The future of humanitarian financing

By Daphne Davies 17 June 2015

A small cash stipend given to Eritrean refugees to cover basic services such as food, water and shelter in Ethiopia. Humanitarian funding requirements for 2015 have risen to $18.8 billion with only 26 percent of the amount met. Photo by: Malini Morzaria / ECHO / CC BY-ND

Humanitarian funding needs fixing.

The number of man-made and natural disasters is increasing year-on-year, with the number of people in need growing 75 percent from more than 45 million in 2004 to 78.9 million today. And in its latest Global Humanitarian Overview Status Report, the U.N. Office for the Coordination of Humanitarian Affairs revealed humanitarian funding requirements for 2015 have risen to a record $18.8 billion. So far, only 26 percent has been met, leaving a $14 billion shortfall.

Last month, the U.N. appointed a High-Level Panel on Humanitarian Financing, jointly chaired by European Commission Vice President and former EU humanitarian aid chief Kristalina Georgieva and Sultan Nazrin Shah of Malaysia, to look at solving the funding issue. Humanitarian funding has also taken center stage at the U.N. Economic and Social Council meeting, known as ECOSOC, which will be held June 17-19 in Geneva, Switzerland.

Humanitarian needs vs. resources: How do we fill the gap?

U.N. Secretary-General Ban Ki-moon appointed a set of individuals to be part of a high-level panel who could find means to bridge the increasing gap between today’s humanitarian needs and the resources available. Co-chair Kristalina Georgieva shared the panel’s points of discussions and plans in this exclusive interview.

Anne Street, head of humanitarian policy at CAFOD, the official aid agency of the Catholic Church in England and Wales, sees these as “exciting [moments] in the whole process, which can focus on the bottlenecks and key issues and try to move the system forward.”

Sandra Aviles, a senior adviser at the U.N. Food and Agricultural Organization, said the panel and the meeting could “shape the tenor of years to come,” adding that she hopes “they suggest codes of conduct and a principled approach of how things need to change.”

Both Street and Aviles see the HLP and the ECOSOC discussion on humanitarian funding as a “huge opportunity” in the context of World Humanitarian Summit in 2016 to tap into a more diversified stakeholder base, and create a new generation of humanitarians.

Julian Srodecki, World Vision’s technical director for humanitarian grants, meanwhile hopes the ECOSOC meeting can forge a common agenda and build momentum as current structures require “changed behavior from all stakeholders in a world where financial power is more diversified, with new funding actors emerging with a powerful role to play.”

Ahead of the ECOSOC meeting, Devex asked these experts their views on what needs to change in the current humanitarian funding structure to stretch aid dollars and ensure the people in need get assistance faster.

Improve the funding architecture

The unpredictability of funding is one of the biggest obstacles to humanitarian work. As Street puts it “one often doesn’t know how much funding one is going to get, or when.”

And this is a common problem for all organizations, regardless of size or type.

For Aviles, a “quick win” would be to move from the current 12 to 18 months funding model to multiyear partnership agreements with donors. She cited seven countries — including the Democratic Republic of the Congo, Somalia and Sudan — where the United Nations has lodged appeals for over 10 years. If funding were predictable, organizations working in these countries would be able to plan for the next three to five years and “could deliver better value for money with lower administrative costs.”

Further, different fundraising methods address different humanitarian needs: Individuals respond well to natural disasters, while institutional donors address chronic man-made disasters like the effects of conflicts. Srodecki described how its Australian office raised more money from the general public for the Nepalese earthquake in a month than it had for Syria over four years.

There is also need to think beyond current donors. Fundraising is no longer a “Western” prerogative — in January, a Red Crescent telethon in Dubai for Syrian refugees fleeing a deadly snowstorm raised $40 million in six hours. In the future it is likely that regional organizations and donors will take more of a leading role in responding to disasters where they share high levels of cultural and geographic affinity.

Other fundraising innovations include air tax levies for development, such as that brought in by the governments of Brazil, Chile, France, Norway and the United Kingdom. ECHO, the European Commission’s humanitarian aid arm, also increasingly welcomes private funding for emergency aid from businesses and individuals, including through crowdfunding.

Form partnerships and work with local actors

Stability and predictability are important elements in mitigating the effects of disasters. The European Commission analyzes risks and coordinates planning and implementation through a joint development and humanitarian aid approach, such as the Global Alliance for Resilience Initiative in West Africa and the Sahel.

Meanwhile, following the 2011 East African food crisis, international nongovernmental organizations and locals from the region set up the Somalia Resilience Program, which includes a tool to predict changing climatic and humanitarian conditions and mobilize early action and funding.

Indeed, more responsibility should be given to local and national actors, which are the first to respond to disasters. From experience, FAO’s Aviles can attest that local businesses contribute to the humanitarian response “before, during and after a crisis, with a huge potential to identify cost efficiencies and achieve more with less.”

The private sector has also helped facilitate money transfers in support or in lieu of formal banking and financial institutions. In Somalia, for instance, World Vision’s Srodecki said mobile phone operators helped aid agencies transfer humanitarian funds there.

An ECHO spokesperson stressed to Devex the importance of engaging with the private sector in disaster risk reduction, citing how electricity, water supply and transport are increasingly managed by private companies. And aid workers must establish a dialogue with local entrepreneurs, who provide technical expertise and deliver aid, which is far more effective than seeing them as a “cash point.”

Unblock transition chains and standardize reporting

But apart from strengthening the funding base and forging strategic partnerships, streamlining delivery mechanisms and implementation is essential to improve humanitarian funding.

At present, for instance, money collected in donor countries goes through intermediaries to local actors. With U.N. appeals, money is channeled to the Central Emergency Response Fund, which allocates funding to the relevant U.N. agency, which then subcontracts to local actors. While there may be value added at each link in the chain, there are also administrative costs.

By analyzing the value added at each step, cutting out intermediaries with negligible contributions, the transition chain could be economized and funds could be delivered faster.

This streamlining of processes could be adapted for donor reporting requirements as well. CAFOD’s Street suggested standardizing interagency reporting as a way to make the system more efficient. Presently, humanitarian agencies have to report to each donor, which often has reporting requirements that differ from what other funders require.

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About the author

Daphne davies profile
Daphne Davies

Daphne Davies is a London-based freelance journalist and consultant with more than 30 years' experience in international development. She has worked with the U.N., the European Union, national governments and global civil society organizations, including Amnesty, WWF and LDC Watch. Her expertise is in monitoring government policies in relation to international cooperation. Her interests are in sustainability, social and economic matters, women and least developed countries.


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