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Renewing the Grand Bargain, Part 1: Old goals, a new path

‘It's the donors who still dictate the rules.’

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In May 2016, a sweeping deal was struck between the most powerful humanitarian players – the donor nations and the main international aid organisations. Its purpose: to make the system more efficient so it could respond more effectively to emergencies around the globe.

But five years after the Grand Bargain – as it came to be called – was negotiated at the first-ever World Humanitarian Summit in Istanbul, momentum has slowed. “There’s nothing grand about the progress that’s been made,” is how one group of NGOs put it.

Fortunately for those trying to make it work, the deal was meant to be re-evaluated after five years, and this is the year to do that.

Read More → Renewing the Grand Bargain, Part 2: Old goals, a new path

As discussions on overhauling the plan are poised to begin next week, The New Humanitarian spoke with dozens of people – from local and international NGOs, UN agencies, the Red Cross, and donor nations – to find out what went wrong and get their ideas on how to make things right. 

While many said they see value in continuing the dialogue, and appreciate that individuals from across the sector are trying to find solutions, they’re also weary of the disagreements and disappointed by the patchy progress over the past five years. “The Grand Bargain is a mechanism of coordination, not a mechanism of action,” said Hibak Kalfan, executive director at the NEAR Network of local and national NGOs.

The Grand Bargain: An overview of what happened and what’s next
 

In 2016, donor nations and aid agencies agreed on 51 “commitments” to make emergency aid finance more efficient. They called this package – where implementers and funders both had to change the way they work – the “Grand Bargain”.

But the process of translating 51 separate commitments into action proved harder than anyone had bargained for. Donors faced a slew of internal constraints, their hands tied by tight regulatory and compliance systems imposed by national treasuries and parliaments. But it wasn’t just the donors – each of the over 60 signatories had their own obstacles, incentives, and levers for change. The give and take the bargain demanded ultimately became its Achilles’ heel. 

One of the backbones of the Grand Bargain was supposed to be “quality funding” – longer term and more flexible grants, as opposed to highly controlled one-year cycles that are out of sync with the true nature of crises. The bargain ensured donor nations would get something from the agencies in return: better transparency about where funds ended up and greater cost-consciousness. But while some progress has been seen, a substantive reorientation of the funding landscape is still a long way off. 

Localisation was another standout priority. Despite inside knowledge and access, local organisations are often told what to do by international partners – treated as disposable contractors and denied the chance to take charge. Rather than an elite of foreign aid organisations calling the shots, commitments around “localisation” called for a more equitable and complementary division of labour – “as international as necessary, and as local as possible”. This concept is now hardwired into the humanitarian discourse, but progress on the ground is patchy, and direct funding to local groups remains low. 

One of the most fundamental imbalances in the aid system has always been its “take it or leave it” approach. People affected by crisis generally have no say over the goods or services they receive, nor a way to provide feedback on what is delivered to them, or how. Grand Bargain commitments around a “participation revolution” set out to change that by embracing ideas that had been circulating in the system for decades. Initial results have been far from revolutionary – amounting to a complaint box here, a hotline there – and the voices of people in crisis still struggle to be heard, even on decisions that affect their lives the most. 

What’s next? Signatories will meet in a few days time to hammer out how the proposed upgrade will actually work. The overall objective will be reframed to: enhanced efficiency, effectiveness, and accountability of the aid system. With the challenges of implementing the 51 commitments well understood, the Facilitation Group has drilled down on quality funding and localisation (including participation of affected communities) as the priority areas. They have also proposed a new set-up, elevating the technical workstreams into a more political arena, and strengthening local actor engagement in the negotiations. 

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After months of consultations with the more than 60 signatories, a Grand Bargain 2.0 has been proposed by the Facilitation Group – composed of representatives from each of the four original signatory groups (the donors, UN organisations, international NGOs, and the Red Cross/Red Crescent Movement).

The new proposed framework, obtained by The New Humanitarian, will run until 2023, at which point there will be another stocktaking of what has been achieved. It hones in on two priority areas: greater support to local leadership, as well as participation of affected communities; and more long-term, flexible support – or “quality funding” – to humanitarian responders. These, the proposal asserts, have “the most potential for system-wide transformative impact on the humanitarian ecosystem”.

