OCHA's Use of Flexible Funding 2017

The importance of flexible funding

More than any other form of support, flexible funding is critical to OCHA’s ability to help humanitarian partners save and protect lives anywhere in the world, whenever needs arise.

In delivering its coordination mandate, OCHA relies primarily on almost 2,000 staff members who work with thousands of United Nations (UN), national and international non-governmental organizations (NGOs), Governments and regional organization partners in some 60 countries.

A high degree of predictability and flexibility in funding is critical to maintaining a stable workforce that can build and maintain relationships and deliver coordination services, especially in challenging and often dangerous environments.

EARMARKED VS. UNEARMARKED

Using the Grand Bargain funding categories (see box), OCHA defines contributions as flexible when they are unearmarked or softly earmarked by the donor.

Funds are considered unearmarked when they are not restricted for specific use, such as a particular field office or project. With unearmarked funds, OCHA has the flexibility to decide how a contribution is used. Softly earmarked contributions are typically reserved by donors for use in a geographic region, such as in response to a regional crisis. Earmarked contributions are assigned to a specific field office, headquarters or thematic project. OCHA does not accept tightly earmarked funding for specific activities or staff positions, because management and reporting costs for such contributions are too high.

AGILITY AND VALUE FOR MONEY

Flexible contributions allow OCHA to plan more strategically across its operations and to manage its resources efficiently and effectively. For instance, without unearmarked funding, it would be impossible for OCHA to operate at a global scale (see map overleaf), or to rapidly open and close offices or scale up or draw down operations according to coordination needs on the ground.

The bulk of flexible funding goes to operations in the field, but all OCHA offices and projects benefit from these contributions to some degree. Crucially, flexible contributions can be used numerous times across OCHA’s field and headquarters locations according to need and priority, multiplying operational impact and value for money. For example, unearmarked funds can be used to rapidly scale up operations in a field location when a crisis deteriorates. If earmarked funding is received later, the unearmarked funds can be moved to fund other critical operations or activities. As such, flexible funding allows OCHA to respond more quickly to sudden-onset emergencies. It also allows OCHA to respond impartially to all needs, including to overlooked or forgotten emergencies that may not attract much donor interest.

Unearmarked and softly earmarked funds are important to facilitate the financial management of OCHA. Flexible funds reduce transaction costs associated with having to deal with overlapping and/or cumulative restrictions and thereby enhance OCHA’s administrative efficiency. For example, when multiple donors want to earmark contributions for the same project, OCHA may need to negotiate to find a mutually agreeable use of earmarked funds.

The Grand Bargain

The Grand Bargain (GB) is a set of reforms to improve the humanitarian financing system that was agreed during the 2016 World Humanitarian Summit. Since the summit, more than 50 aid organizations and donors signed on to the agreement.

GB commitments include providing more unearmarked money and increasing multi-year funding to ensure greater predictability and continuity in humanitarian response.

Under GB Workstream 8, Reducing Earmarks, donors commit to “progressively reduce the earmarking of their humanitarian contributions. The aim is to aspire to achieve a global target of 30 per cent of humanitarian contributions that is non-earmarked or softly earmarked by 2020.