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Too Important to Fail—Addressing the Humanitarian Financing Gap

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Too Important to Fail—Addressing the Humanitarian Financing Gap High-Level Panel on Humanitarian Financing Report to the Secretary-General Too important to fail—addressing the humanitarian financing gap January 2016 High-Level Panel on Humanitarian Financing Report to the Secretary-General Too important to fail—addressing the humanitarian financing gap January 2016 iii Contents Executive summary . v 1 . Introduction . 1 2 . Shrink the needs: a shared responsibility . 5 3 . Deepen and broaden the resource base for humanitarian action . 11 4 . Improve delivery: a Grand Bargain on efficiency . 17 5 . Conclusion . 25 Annex I . 27 Annex II . 28 Notes . 29 v Executive summary The world today spends around US$ 25 billion to provide the world’s scarce resources of official development assis- life-saving assistance to 125 million people devastated by tance (ODA) should be used where it matters most—in wars and natural disasters. While this amount is twelve situations of fragility. times greater than fifteen years ago, never before has gen- Beyond focusing ODA on fragile countries and erosity been so insufficient. Over the last years conflicts countries experiencing shocks due to conflicts in their and natural disasters have led to fast-growing numbers surroundings or to natural disasters, there has to be sys- of people in need and a funding gap for humanitarian tematic investment in resilience-building. This includes action of an estimated US$ 15 billion. This is a lot of dedicated funds for peacebuilding and conflict resolu- money, but not out of reach for a world producing US$ tion at the international level. In this regard the panel 78 trillion of annual GDP. Closing the humanitarian endorses the recommendation of the UN Secretary-Gen- financing gap would mean no one having to die or live eral’s Advisory Group of Experts on the Review of the without dignity for the lack of money. It would be a Peacebuilding Architecture to put one per cent of core victory for humanity at a time when it is much needed. funding allocated to peace operations from assessed con- The UN Secretary-General has appointed a nine- tributions of the UN’s Member States into the United person group of experts (“the panel”) to work on finding Nations Peacebuilding Fund. solutions about this widening financial gap. The panel Similarly, countries at risk of natural disasters identified and examined three important and interde- should have emergency reserve funds and dedicated pendent aspects of the humanitarian financing chal- DRR budget lines for risk-reduction activities and for lenge: reducing the needs, mobilising additional funds receiving funding when disasters hit. Countries hosting through either traditional or innovative mechanisms, refugees should integrate displacement into their devel- and improving the efficiency of humanitarian assistance. opment plans and obtain predictable and adequate inter- The panel’s work aims to help inform and shape the national support. And we should also follow the people objectives of the World Humanitarian Summit (WHS) in need, not the countries, by reclassifying the eligibility in Istanbul in May 2016. It is also highly relevant in the criteria for the International Development Association context of adopting the Sustainable Development Goals (IDA), thereby giving middle-income countries (MICs) (SDGs)—only by focusing the world’s attention on the access to its grants and low-interest loans. To further rapidly growing numbers of people in desperate need will ensure that low-income countries can be assisted in times we be able to achieve the SDGs. of crisis, the panel recommends that during the next IDA replenishment its shareholders vote to increase the cur- rent level of funding of the Crisis Response Window by Shrink the needs: at least threefold. a shared responsibility Last, but not least, there must be an end to the short- The panel recognises that the best way to deal with termism of annual—and retrospective—fundraising by growing humanitarian needs is to address their root bridging the humanitarian-development divide with pro- causes. This requires a strong determination at the gramming based on joint analysis. This way vulnerable highest level of global political leadership to prevent and people can become self-reliant, being helped seamlessly resolve conflicts and to increase investment in disaster by humanitarian organisations with higher capacity to risk reduction (DRR), especially in the most vulnerable operate in volatile environments along with development communities and countries. Because development is organisations with longer-term funding horizons and bet- the best resilience-builder of all, the panel believes that ter capacity to support economically viable activities. Too important to fail—addressing the humanitarian financing gap vi Deepen and broaden the resource to meet humanitarian needs. The potential certainly base for humanitarian action exists for Islamic social finance to provide solutions. Insufficient funding for humanitarian aid means not Partnering with media companies for