Version 2.0 also revamps the structure, seeking to elevate it from the technical working level to the more strategic, political sphere in the hope that this will help resolve persistent gridlock. It also seeks to strengthen engagement with local actors by increasing their representation and influence.

The specifics are set to be worked out at the 15-17 June annual meeting, with Jan Egeland, the secretary general of the Norwegian Refugee Council, stepping in to guide this next phase as its new leader, or “Eminent Person”.

The real breakthrough was the concept of a bargain itself.

In July, Martin Griffiths will also start as Emergency Relief Coordinator – the top humanitarian position at the UN. As someone with a long humanitarian career, he may be able to help steer the sector through some of the thorniest problems the bargain seeks to address. 

Today, many of the Grand Bargain’s 51 original commitments have only been partly upheld, or have been buried in committee work and small-scale pilot schemes. “It has been a really mixed bag,” said Wendy Fenton, coordinator of the Humanitarian Practice Network and senior research fellow at the UK-based Overseas Development Institute, which annually reviews progress on the Grand Bargain commitments, and just released its latest review. “Five years sounds like a long time, but it really isn’t. I don’t know why we thought it would be possible to accomplish 51 commitments within such a short timeframe.”

The origins of the deal

Rewind five years to when the bargain was introduced, and the humanitarian sector was in trouble. The world was changing much faster and more violently than expected, leaving more people from all corners of the world in need of its assistance. Technical fixes had been made over the years to improve the system’s functioning, but it had reached its limits. As the sector’s major biannual review of humanitarian performance acknowledged at the time, “even as its machinery becomes more elaborate and finetuned, it is still akin to a pocket calculator attempting the job of a computer.”

Many believed the problem came down to money. For a long time, donors had only been coming up with a fraction of the amount required to meet major needs. In 2015, the UN estimated that $19.8 billion was required, with donors able to provide $10.9 billion of that, leaving a 45 percent shortfall. António Guterres, speaking then as the head of the UN’s refugee agency, said the humanitarian system was “broke, but not broken”. The humanitarian community had to find ways to make the system more efficient and cost-effective.

This time, the spirit was one of, we all want to make this humanitarian endeavour better, let’s help each other make that happen.

In 2015, the UN secretary-general called a nine-person panel of influential global leaders – from governments to the private sector – and tasked them with finding ways this stretched and weary aid industry could be better financed. By the start of the next year, they arrived at three recommendations, the last one, which would come to be known as the Grand Bargain, was to make the humanitarian system itself more efficient so the money it did disburse could go further. All told, this plan was going to save the system an estimated $1 billion.

READ MORE: A top-down and bottom-up bargain

When the High-Level Panel – nine influential global leaders who the UN secretary-general tasked with finding ways to better finance the aid sector – presented its report in early 2016, it outlined three objectives to close the gap between mounting needs and available funds. The first was to prevent costly crises from happening in the first place, by tackling known risks – both natural and man-made – before they unravelled into disasters. The second was to find pots of money elsewhere: by creating an international “solidarity” tax; or by drawing funding from states like those in the Gulf or China into the existing Western-dominated mechanisms; or by engaging the private sector in new ways. The third and final recommendation would become the Grand Bargain – to find efficiencies within the sector to make the money that did flow through it go even further.

For over two years prior, the preparations for the World Humanitarian Summit had included a series of global meetings to identify the sector’s biggest pain points and inform what topics would be addressed. Whereas the usual suspects (the UN and international NGO leaders) typically dominate these meetings with arguably tokenistic invitations extended to local and national actors, these consultations were different in both their expansiveness and inclusivity. They drew in over 20,000 representatives from civil society and governments, religious leaders, members of the private sector, academics, to listen to their concerns about how the system was running.

And it turned out that the problems that beset humanitarian actors went far beyond financing. “Many donors and UN agencies were caught off guard by the strong calls for a participation revolution and the localisation roar,” recalls Petra Demarin, senior adviser at the International Federation of Red Cross and Red Crescent Societies (IFRC), referring to the demands that came up in these meetings, namely that the system should not only include the voices of people it served, but also allow organisations from those countries to lead the response. These things picked up tailwinds during the consultations, and by the time they got to Istanbul they carried a powerful impetus. “The system had to come up with creative solutions,” Demarin said.

