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It's all about the money

The business of humanitarian aid and who holds the purse strings L2GP
There are plenty of gripes about the humanitarian system, but most of them boil down to money.

According to the UN’s emergency aid coordination body, OCHA, less than one-fifth of the US$19.44 billion required for humanitarian response this year has been funded, creating frontline cash shortages and spending cutbacks across the board.

With protracted conflicts in Syria, Iraq and South Sudan driving record levels of displacement, migrant crises in Europe and Southeast Asia, and a string of natural disasters, most recently the earthquake in Nepal, demand has never been greater.

And as a result, the rising cost of responding to these growing needs – and how to plug that funding gap – is dominating debate in the aid sector and is likely to become one of the key themes at next year’s World Humanitarian Summit (WHS).

“There are an increasing number of concurrent chronic crises and the demands are becoming unsustainable,” Mike Noyes, head of humanitarian response at ActionAid, told IRIN. “The World Humanitarian Summit will not be a success unless financing is a central part of the agenda.”

In May, UN Secretary-General Ban Ki-moon set up a high-level panel to come up with solutions for a more timely and predictable system of humanitarian funding, and to suggest ways that resources could be deployed more effectively.

Its nine members met together for the first time in late June and they are due to report back ahead of WHS next May.

Interactive: The Humanitarian Economy 

Growing the pot

A key challenge is how to “grow the pot” and source more money for humanitarian response.

“The donor base must clearly expand and we need to make the private sector a more predictable partner for funding and for response,” new OCHA chief Stephen O’Brien noted at a recent UN event on humanitarian financing.

Oil-rich Gulf states like the United Arab Emirates, Kuwait and Saudi Arabia, who have been steadily increasing their spending with recent large donations to the UN in Iraq and Yemen, are also being tapped for more money.

READ MORE: Gulf countries: growing aid powers

Barnaby Willitts-King, a research fellow at the UK’s Overseas Development Institute (ODI) think tank, welcomed the “timely” formation of the UN panel on humanitarian funding, especially its diversity, with members drawn from the private sector and the so-called global South.

But, he cautioned, “These are problems that have been looked at for many years. There are no easy answers.

“My concern also is that we are putting too much hope on plugging the funding gap from donors like the Gulf states. They do sign big cheques, but they don’t always do so in a predictable way,” he told IRIN, adding that the private sector was also not necessarily the panacea it was being made out to be.

“There are some opportunities, from the point of view of employees wanting to give money and support to crises like Nepal,” he said. “But are we going to see corporates start making big donations to the UN? I am not so sure.”

Shifting controls

In addition to finding ways to grow the funding pot, at the heart of the debate is a also a call to change how – and by whom – aid money is spent.

It is time, many argue, for large “Northern” donors like the United States, the UK and the European Union to loosen their grip over the humanitarian system and devolve more money and power directly to local and national organisations.

According to the 2015 Global Humanitarian Assistance Report, published by UK-based Development Initiatives in June, national and local NGOs received just 0.2 percent of the funding, half the 0.4 percent they received in 2012.

Policy experts argue that giving so little money directly to local organisations – which are on the frontline of response – not only limits their capacity development but also underlines the paternalistic – or even colonial – attitude held by donors in the North and West, about aid actors in the global South.

It means that how aid is delivered is still dictated by those who fund it, rather than by those who are on the ground actually working with the people in need.

READ MORE: NGOs: bridging the North South divide

“Crises and needs are at the local level in local areas, yet the funding comes from foreign governments to largely foreign agencies,” complained Degan Ali, executive director of Nairobi-based African Development Solutions (Adeso), which is leading calls to set up a southern NGO network to help manage funding for local organisations.

Anne Street, head of humanitarian policy at CAFOD, a leading UK-based Catholic aid agency, told IRIN that the humanitarian funding model “needs to change”.

“Donors, the UN and NGOs need to have some bold conversations and start getting behind different options and testing out the different models,” she said.

