Attachments
Executive Summary
About this report
The aims of this research were to: assess the financial impacts of the COVID-19 pandemic on National Red Cross and Red Crescent Societies (NS) and local civil society organisations (CSOs) in the Asia Pacific region; build an evidence base for advocacy around the impact of COVID-19 on National Society sustainability; and identify models of flexible and localised funding and partnerships that are supporting the response to COVID-19 and other disasters.
The research took place over several months in 2021 and 2022, involving a literature review; key informant interviews; preparation of country case studies for six focus countries (Federated States of Micronesia, Fiji, Indonesia, Mongolia, Myanmar and Vanuatu); and analysis and report preparation.
Key findings
The pandemic had a significant impact across nearly all aspects of NS operations.
Many NS reported struggling to retain staff and volunteers due to a combination of health concerns, low pay and job insecurity, while at the same time experiencing increased demand for services and expanding into new roles to help address the health crisis. This was compounded by the challenges of adapting to changing government restrictions and transitioning to remote operations.
International funding, although plentiful, has not contributed to sustainability.
Many NS received substantial international funding to support their COVID-19 response efforts, and some were able to strengthen or develop new partnerships and scale up their response efforts. Overall however, the inflexibility of COVID-19 funding meant that some NS were unable to spend funding within the designated timeframes or to successfully repurpose it to fill other critical funding gaps. As such, international resources did not contribute to the financial sustainability of NS.
Economic pressures caused by the pandemic curtailed opportunities for domestic fundraising.
To make up for these shortfalls, many NS sought opportunities to commence or expand their domestic fundraising efforts, through the commercialisation of services such as first aid training or through property rental, public events and retail activities. There were also some unexpected positive outcomes from the switch to greater online engagement, including opportunities to diversify fundraising and accelerate the development of online training, such as first aid.
However, these efforts were significantly curtailed by the impacts of the pandemic on staffing levels and health restrictions, as well as the economic impacts on households and businesses which reduced the level of public donations. There were also concerns about accepting too much government funding, so as not to increase the risks, real or perceived, of compromising independence.
Organisations struggled to cover their core costs.
A critical aspect of NS sustainability is the coverage of core costs to finance essential overheads and maintain core staffing levels to remain viable. While international project funding often includes a contribution towards the indirect costs of project implementation, NS are required to meet any shortfalls through domestic fundraising. The pandemic has therefore had a significant and detrimental impact on the ability of NS to cover their core costs, which has reduced opportunities for organisational growth and sometimes led NS to make cost-saving decisions which create legal or financial risks.
Numerous barriers stand in the way of achieving sustainability, high among which is a lack of commitment to localisation.
Despite global international commitments to localisation, organisations at the front-line of the pandemic response are still unable to cover their basic operating costs and face boom-andbust cycles of international funding which do not ultimately enable them to grow and address the increasing demands of the humanitarian landscape and economic climate.
For the most part, international donors have remained steadfast in their approach to restrictive earmarking, minimising their own risks through high levels of monitoring and reporting, and caps on the coverage of overheads. Conversely, NS have struggled to achieve high standards of transparency in their accounting and financial management practices, partly due to a lack of capacity, but also a reluctance to be scrutinised by their international partners.
Localisation requires mutual trust, which remains lacking.
A lack of trust in two directions appears to lie at the heart of the lack of commitment to localisation. Local organisations expressed frustration at the lack of autonomy and the inflexibility of international support to re-purpose resources to meet higher priorities or to cover core costs. International partners on the other hand, needed assurances that their resources would be used to meet certain external funding requirements and meet the accountability standards expected in their own domestic contexts or by their back-donors.
Despite the challenges, the pandemic offers opportunities to reset partnerships and further organisational growth and sustainability.
The nature and scale of the pandemic have necessitated some shifts in the way local and international partners engage. Travel restrictions limited the frequency of international deployments and partner visits, which by necessity provided greater space for NS to implement projects and make decisions according to their own priorities and capacities, particularly during other disasters requiring emergency response.
Where strategic or technical assistance has been required, NS have reached out to their partners in a more meaningful way and with greater frequency, through the convenience of online communications. The overall result has been a more locally-led approach to capacity development based on assessment of needs, which is likely to be more sustainable in the longer term and is certainly more cost efficient.
International partners for their part have been required to allow greater flexibility in the use of resources, and to tolerate higher levels of financial risk, given the many uncertainties generated by the pandemic. These risks can be mitigated in the longer term by contributing to the overall growth and capacity development of NS, in particular through:
• improving the stability and predictability of financial support;
• supporting NS-led priorities;
• contributing to the coverage of core costs to relieve some of the pressure on staffing and the delivery of critical services.
These efforts should be combined with targeted, tailored capacity building support in financial management, planning and accountability, based on the specific needs of each NS.