The resulting deal struck at the World Humanitarian Summit in May 2016 incorporated not only the High-Level Panel report’s third set of recommendations around efficiency, but also addressed the groundswell of discontent emerging from the global consultations. While at least one of the other two recommendations of the High-Level Panel has stalled, some have noted that the third pillar was – in many respects – the easiest of the three for players to sign up to and a way to show good faith that they were taking reform seriously. 

The report arrived at a time when the appetite for reform was strong and growing. The Sustainable Development Goals – a collection of 17 global targets set out by the UN to improve worldwide development – had been announced in 2015, with promises to “leave no one behind”. And, significantly for the humanitarian sector, preparations for the 2016 World Humanitarian Summit – a first of its kind meeting in Istanbul that would bring together 9,000 people from around the world to address the most pressing issues of the time – were well underway, and would ultimately be where the new agenda was launched. 

Over 30 donors and humanitarian agencies signed on the dotted line in Istanbul (today there are over 60 signatories). But the task ahead was daunting. The ambitious new agenda of 51 individual actions, categorised into 10 different workstreams (today there are nine) dissected the nuts and bolts of how humanitarian assistance and its finances were managed and processed. There were changes for donor nations: simplifying their painfully burdensome reporting requirements; and improving the short-term and rigid way they funded humanitarian groups. There were also changes for the implementers: being more transparent on where donor funding ended up; and providing donors with a more honest and shared approach to assessing humanitarian needs.

But the Grand Bargain commitments didn’t just dwell on technicalities. They addressed the human dimension of aid delivery too – arguing for putting people who received assistance in the driver’s seat by listening and responding to their feedback (the “participation revolution”). The commitments also stressed a change in the dispensation of resources so that national actors could have a greater share (the localisation agenda) as well as expanding the use of cash for a more dignified aid response. Not only were these the right things to do, many felt, but importantly for the bargain, they would also make humanitarian response more efficient.

READ MORE: The Grand Bargain workstreams

1. Greater transparency

2. More support and funding tools for local and national responders

3. Increase the use and coordination of cash-based programming

4. Reduce duplication and management costs with periodic functional reviews

5. Improve joint and impartial needs assessments

6. A participation revolution: include people receiving aid in making the decisions which affect their lives

7. & 8. Increase collaborative humanitarian multi-year planning and funding and reduce the earmarking of donor contributions

9. Harmonise and simplify reporting requirements

Former 10th workstream: Enhance engagement between humanitarian and development actors (now closed and mainstreamed within the other 9 workstreams)

The bargain’s give and take

The real breakthrough was the concept of a bargain itself: the fact that the most powerful players in the humanitarian system (the donors) had come together with organisations who actually implement the programmes they pay for (the UN, international NGOs and the Red Cross movement), with each signing up to change. As in any bargain – whether it’s negotiating the price of a carpet or making a system more effective – two sides engage in a series of trade-offs, and each offers something until a common desired outcome is achieved. Agencies couldn’t just request better funding, for example. Donors needed something in return: better transparency about where those funds ended up, and greater cost-consciousness. This quid pro quo arrangement between donors and implementers is what came to define the new agenda.

Past aid reforms had only targeted one segment of the system. The Grand Bargain targeted the functioning of the entire international system, and therefore everyone at once. This time, the spirit was one of, we all want to make this humanitarian endeavour better, let’s help each other make that happen.

“It gave me the sense of being able to sit at the table as a peer with donors and UN agencies and reshape the system,” said Cecilia Roselli – director of humanitarian policy for the Norwegian Refugee Council, and its focal point on the Grand Bargain negotiations – recalling an early meeting to harmonise donor reporting requirements. “We were looking in each other’s faces, raising our hands to sign up. There was a sense of collegiality which didn’t exist before.”

What will determine the survival or failure of the Grand Bargain 2.0 at this crucial moment is whether a more rigorous level of accountability around the commitments, especially for the most powerful, can be attained.

Donors hadn’t been formally invited to any other humanitarian coordination forum before. The Grand Bargain gave them a seat, recognising that they too were part of the problem, and therefore of any solution. “With donors in the room, they [the UN, NGOs, and Red Cross] have to be more transparent. And so do we,” recognised someone from a major donor, who wished to remain anonymous so they could speak freely.