The Future Humanitarian Financing (FHF) initiative, part-supported by CAFOD, is among those calling for a major system shake-up.

“Removing barriers and enabling local and national actors to access international sources of humanitarian financing should be an urgent priority,” it said in Looking Beyond the Crisis, a report published in May.

Based on research gathered from a series of “cross-sector dialogues” in London, Dakar, Amman, and Bangkok, the 52-page report noted: “The international humanitarian enterprise is out of step with the realities of the world in which it operates and is far from fit to meet the challenges of the future. A fundamental shift in the humanitarian business model is overdue.”

“The FHF report was about sowing seeds; now we just need to water them and make sure that they grow,” Street said.

The challenge, of course, is how to make that happen.

Pooled funding

One option is pooled funding, whereby donors give money to a central fund that is then allocated based on need on the ground, rather than a specific donor agenda.

A number of country emergencies are now using pooled funding to speed up the release of money to agencies working on the ground.

Launched in 2014 by UK-based Start Network, a consortium of international NGOs, the Start Fund is a type of pooled fund, focussing on sending money to organisations working in developing emergencies, which in many cases are yet to receive media attention or cross donor radars.

“We sent money to Ebola-affected countries in June last year and that money went towards awareness-raising and hygiene supplies that arguably saved many lives,” explained Start Network director Sean Lowrie. “We were not waiting for the media to create a story. We saw a need and we used our delegated authority.”

Lowrie pushed back against calls for more money to go directly to local aid actors instead of via international organisations and UN agencies.

“We don’t think changing the implementing partner is going to change the systemic behaviour,” he said. “The key issue is not who does the work, it’s what does the population need.”  

OCHA is also understood to be working on reforming its approach to management of humanitarian funding, while there are growing calls from across the industry to promote more direct cash-based programming (instead of in-kind support) in crisis response.

But how best to measure and manage these more direct approaches remains an issue.

New research by the Local to Global Protection Initiative (L2GP), produced in conjunction with IRIN, reveals that large donors and agencies struggle to track aid money as it moves down the supply chain.

SEE OUR DATA ANALYSIS: The Humanitarian Economy 

There are fears that lack of accountability, perceived or otherwise, could put the brakes on the push to devolve more control and cash down the line to local organisations.

“Given that we are all talking about the importance of local responses, it is fascinating that we cannot put a figure on how much is spent locally,” added Nils Carstensen, co-author of the L2GP research.

Development or Humanitarian?

Another question endlessly up for debate when people discuss aid funding is: where does humanitarian effort end and development work begin?

“Humanitarian crises are inextricably linked to other factors including vulnerability, poverty, inequality and political and environmental fragility,” said WHS secretariat chief Jemilah Mahmood, writing in The Guardian newspaper.

“The simple fact is that these protracted and recurrent crises cannot be addressed through humanitarian action alone,” she said.

“We must harness the strengths of multiple actors and multiple sources of finance to reduce vulnerability and dependency on humanitarian aid, and increase people’s resilience to crisis.”

Noyes of Action Aid agrees.

“Over the last few years, it could be argued that we humanitarians have gone from a situation where humanitarianism was about just emergency response to where it is now: about emergency response, preparedness, recovery and resilience,” he said. “Our appetite has got bigger while the pot hasn’t.”

While Noyes said he believed there was an argument for development actors to be investing more, he also questioned the “divide” between the humanitarian and development response.

“Many of us are on the delivery end of multi-mandate organisations. The donor pot itself very often comes from the same governments but it kind of gets separated in the middle and re-joins again,” he said.

While different approaches abound, what is clear is that there is plenty of interest and momentum around reforming the system.

“This is a hugely important moment in terms of humanitarian financing; there is a lot to play for,” said Street.

“Hopefully, this time in two years we might begin to see some real changes, which will enable humanitarian action to be better-placed to work more rapidly, more responsively and more appropriately when and where it’s needed, delivered by who is best-placed to do it, as opposed to whoever is best-placed to access the funding.”


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