free airtime only more suffering but also a wider spread of global and directing donors to an alliance of humanitarian instability. Helping people in distress is morally right, partners can reduce fundraising costs, improve the but it is also in the interest of those who support aid. coherence of humanitarian response, ensure funding is Today’s massive scale of instability and its capacity to used efficiently by partners, and strengthen public trust, cross borders, vividly demonstrated by the refugee cri- increasing opportunities for ‘in kind’ contributions of sis in Europe, makes humanitarian aid a global public expertise and other support. good that requires an appropriate fundraising model. Remittances to the developing world enable people In an interconnected world we need solidarity fund- to meet their basic needs and not depend on external ing capable of crossing borders. The panel proposes that aid. The panel thanks the money transfer agencies who governments use the opportunity of the WHS to sign already lower their commission rates in times of crises up to the concept of a solidarity levy and create a steady and encourage others to follow suit, preferably waiving revenue stream for humanitarian action. charges altogether in such moments. The WHS could There is an over-reliance upon a small group of ODA be a platform for rallying support for states to meet the donors. While they remain very important and are also SDG target of lowering transaction costs to less than encouraged to do more, we are heartened by emerging three per cent by 2030. donors who act on the premise that with greater wealth Partnerships between the media, the private sector comes greater responsibility. The panel believes that and humanitarian organisations to raise funds need to states that are appropriately credited and recognised for go much further by building on existing successful mod- their contributions to humanitarian aid will respond els. UN agencies in particular should be encouraged to generously. There is a need to better reflect the full con- join or emulate them. tributions of all states to humanitarian action. Beyond governments, the humanitarian commu- Improve delivery: nity must harness the power of business to deliver its a Grand Bargain on efficiency key skills and capabilities. Business is still a modest fac- tor in humanitarian activities, yet has the creativity and The panel concurs with a widely shared view among capacity at scale to provide new solutions to risk man- stakeholders that systemic change in humanitarian aid agement, support aid delivery, create jobs, and modern- delivery is needed in order to raise new money and use it ise transparency and accountability. Involving staff in more effectively. Greater efficiency will create a virtuous humanitarian action is also motivational, and companies circle by drawing in more funding. Since the status quo need to be encouraged—from insurance and digital cash is not an option, the panel calls on donors and imple- to logistics and telecommunications—to get involved in menting organisations to come together in a Grand Bar- providing their relevant skills and capacity for delivering gain. As part of that agreement, donors would not simply life-saving assistance. give more but give better, by being more flexible, and aid The time has come for innovative investment in organisations would reciprocate with greater transpar- humanitarian action which leads to long-term social ency and cost-consciousness. improvements. Social Impact Bonds and micro-levies on The elements of a Grand Bargain include provision of corporations with high volume transactions have great more cash-based assistance, where appropriate, and rec- potential. ognition of the comparative advantages of local, national Given that the vast majority of conflict-affected pop- and international implementing organisations for delivery ulations are in Muslim counties, the role of Islamic social of services. To improve response time the panel suggests finance is particularly important. Work is ongoing to the creation of a repository of pre-qualified organisations address how waqf, zakat and other instruments such as to dispense with repeated screening of NGOs, as well as sukuk bonds can be channelled effectively and efficiently more work on strengthening local capacity. Executive summary vii The panel wants donors to commit to more multi- grasp thanks to digital technology and this should be year funding and less earmarking, since flexible fund- extended to include communities receiving aid: humani- ing is the lifeblood of humanitarian operations. And tarian organisations can learn and improve by listening donors should simplify and harmonise their reporting to the people they serve. requirements, leaving aid workers more time to perform If we are to move towards a model of collaborative their life-saving activities. And we need greater transpar- efficiency, the panel would like government donors and ency from implementing organisations so that everyone aid organisations to agree to a Grand Bargain. By doing can “follow the money” on its journey from donor to so, they will clearly demonstrate a common commitment recipient.
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