Operational consequences of reform project: Working paper - Humanitarian financing reform

Report
from ODI - Humanitarian Policy Group
Published on 30 Jun 2007 View Original
Abby Stoddard and Katherine Haver
Center on International Cooperation, New York University

and

Adele Harmer
Humanitarian Policy Group, Overseas Development Institute

This working paper is part of a programme of HPG research running from 2006 to 2009 examining the operational consequences of humanitarian reform. For further information see www.odi.org.uk/hpg/ocr.html

Executive summary

This paper forms part of an ongoing study that seeks to identify and measure the early impacts of humanitarian reform initiatives on the financing of humanitarian action. An updated paper will be produced in early 2008 measuring the extent of changes a year on. The humanitarian reforms in question include new financing mechanisms, in particular the expanded Central Emergency Response Fund (CERF) and Common Humanitarian Funds (CHFs) in recipient countries, the various country-specific Emergency Response Funds (ERFs), as well as the roll-out of the Cluster Approach, strengthened Humanitarian Coordinator leadership and the guiding principles articulated in the Good Humanitarian Donorship (GHD) initiative.

GHD established the policy goals of providing more timely, predictable and needs-based financing to humanitarian crises. However, some of the key mechanisms designed to deliver against these goals, the CERF and the country-level CHFs, have been operational only since 2006. Given this, the following preliminary findings are to be approached with caution: it is too early to say whether any of the observable changes in funding flows outlined below are indicative of new trends in humanitarian financing, or the direct results of the reform instruments themselves.

An examination of 2000-2006 financial data yields the following preliminary findings:

- Global humanitarian funding to date does not appear to be growing more predictable or needs-based.(1) On the contrary, donor governments' funding trends run counter to the stated requirements of the international humanitarian system.
- In addition, the past 2-3 years have seen a slowing of growth in the volumes of financing compared to the previous 4-5 years.
- Nonetheless, recipient countries specifically targeted by humanitarian reforms do show some slight positive signs regarding funding levels and strategic allocations.
- Those donor governments most engaged in the humanitarian reform process are allocating additional funds (new money) in the countries where reforms are rolling out.
- UN agencies have increased their share of direct contributions from donors, ostensibly taking advantage of increased multilateral funding, including common funding mechanisms such as the CERF and CHF. NGOs, while not declining in their overall funding, now receive a smaller share of direct bilateral contributions from donor governments.
- At the global level there is no evidence that a greater percentage of funding is being strategically directed to priorities identified in the common humanitarian action plans and appeals. However, at the country level, in those contexts where the Humanitarian Coordinator is leading a more comprehensive and strategic planning process, there has been a marked increase in the share of funds channelled within the strategic plans.
- It is not clear that donors have improved the timeliness of their contributions to ongoing crises.

One tentative conclusion to be drawn from these preliminary findings is that, while the period since reform began has seen mixed or negative funding trends at the global level, reforms may have had a real but very narrow and focused impact in those countries that have been the concern of donors most engaged in the reform processes. When viewed in the broad scope of overall humanitarian assistance, the impacts are barely visible, yet at the country level there may be more meaningful effects. This may be an important signal of the future potential of financing reforms - if and when these can be expanded to include more donors, providers and crisis contexts.

Methodology of the study

The purpose of this study is to establish a baseline for a financial analysis of the potential impacts of humanitarian reforms on funding flows, and to identify any immediate discernible impacts in the last few years. Except where otherwise specified, data was compiled from OCHA's Financial Tracking Service (FTS), and figures are current as of May 2007.(2) The timeframe of analysis is 2000 to 2006. The researchers also consulted Development Initiative's Global Humanitarian Assistance reports for comparative purposes. In addition to the quantitative data, the analysis draws on interviews conducted in 2006 and 2007 with representatives of donor governments and humanitarian agencies.

A further caveat must be added in relation to the reliability of OCHA FTS data. FTS relies on donors and agencies to report contributions and, particularly in the early years (1999, when it was created, to 2001), reporting was probably not as complete as in recent years. The analysis seeks to adjust for this by using averages for the time period, to avoid putting too much weight on the early figures. Both of the two main data sources for comparing global figures on humanitarian assistance - the Development Assistance Committee (DAC) of the OECD and the FTS - have advantages and limitations, and neither provides a fully accurate picture. While DAC aid figures are more reliable and comparable over time, this study opted to use FTS data given that it is produced on a realtime basis, encompasses more donors (including non-DAC and private contributions), and allows for a more detailed disaggregation.