UNRWA chief explores 'revolving fund' model

The United Nations agency for Palestine refugees must change how it is funded or else risk collapse, according to UNRWA chief Philippe Lazzarini. He has some ideas. As Devex reported in March, the agency, founded in 1949, enjoys widespread political support yet is chronically underfunded. Once-reliable partners becoming less so, scant long-term grants, and rising need among the people it serves in Gaza, Lebanon, and Syria all play a role. Now, the war in Ukraine is bringing new pressures on food prices and donors’ aid budgets, raising the stakes for Lazzarini as he tries to keep paying the salaries of teachers and health care workers, among others. Earlier this month, Devex caught up with the Lazzarini at the Brussels VI Conference for Syria to ask about the path forward for an agency that considers itself the “only remaining lifeline” for over 2 million Palestinian refugees living in poverty. This conversation has been edited for length and clarity. What are the main trends that UNRWA is observing at the moment? More people in need of assistance, because they're really struggling with day-to-day market prices. When it comes to our own operation and procurement, we have a number of vendors who have been very clear that they will not be able to deliver any more on contracts agreed just before the Ukraine conflict. They say they will not deliver or want to renegotiate the contract. And thirdly, a number of donors are now giving priority to the conflict between Ukraine and Russia. This has translated for UNRWA into donors delaying their contribution. Other donors are indicating that they will not be in a position to provide the end-of-the-year top-up, because their funds would have been completely depleted — which, for an organization like UNRWA, has severe implications. We have such tight cash-flow management that any delay has a real impact on our ability to keep our services running. Our workforce is primarily composed of teachers, health workers, doctors, sanitation engineers — and if we are not in a position to pay them, it has a direct impact on our ability to deliver the service to the population. How could your funding be managed differently? UNRWA is an organization which is expected to provide government-like services. We are expected to provide education, primary health care, [and a] social safety net to one of the most destitute communities in the region — being the Palestinian refugees — until the day there is a political solution. But at the same time, our funding basis is like any NGO. It’s based on a voluntary contribution. Now it is true that for many donors, the normal reaction would be: “You have to adjust your spending to your income.” But if your mandate is to provide education to all the Palestinian refugees, and you’re minister of education and your budget is halved, you will certainly not say: “Oh, that's fine. I will ask half the children not to go to school.” So we’re asking, “Where can we find the funding?” This is a structural issue that we are trying to address with the member states, which requires not just a technical adjustment. It requires that we better match the political mandate to the resources being made available to the organization. What do you think of the idea, suggested in a high-level report in September, of a global fund for solutions to so-called internal displacement? Thematic funds are definitely useful and ultimately provide additional alternative funding streams for situations where we are constantly, constantly struggling to get the resources. Would such a fund be accessible to an organization like UNRWA? Well, there could be a situation like in Syria, where more than half the Palestinian refugees we are serving had to move because of the conflict and had to continue to be supported in-country. A thematic fund definitely would be a way to alleviate the financial burden the organization is confronted with. I’m also looking at how we can create a kind of “revolving fund” for an organization like UNRWA, because I do believe that there are some activities which could require important investment and which, in the longer term, would bring back some return on this investment. “We have such tight cash-flow management that any delay has a real impact on our ability to keep our services running.” --— Philippe Lazzarini, commissioner-general, UNRWA We have revolving funds in microfinance, and our microfinance activities are fully covered by incomes generated by this activity. We keep hearing that an organization like ours should invest in digital fundraising. And if you talk to experts, you always have a return on investment for every dollar being invested in digital fundraising. But for an organization which has absolutely no cash available, negative cash flow, and does not know if by the end of the month we will be able to pay the salaries, it's almost impossible to invest the 10, 20, 30, 40 million dollars required for that. Hence, revolving funds being made available to an institution like ours — through a combination of, for example, a loan provided being guaranteed by a donor for the next 20, 30, 40 years — could certainly be highly helpful and help us to think in more creative ways. Are you talking to development finance institutions about this? I have raised this issue with a few potential donors, including development banks, yes. … They are looking, but then you always need a guarantor.