Theory of Change: #14: Is the global humanitarian system collapsing?

In an interview on Devex's Theory of Change podcast, Alight CEO Jocelyn Wyatt warned that the traditional humanitarian business model is facing structural failure. Following the collapse of the U.S. Agency for International Development and the transition of U.S. foreign aid programs to the U.S. State Department, organizations are having to rely on more rigid grants from United Nations agencies that typically cap overhead at 7%, leaving virtually no resources for operational leadership, compliance, or innovation, Wyatt said. Global humanitarian assistance fell by roughly 30% between 2022 and 2025, with 13 of the 20 largest donors cutting relief aid in 2025, according to the latest State of the Humanitarian System report, released last week. Wyatt highlighted how structural defects and funding restrictions in the traditional framework actively undermine long-term progress: • The misallocation problem: Private donor funding floods highly publicized, geopolitical conflicts (such as Ukraine), while long-term, acute humanitarian disasters (such as Sudan) receive virtually no private support due to public narrative fatigue, donor bias, and political media coverage. • Survival over solutions: With institutional funds shrinking, remaining aid is strictly funneled into immediate lifesaving care, stripping away funding for education, job training, and economic development that actually helps people transition out of displacement. • Failing durable pathways: The three traditional solutions for refugees — returning home, integrating locally, or third-country resettlement — have largely stalled or collapsed under political and financial strain. “This world order and these systems that were developed post-World War II have seemed like they're hitting their expiration date, and they will need to be reinvented. But that is not happening in 2026 or 2027, probably 2028. So in the interim, we need to find ways to help people be able to provide for themselves and their families,” Wyatt said. To survive the breakdown of the traditional model, Wyatt argues that humanitarian organizations must pivot toward financial self-reliance and market-driven solutions. “Let's actually put our resources to social enterprise models where we can recycle capital, where we can help people start businesses. Let's actually train people and connect them with employers so that they can get jobs and make money for themselves,” she said. “To think that governments are going to be the continuous providers of financial support to refugees ... I think is just a fallacy at this point,” she added.