AidEx 2025 – Navigating the Future of Humanitarian Finance

Last month, I had the opportunity to attend AidEx, a highly reputed conference in the humanitarian sphere, bringing together international and local NGOs, donors, academics, and private sector actors. Over two packed days, I listened to thought-provoking speakers, explored emerging trends in humanitarian finance, and took part in a Harvard-led simulation that offered a hands-on glimpse into the complexities of humanitarian response.

What Happens When Crisis Hits? A Simulation of Humanitarian Coordination
One of the most engaging sessions was the Humanitarian Response Simulation Challenge led by the Harvard Humanitarian Initiative. It asked a deceptively simple question: What do all the different NGOs do when a large-scale, multi-sectoral event occurs?

The answer is anything but simple. NGOs, local and international, are grouped into ‘clusters’ such as Health, Education, WASH, Protection, and Shelter. Each has its own expertise, but none operates in isolation. Local NGOs, in particular, play a pivotal role. Their deep integration into communities allows them to assess needs more accurately and communicate effectively with those impacted.

In the simulation, I was placed with a local education NGO. We reviewed key informant interviews that revealed urgent needs: overwhelmed hospitals, contaminated water sources, and displaced families. Our task was to coordinate with other clusters to design the most efficient and effective response plan. Our education cluster proposed creating Safe Zones for children; spaces where those separated from family or whose parents needed to rebuild their lives could receive protection, psychosocial support, nutrition, and, if needed, continued education. This required providing a clear outline of what we intended to do, what we would require from other clusters and how other clusters could use us. Once designed, we had to stand up in front of ‘donors’ and face live scrutiny of our decisions. This illustrated the role many institutional donors play in ensuring high standards and therefore high quality care is maintained, as well as non-governmental organisation’s role in truly understanding the community’s needs and context.

The exercise underscored the importance of collaboration, speed, and clarity in crisis response, and the critical role of local actors in shaping effective interventions.

Innovative Finance: A New Frontier for Humanitarian Aid

A key focus of the conference was Innovative Finance, a term that’s gaining traction as traditional donor funding becomes increasingly stretched. The sessions explored whether humanitarian organisations are ready to embrace new financial mechanisms and how public, private, and philanthropic actors can collaborate to fund long-term solutions.

So, what is innovative finance?
In the humanitarian context, it refers to moving beyond traditional grants and tapping into new funding streams, often from the private sector. One speaker broke it down into three main categories:

• Pre-arranged financing: An example of this is parametric insurance, which is where payouts are triggered by specific events, like extreme weather (based on pre-agreed thresholds of meteorological data). This is particularly relevant in regions facing the brunt of climate change. Programmes like those run by the International Rescue Committee are therefore exploring how insurance can protect vulnerable communities and small businesses as the frequency and intensity of natural hazards increase.

• Outcomes-based financing: This umbrella term refers to projects where payments are linked to pre-agreed social or environmental targets of a project. For example, the British Red Cross and a donor might agree that, for a specific project, BRC will support 100,000 people to return home after hospital visits across the UK. Upon the BRC achieving this target, the donor provides the agreed payment. This model can emphasise accountability and further incentivise measurable impact.

• Blended finance: Humanitarian blended finance uses funding already earmarked for development projects in frontier and emerging markets (e.g., from governments, foundations, development banks) to attract private investors. The approach typically blends the public or philanthropic capital with private investment in a way that reduces risk and so makes the opportunity more attractive to private investors, ultimately enabling development funding to reach further.

While these mechanisms may be standard in the financial world, they’re still relatively new to humanitarian organisations. AidEx explored how NGOs can adapt, without becoming financial institutions themselves, for these new partnerships to support the sector going forward.

By calculating the likelihood of an overspend, they are able to insure the whole fund. This means that in those extreme cases of depletion, an insurance payout enables them to continue financing projects. It is fundamentally important that funds don’t run out, not only to provide relief at the time on an event, but to ensure trust with organisations and communities for the future.

An interesting Network using pre-financing to tackle global emergencies is the START Network, which Jersey Overseas Aid funds annually. As overseas funding budgets dwindle, institutions are having to be innovative. This is why START Network has been designed, to pool money from multiple donors and insure it against worst-case scenarios. What does this mean?

START Network, active since 2014, is a fund made up of money pooled from government and philanthropic donors, which is replenished annually. Each year, they calculate how likely it would be for them to overspend. Given the unpredictability of natural disasters, each year is different and each country experiences them differently; there can be a good year of fewer natural disasters and then an extreme year, where communities, organisations and resources are overwhelmed. START Network, flexible by nature, is designed to combat these nuances.

By calculating the likelihood of an overspend, they are able to insure the whole fund. This means that in those extreme cases of depletion of the fund, an insurance payout enables them to continue funding projects. It is fundamentally important that funds don’t run out, not only to provide relief at the time on an event, but to ensure trust with organisations and communities for the future.

Gender-Based Violence: Funding People, Not Just Policies
Another powerful session focused on addressing gender-based violence (GBV) in humanitarian settings. Speakers from CEDESEX, NORAD, and others highlighted the ripple effect of supporting women impacted by GBV as well as how helping one person can strengthen entire families and communities.

The session also raised critical concerns: over half of women-led organisations may face closure due to budget cuts. But commitments (like NORAD’s) to flexible, long-term funding and pooled funds for local actors was encouraging. The message was clear: we must fund overheads, take more risks, and hold the humanitarian system accountable.

Final Reflections
AidEx 2025 was a whirlwind of ideas, acronyms, and ambition. It challenged me to think differently about how the sector funds, designs, and delivers humanitarian aid. As humanitarian organisations, we’re having to adapt and become more agile, informed, and collaborative.