Following decades of demands for UN reform, the rubber has now hit the road. All it took was Donald Trump’s dramatic gutting of US foreign aid.
At the largest humanitarian agencies, planners are contemplating what a halved US contribution would look like. Yet this is an optimistic scenario: Cuts may well be higher. Moreover, the widely held assumption that other countries would step up has not materialised. Donors both large (Germany and the UK) and small (the Netherlands, Canada, and Belgium) have announced their own reductions in foreign aid.
This has left agencies scrambling to enact plans that will shrink staff numbers and likely reduce organisational presence in countries and at headquarters. In parallel, UN Secretary-General António Guterres’ UN80 reform initiative has offered early proposals, including the sweeping mergers of multiple UN agencies and departments.
Whether funding cuts were justified, or could have been done in a better way, is now a moot point. Attention must refocus around a response. The quickest way to dramatically reduce costs is to stop the tangible part of what humanitarian agencies do, such as food, water, shelter, and protection. Or agencies could cut staff and administrative processes, which takes time, breeds angst, and can be legally complicated. The risk in the former, however, is creating a set of organisations that are top-heavy and over-administrated yet do little – precisely how the Trump administration has portrayed them.
In navigating these challenges, decision-makers will need to imagine a radically transformed humanitarian architecture. Knowing where and how to economise is crucial; so is building a system agile and robust enough to tackle the challenges likely to emerge over the coming decades: declining multilateralism, a worsening climate emergency, and perhaps a new era of inter-state conflict. As a first step along this path, decision-makers can focus their thinking on cost cutting, cost saving, and smart reform.
Do less with less: Focus on core mandates and eliminating duplication
The magnitude of budget cuts should be a clarion call for agencies to rationalise programming around their core mandates. For example, UNICEF’s child-friendly cities initiative is unlikely to be feasible in the current context. The same may apply to IOM’s transitional justice projects, UNHCR’s work on refugee higher education, and WHO’s engagement on slow and sudden-onset disasters. This is not to say that these programmes don’t have value. But are they at the core of each agency’s work?
Reducing operational overlap must be another priority. IOM, UNHCR, and UNICEF each operate health, water and sanitation, basic needs (food and non-food items), and shelter programmes – functions that could be centralised in one agency or a specialist international NGO.
A final area ripe for cuts is humanitarian agencies engaged in development-like programming. IOM has a $67-million sustainable development programme, UNICEF a $1.6-billion poverty reduction programme, and UNHCR a $545-million livelihoods programme. Consider the following: If WFP and IOM narrowed their operations to emergency response only, and UNHCR returned to programming only in mandate areas – registration, status determination, protection, repatriation, resettlement and local integration, for example – the savings could total over $6 billion.
Somewhere along the way, sound intentions have given way to mandate creep and duplication.
This is not to be tone deaf to the complexities of humanitarian programming – UNHCR providing emergency refugee education is not the same as UNICEF’s work promoting gender parity in schools. Agencies are also entitled to a level of frustration. For decades, they have been instructed to be more inclusive of local voices and promote a better joining up of development and humanitarian assistance. IOM may rightly argue that if “Institutional Strengthening to Assist Survivors of Conflict-related Sexual Violence in Ukraine” is what Ukraine needs, then this is what Ukraine should get. Likewise, UNHCR will submit strong evidence that in contexts such as Uganda and Kenya, investing in livelihoods is the hook that governments – who are battling their own challenges – need to keep their borders open to refugees.
This is all correct. But somewhere along the way, sound intentions have given way to mandate creep and duplication. The system cannot have a dedicated child protection agency operating alongside large-scale, agency-specific child protection programmes; it can’t have development agencies competing with humanitarian agencies; and it can’t have a duplication of specialist functions. This is true in the best of times (where the result is inefficiency); it is especially true in the current times (where any waste will likely result in loss of life).
Donors also have to bear some responsibility in how we arrived at this point. Everyone in the humanitarian community will be familiar with the scenario where a programme is tailored to fit within a funding envelope, but with the consequence of aligning less cleanly and efficiently with what the beneficiary population actually needs. There is duplication and fringe programming not only because agencies have strayed outside their remit to pursue opportunities, but also because the donor community has failed to develop a coherent, aligned and evidence-based vision for humanitarian response, and to require that it be implemented.
