An analytical framework for examining the ethical dimensions of innovative humanitarian finance

Despite the increasing exploration of innovative financing mechanisms to address the widening humanitarian funding gap, scholarly engagement with innovative humanitarian finance remains remarkably scarce. Many of these mechanisms adopt blended finance models, in which public or philanthropic funds are used to de-risk and attract private investment into fragile contexts. While such arrangements raise fundamental questions about the compatibility of profit motives with humanitarian values, their ethical implications are not well understood. This article addresses these gaps by introducing a novel analytical framework for examining the ethics of using market-based financing mechanisms for humanitarian action. The framework integrates three interdisciplinary ethical perspectives - market ethics, humanitarian principles, and normative moral philosophy - to form a layered and comprehensive approach. The article demonstrates the application of the framework through the case of impact bonds - an outcome-based financing mechanism in which investors provide upfront capital and are repaid with interest if projects achieve their intended outcomes.