innovation – and silo mentalities.
• Inaccurate budgeting, escalating costs and a lack of diversified revenue streams.
• Wasted, redirected, misappropriated resources, including underinvestment in people, capacity, technology and infrastructure.

We urgently require a new development model that can address these challenges and accommodate the large, unavoidable structural changes that need to take place if we are to make a dent in the snowball effect of the global polycrisis. This model will have to meet a range of requirements:

• Big budgets to support economic progress, which is now understood to underpin social and human development.
• New and innovative financial models that bring different capital structures together to deliver impact as well as a return on investment, are performance-based and require large networks of stakeholders.
• Diversified approaches to deal with complex, systemic and integrated challenges such as food insecurity, the cost-of-living crisis, climate change adaptation, democracy, disaster readiness, the migrant crisis and localisation.
• Extended human and organisational capacity that supports resource efficiency, cost effectiveness (value for money), relevant expertise and evidence of implementing at scale across disciplines and geographies.
• Innovative technologies, especially AI/machine-based learning solutions and software, to inform and track investment and development practices.
• Large-scale collaboration via large networks of experts and more collaborative funding structures that include intermediaries, networks, coalitions, infrastructure and backbone organisations.
• A new language and vocabulary, with concepts like decolonising, nature-based or regenerative philanthropy and collective, shared or equitable impact becoming widely used.

Complex problems require complex solutions

To establish an operating system that can meet these requirements in order to successfully solve the complex challenges of a world in a polycrisis, I believe there are two areas in particular that we need to focus on: collaborative and network philanthropy and transformative philanthropy.

In the case of collaboration, the focus should be on capacitating organisations to codevelop effective solutions to known problems with communities and stakeholders. In the context of the polycrisis, it is however critical to address the highly complex, disruptive problems that are having a disastrous impact across the globe. This is where transformative philanthropy is critical. It focuses on the systemic root causes of these problems, with role players across the humanitarian ecosystem cocreating solutions.

How to build an ecosystem equipped for transformative change

What does all this mean in practice for the 2024/2025 humanitarian sector? In my view, all role players in the ecosystem need to implement transformative systems to prepare for the short term. This will require significant change on three levels:

Change from the outside in: Sector changes

What’s needed and what this will mean in practice

• Collaborative and enabled systems: A focus on outcomes, coupled with technology-enabled systems and innovative approaches that are based on evidence.
• An inclusive, multi-stakeholder-based model that facilitates scalable, integrated and cocreated solutions.
• Better, more credible and transparent data: Effective impact management and measurement, with AI tools playing a crucial role in providing accurate and real-time insights into outcomes.
• Competent, skilled and experienced human resources: An increased focus on:

1. Data literacy and analysis skills, including the ability to analyse the strengths and limitations of different digital tools.
2. An understanding of data privacy laws and unconscious bias in data handling.
3. Designing and applying technology solutions that prioritise human welfare and ethical considerations.

• Partnerships for effective impact: Building and nurturing connections between diverse partners across the public, private and social sectors.

Change from the inside out: Organisational changes

What’s needed and what this will mean in practice

• Inclusion of the next generation: Appointing more young, qualified, competent and aspirational changemakers that want to influence the flow of capital as well as the direction of development as board members. (The general tech savviness of the youth also supports the shift towards data-driven social development.)
• Extensive technology adoption: Enhanced reporting and communication, leading to increased transparency, better engagement and collaboration, and new ways of doing development, with less pressure on resources.
• Innovative funding models: AI-driven funding models that:

1. Help identify promising social enterprises for investment.
2. Ensure that funds are directed towards initiatives that align with impact objectives.
3. Maximise the potential for positive impact and return on investment.

Changes from the bottom up: Funding changes

What’s needed (some are already taking place) and what this will mean in practice

• Increase in impact investing: More socially conscious investors that seek financial growth as well as measurable social or environmental benefits.
• Community-centric fundraising: Prioritisation of the community over individual(s) and organisations that, in turn, facilitates a collective, holistic approach that encourages support between local organisations.
• Niche platforms: More platforms that verify credible organisations, facilitate transactions and drive online giving globally.
• Outcomes-based funding: Streamlined funding processes, that promote cross-sectoral coordination, ensure accountability, and enable long-term funding aligned with multi-year budgeting models and shared return on investment.
• Collaborative funding as the standard: A shift to multidonor and public/government funding models towards shared goals (instead of the more traditional practice of a single source providing the lion’s share of philanthropic capital), which can magnify impact and help solve complex societal issues at scale.
• Matched funding: Blended and innovative funding models that make provision for multiple cofounders using different mechanisms to ensure measurable impact.

Diversified portfolios are unavoidable

With the sheer scope of humanitarian issues that we are dealing with combined with limited funding, it is unrealistic to aim or expect to provide a solution to every problem. Even if we manage to reorganise the different parts of the ecosystem, how do we know what we should focus on? Overall, the global polycrisis is forcing us to prioritise and follow a more diversified and strategic approach. While many traditional focus areas such as arts and culture, sport and housing are being pushed from the priority list, other areas are becoming increasingly important, as reflected by these trends: 

• Education: The focus is shifting to early childhood development and collaborative funding approaches. (While STEM literacy and numeracy are still important, it’s regarded as too limited to enable systemic change.)
• Environment: Due to the climate emergency, programmes have changed from environmental awareness and conservation to climate mitigation and adaptation to make communities more climate-resilient.
• Disaster relief and response: Driven by the climate crisis as well as increased conflict, more and more organisations have to reserve funding for disaster responses.
• Food security: The priority is shifting to a specialist, systems approach, with a focus on the agricultural value chain.
• Entrepreneurship: Driven by the need to solve youth unemployment, the priority to grow the economy as well as the objective to move to more innovative social innovation and development practices funding for entrepreneurship is increasing exponentially.

What’s next will depend on who and where you are in the ecosystem

Whether you provide social services or the resources that enable these services and the nature of what you provide (where, what, to/with whom, how) will ultimately determine your role in realising the much-needed transformative change. If we take a very simple view and consider the demands, I believe there are four broad directions in which to go:

With the exception of the worst-case scenario of having to scale or close down, collaboration is the golden thread and the key to a transformed humanitarian sector.

Are we ready to transform?

From experience, we know that change seldom happens in a neatly ordered fashion. It is complex, messy and elusive, often nullifying our beautifully crafted and logical frameworks and theories of change. We also know that no single organisation can move society in a new direction – transformative change requires large-scale, strategic collaboration.

The problems we’re facing are highly complex and interconnected. There is no roadmap for the injustices we are trying to solve. What has brought us here will not take us forward. With so many variables – in terms of inputs, solutions and outcomes – we’ll need multiple plausible maps of change, and multiple rounds of trial and error.

#polycrisis #permacrisis, #transformativephilanthropy #collaborativephilanthropy #ecosystemchange

Author Reana Rossouw is one of Africa’s leading experts on social innovation, sustainable development, shared value and inclusive business strategies. As director of Next Generation Consultants, a specialised management consultancy, she believes strongly in contributing to the development and capacity-building of the sector. Through advisory, research and strategic work, Next Generation aims to solve social problems through social innovation, and in the process create shared value and social capital.