Share resources: Consolidate complementary functions
WFP, UNICEF, UNHCR, IOM, and WHO each operate a division of human resources, risk management, ethics, information technology, data, financial resources management, public-private sector partnerships, legal services, an inspector general, and an ombudsperson.
These units share common governing rules, as well as similarities in the nature and orientation of the programming they support. What savings might be realised by bringing these under a shared humanitarian operations support service?
Taking the disclosed budgets of UNHCR, WFP, and IOM as benchmarks, and calibrating these by agency size (using total income as a proxy), it is possible to make rough estimates. If services across the five largest humanitarian and non-humanitarian agencies were consolidated (and even if only a one-third saving could be recouped) this would be in the range of $1.37 billion. This is almost certainly a conservative figure. Aligning systems would also move the UN a step closer to working off common metrics and data collection, making it easier to track impact and efficiency across agencies over time.
Importantly, this is not a new idea. The “Mutual Recognition” principle encourages (if not requires) UN entities to use another’s policies, procedures, and systems to reduce costs. But uptake has been poor, with some agencies resisting and no big push from leadership.
Smart reform: Innovation, out-of-the-box financing, and new partnerships
Cost-cutting and cost-savings are unavoidable. But they will not fix broader criticisms around the UN system’s ability to deliver efficiently, effectively, and with sustainable impact. Indeed, with more than $65 billion in income and 133,000 staff (plus thousands more considered non-staff personnel), it is staggering that extreme poverty, conflict, and basic human rights remain challenges of our time. The reform process cannot simply cut; it must also improve. Agencies need to get smarter about how they design and implement.
Foremost, agencies need to craft an operating culture around innovation. It is a tired analogy, but if the humanitarian sector was competing with similarly sized private sector companies – say, Ford Motors – would it still be in business? Ford is a successful company because it is forced to innovate, respond to its clients’ needs, and remain competitive. If it doesn’t, this is reflected in their profits and managers are held to account.
The humanitarian sector doesn’t work like this. There is no naturally occurring feedback mechanism, where dissatisfaction is collected and changes are required. The accountability instruments designed to offset this are unreliable and regularly malfunction. The upshot is that agencies need to actively absorb some private sector norms: They need to become more like Humanitarian Response Inc.
We must start somewhere, and that somewhere should be pragmatic, future-proofed, and evidence-based.
The humanitarian sector also needs to pioneer and adopt innovative financing solutions. One high-potential, yet scantly tested, way to address funding shortfalls is transferring risk to the insurance sector, or even to global capital markets through index-linked securities (so-called “catastrophe bonds”). To date, such risk-outsourcing has targeted natural disaster and disease outbreaks (the World Bank’s Crisis Response Window and the African Risk Capacity’s parametric insurance initiative are positive examples). However, there is no reason that the logic could not extend to, say, refugee influxes.
Innovations that provide finance through mechanisms other than debt financing is another avenue to explore. One option might be a regional bank (structured along the lines of the European Bank for Reconstruction and Development) that could redirect capital to match finance for projects. Funds might come from the Gulf sovereign wealth funds, zakat contributions, or public-private sector partnerships. Such an arrangement would – borrowing a term from the impact investment sector – allow capital owners to “do well and do good”, and at the same time liberate donors to support and add value in ways that others cannot.
Third, the humanitarian sector needs to broaden the range of stakeholders it engages with, and deepen those relationships. While the private sector and multinational development banks (MDBs) walk to a different beat, the enormity of the financial resources wielded must be acknowledged. Indeed, if Corporate Social Responsibility, remittance transfers, and zakat were added to combined revenue of the top 5 humanitarian agencies, the sector would be the world’s largest company – around double the size of Walmart. Agencies need to prioritise channelling these non-traditional forms of assistance towards coordinated goals.
Consolidate, erase duplication, share resources, innovate, partner: This is just a starting point, not a detailed roadmap for change. Reform and restructuring are complex, context-specific, and steeped in political nuance. But we must start somewhere, and that somewhere should be pragmatic, future-proofed, and evidence-based.
Erica Harper is the author of The Last 10 Per Cent: Why the World Needs a Leaner, More Innovative and Pragmatic Development Sector, Today.