At the time, the Grand Bargain had all the ingredients for success: stakeholders eager for change, a wishlist of pressing issues in need of reform, a seemingly genuine desire for all sides to come to the table and live up to their end of the agreement, and an arrangement that would hold each other’s feet to the fire.

But after the initial excitement about the bargain faded, and people got down to actually implementing the commitments, the sobering up began. A sense of buyer’s remorse set in, especially for the most powerful in the system – those with the most vested interest in maintaining the status quo.

Donors – while largely sympathetic to the aims of the bargain – faced a slew of internal constraints, their hands tied by the tight regulatory and compliance systems that their national treasuries and parliaments imposed. But it wasn’t just the donors – each of the over 60 signatories had their own obstacles, incentives, and levers for change. “They are well-intentioned, but these institutions are machines,” explained Lindsay Hamsik, senior manager of humanitarian policy at US NGO consortium InterAction, and a former member of the Grand Bargain’s Facilitation Group. 

Ultimately, the secret sauce that gave this new agenda the most promise and made it distinctively new at the time – the concept of a bargain itself – has also been its Achilles’ heel. Unlike other bargains where there are financial or reputational consequences for non-compliance, there has been no stick to accompany the carrots in the Grand Bargain. According to dozens of players in the field, what will determine the survival or failure of the Grand Bargain 2.0 at this crucial moment is whether a more rigorous level of accountability around the commitments, especially for the most powerful, can be attained.

“If the top donors and the key UN agencies are not willing to have hard conversations and hash out the real things that are needed to change, it’s hard to imagine this going forward,” said Kate Phillips-Barrasso, director of humanitarian policy for InterAction, and another former Facilitation Group member.

The pressure is certainly on. Last year, the funding gap grew even wider as conflict, climate change – not to mention COVID-19 and its knock-on social and economic impacts – resulted in unprecedented levels of humanitarian need. At the same time, the aid sector is grappling with colonial legacies and attempting to rewire inherent power imbalances within the system. 

“We are in bad need of inspiring and committed leadership to help broker the kind of deals to fundamentally change the system,” said Nils Carstensen, co-manager of Local2Global, a localisation initiative.

Cash, localisation, and other signs of progress

Yet despite all of the conflicts and setbacks, signatories continue to show up and engage, demonstrating the value they see in the forum. And some Grand Bargain commitments have seen progress. The uptake in the use of cash as a form of humanitarian aid has doubled since 2016, reaching a new high of $5.6 billion by the end of 2019. An additional bump happened last year, with 133 countries relying on cash-based social assistance programmes in response to COVID-19.

Cash though, was easier. There was little disagreement about its value, increased efficiency, and low risk. “One of the reasons why some workstreams were more successful than others is where there was a clear public good, clear improvements for all,” said NRC’s Roselli. And while agencies are still bickering over how cash will be coordinated, its use has been widely embraced. Roselli and others note that although the Grand Bargain may have accelerated the use of cash, it likely would have taken off with or without the commitments.

Others are pleased that localisation is now hard-wired into the humanitarian discourse in a way that it hadn’t been before – even if the commitment is obviously not met (these challenges are explored more in Part 2). The pandemic also lent new energy to the agenda, partly out of necessity. While a “lack of capacity” is often code for suggesting that local organisations are corrupt or not equipped to respond, those assumptions were proven false again and again last year, as local and national actors stepped up while their international counterparts were grounded. Suddenly, with a snap of a finger, many of the excuses that donors and UN agencies once had for not being able to fund frontline actors vanished. Many, including Roselli, are hopeful that, at a minimum, some of the flexibility afforded last year can be maintained.

Some donors creatively manoeuvred around tricky legislation to get funding to the ground while their usual international intermediaries were stuck at home. For example, the UK’s foreign aid office, or FCDO, opened a new rapid funding channel for COVID-19 that insisted that international agencies they funded pass on a fair share of the overhead costs to local and national actors

This could have a domino effect. “If FCDO is ahead of the game on this, it makes sense for us to follow suit,” said Michael Mosselmans head of the humanitarian division of Christian Aid. FCDO’s progressive positioning helped make it easier to win the argument inside Christian Aid to get on the front foot and change policy to share overhead costs equally with local partners. Other donor countries, like Denmark, Australia, and Germany, have initiated similar effects, requiring their international NGO funding recipients to rethink and revise their partnership approaches with local NGOs. While a core set of international agencies continues to prioritise equitable partnership arrangements with their local counterparts – including capacity development and multi-year funding – consistent funding for this is still hard to come by. 

