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Ministry for Foreign Affairs Promemoria 26 August 2015 Department for Multilateral Development Cooperation Humanitarian

Ministry for Foreign Affairs

Promemoria

26 August 2015

Department for Multilateral Development Cooperation Humanitarian Affairs Section Peter Kvist Telephone +46 8 40 54 756 Mobile +46 725 259 130 Email peter.kvist@gov.se

Non-paper: The case for flexible funding for effective humanitarian action

Summary: Humanitarian financing is lacking in quality as well as in quantity. While the renewed focus on and growing trend of multi- year humanitarian financing is most welcome, the reverse trend of decreasing core and pooled funding is extremely worrisome. Increased use of core and pooled funding in humanitarian action would have significant benefits for efficiency, accountability and speed of delivery. Although donor concerns about core funding with regard to accountability to taxpayers are largely misplaced, humanitarian actors must do more to ensure donors of flexible funding receive the recognition and visibility they deserve.

Problem statement funds lacking in quality as well as quantity The desperate state of humanitarian financing is well known. The USD 11 billion provided in humanitarian aid in 2014 was a record amount. However, the enormous global humanitarian needs eclipsed this generosity, illustrated by a much sadder record the USD 7.4 billion that was lacking to meet the world’s humanitarian needs 1 . Humanitarian requirements in 2015 have grown even larger still, amounting to over USD 19 billion.

While we must continue our efforts to bridge the gap between humanitarian needs and resources in terms of quantity, it is evident that we must also strive to make the most of what we give in terms of quality. The renewed focus on and increased trend of multi-year humanitarian financing is most welcome. However, the reverse trend of decreasing core and pooled funding is extremely worrisome.

UN agencies have seen substantial reduction in the share of their financing resources provided through un-earmarked core funding. In 2014, just 9% of the World Food Programme (WFP)’s USD5.5 billion funding was unearmarked 2 .

1 Report of the Secretary-General: Strengthening of the coordination of emergency humanitarian assistance of the United Nations, p. 7.

2 Future Humanitarian Financing Report, p. 20.

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Compared with the increase in needs and donations, the proportion of funding channelled through pooled mechanisms such as the Central Emergency Response Fund (CERF) and country-based pooled funds has also decreased significantly. While the total amount of humanitarian funding almost doubled between 2012 and 2014, contributions to the CERF increased by only 10 percent.

The case for flexible funding for humanitarian action Several reports and studies, including the Secretary-General’s 2015 report on the strengthening of emergency humanitarian assistance, highlight the importance of sufficient core and pooled funding for the humanitarian system to operate effectively.

Specifically, un-earmarked core funding allows humanitarian actors to:

Respond quickly and effectively to sudden needs, without having to wait for directed and ad hoc funds to be processed.

Address humanitarian requirements based on needs, in accordance with the humanitarian imperative.

Set up and implement programmes in line with corporate strategies and internal expertise.

Better plan and manage programmes and budgets, particularly when flexible funds are given early in the year.

Make full use of tools such as bulk procurement or prepositioning of humanitarian goods.

To a lesser extent, engage in resource intensive competition with other humanitarian actors over limited ad hoc funds.

In addition, funding through pooled fund mechanisms can:

Promote country-led leadership, coordination and accountability, in line with the IASC Transformative Agenda.

Allow actors that are closest to affected populations to determine funding allocations.

Facilitate financial support to local NGOs and first responders.

Accountability and visibility The benefits listed above are all significant, and the value of flexible funding is repeatedly raised by humanitarian actors. So why is the level of core and pooled funds low? One reason is donors’ legitimate concerns about the control of and accountability for tax-payersfunds. Another is the inherent challenge of providing appropriate visibility and political recognition to donors of core and pooled funding, compared with donors who provide multiple ad hoc contributions directed at specific crises.

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However, we believe these concerns are largely misplaced for two reasons:

1) In recent years, the humanitarian UN agencies have developed substantially in terms of organisational professionalisation and results-based management. Significant achievements have also been made in the area of humanitarian reform, where combined efforts under the framework of the Transformative Agenda have led to better needs analyses, more strategic appeals and clearer accountability lines at country-level.

The work to ensure an effective and accountable humanitarian system is not complete and will continue indefinitely. However, considerable progress has been made and this deserves recognition through donors’ trust in agency expertise. We believe the best way to work together in partnership towards our common goal is to focus on the improvement of management and organisational systems at global level, rather than increase the burden for overstretched agencies through resource-intensive management of a large number of individual ad hoc grants.

2) Given the significant benefits of flexible funding, and considering the challenges the humanitarian community is currently facing, we believe that accountability to tax-payers is best ensured through the most effective use of their funds i.e. an increase in the proportion of funding that is provided on flexible terms.

We believe these arguments make a compelling case for flexible funding in their own right. However, the issue of lacking visibility and recognition for core and pooled funding must be taken seriously. UN humanitarian agencies have a responsibility to rethink the way in which they communicate to recipient states, to the general public in donor countries and within their own organisations - about the contributions they receive. Donors who provide what many humanitarian actors call their most valued resource flexible funds - should be given the appropriate recognition.

Flexible funding and good humanitarian donorship Providing flexible funding is one of the guiding principles of the Good Humanitarian Donorship Initiative 3 . Despite this, only a small part of humanitarian financing was provided through un-earmarked core funding or through pooled fund mechanisms in 2014. Our vision is to reverse this trend and significantly increase the proportion of flexible funding by 2020. We believe that in doing so, we will greatly contribute to the effectiveness and quality of principled humanitarian action, carried out by strong and empowered humanitarian actors.

3 GHD Principles and Good Practice of Humanitarian Donorship, principles 1112.

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Our vision by 2020, humanitarian financing:

- to the humanitarian UN agencies should consist of at least 30 per cent un-earmarked core funding;

- to the Central Emergency Response Fund should be increased to at least USD 750 million per year (and the grant element target should be increased accordingly);

- to Country-based Pooled Funds should at least double compared with 2014.