At the end of the day, what the changes show is that it’s the donors who still largely dictate the rules of the system. “It’s a matter of them changing the game,” said Carstensen. “They are the only ones who can put power and speed on these issues. If [the donors] want it, they incentivise it, and then everyone will come running. I’m saddened to say that it feels like relying on Mom and Dad to solve the problem.”

For the UN organisations at the front of the feeding line, it took just one to show how changes were possible. UNHCR sub-contracts to many international and local NGOs. In 2019, it shifted its subcontracting agreements, allocating four percent to cover the overhead costs of local partners. UNHCR (as well as a handful of other UN agencies) has also adopted a simpler reporting template for its NGO partners (the background to this is explained in Part 2). “What it tells us is how much you can achieve with political willingness,” said Luca Peciarolo, senior adviser on humanitarian financing at the Norwegian Refugee Council and another of the organisation’s Grand Bargain focal points. “This is really possible. Why can’t others do that?”

And others are. In 2018, the Australian Red Cross decided to change its operating model, shrinking the size of its international team to not only focus on core humanitarian programming but also to shift from directly implementing to brokering resources and providing technical support to local Red Cross National Societies in the Pacific region. 

Local responders, however, aren’t waiting around as the international system continues to tinker with the status quo.

“We said to them, ‘we will guarantee this to help you develop’,” recalled Peter Walton – formerly director of international programs of the Australian Red Cross, now CEO of Care Australia – referring to multi-year funding for core costs (salaries for key roles, utilities, and rent etc.) that would help free up its partners to pursue their missions. “That was a breakthrough,” he said. And the action had a ripple effect too: The Australian Red Cross then secured a humanitarian partnership with the Australian government in which it agreed to also contribute to the core funding of their Red Cross partners. 

But Walton and others worry that these examples, on their own, won’t be enough to shift the needle. Without collective action, the international presence ceded by the Australian Red Cross may just be filled by another international NGO. “None of us are an island,” he said. “There must be a coalition of willing participants before the pendulum genuinely shifts.” He calls the approach that he has adopted “locally led, globally connected” – meaning there is a role for international organisations, but it needs to complement local initiatives – and he is urging others to adopt it too.

Local responders, however, aren’t waiting around as the international system continues to tinker with the status quo. As Sema Genel Karaosmanoğlu, director of Support to Life in Turkey and chair of the NEAR Network, acknowledged: “When we talk about local leadership, that means me, stepping up to mobilise the civil society in-country, and for us to set our own rules.”

Her organisation has become a go-to intermediary for international organisations like UNHCR working in Turkey. This is a new trend for national organisations, replacing international NGOs as “capacity builders” and doing more peer-to-peer learning and mentoring so that smaller local organisations can eventually access and absorb large sums of international funding.

But they are learning from the mistakes of their international partners, trying to act differently from those they criticise. “Whatever we demand from our partnerships [with internationals], we are applying those principles and practices with the local organisations that we support,” Karaosmanoğlu said.

Karaosmanoğlu also heads up a localisation advocacy group composed of 26 Turkish NGOs. They partner with international actors, but on their terms. “‘We are happy to work with you’,” she said they tell international partners. “‘But these are our prerequisites, and this is what we want from you’.”

Other local groups – like a network that Reza Chowdhury, executive director of COAST Foundation, started in 2017 called Bangladesh Civil Society Process – are bypassing the international system altogether, fundraising on their own terms so they won’t be influenced by anyone. “We decided not to take any international NGO or UN money,” he said, “because we want to develop a self-sustainable, locally accountable civil society in Bangladesh.”

Progress over the past five years, although slow and inconsistent, still offers hope going into this next phase. “We can’t give up the dialogue,” said Sudhanshu Singh, CEO of Humanitarian Aid International, a global Indian-based NGO. “Millions of people need humanitarian service, and the pressure must continue.”

Read next: Renewing the Grand Bargain, Part 2: Old goals, a new path explores some of the challenges that have stymied progress, and looks in more depth at the areas that the Grand Bargain 2.0 aims to prioritise: localisation, the participation of affected communities, and more agile funding.

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