Memorandum submitted by the International
Rescue Committee
SUMMARY
The Department for International Development
(DfID) is playing a leading role in promoting pooled funding mechanisms
for delivering humanitarian aid in emergencies and early-recovery
contexts. However, given the centrality of NGOs to the humanitarian
system—delivering up to 80% of humanitarian relief—the
impact of pooled funds on NGO activities needs to be carefully
assessed before rolling out these approaches more broadly. Drawing
particularly on NGO experience of the pilot common funds in Sudan
and DR Congo, this submission outlines a number of concerns from
an NGO perspective.
COMMON FUNDS—"DOING
MORE WITH
LESS?"
1. As stated in its 2007 Annual Report,
the Department for International Development (DfID) is increasingly
championing the use of pooled funding mechanisms in humanitarian
and early recovery contexts. [4]These
include:
— The Central Emergency Response Fund
(CERF), a global fund that has distributed emergency financing
to UN agencies operating in 46 countries, to which the UK government
is the largest donor. [5]
— Various stand-alone country-specific
Emergency Response Funds, managed in-country by the UN Humanitarian
Coordinator (eg in Angola, Indonesia, Liberia and Somalia).
— Two pilot common funds in Sudan and
DR Congo, to which both UN agencies and NGOs have direct access.
[6]
2. Pooled funding mechanisms are multilateral
arrangements managed or overseen by UN agencies on behalf of donors
such as DfID. They are designed to improve humanitarian responses
by addressing funding gaps and promoting more strategic, coordinated
and accountable allocations. In supporting pooled funds, DfID
reduces its bilateral support for NGOs and effectively "out-sources"
decision-making to a UN-managed system, which has responsibility
for financing both UN agencies and NGOs. Pooled funding mechanisms
are being promoted as part of the Good Humanitarian Donorship
initiative and the UN and humanitarian reform agendas, in which
DfID is playing a leading role. Given that pooled funding mechanisms
are intended to reduce transaction costs—at least at the
donor level—they also tie in closely with DfID's commitment
"to do more with less".
3. This submission particularly addresses
NGO experience of the pilot common funds in Sudan and DR Congo.
As stated in DfID's Annual Report, independent assessments have
concluded that these common funds have improved planning and programming
and created stronger incentives for coordination. The report also
notes that an independent evaluation has commended the approach,
despite some teething difficulties, and recommended that the pilots
be maintained and the potential for replication explored.
4. As a large operational NGO working extensively
in humanitarian contexts, including both Sudan and DR Congo, the
International Rescue Committee understands and sympathises with
many of the underlying arguments in favour of pooled funding approaches.
However, we believe that some of the challenges that they pose
for NGOs have yet to be fully addressed. In our view, these need
to be tackled before seeking to expand the use of pooled funds
to other countries.
Specifically, we have the following concerns:
(a) Programme funding vs project funding
Both UN agencies and NGOs can seek support from
the common funds, with the allocation determined by joint in-country
sector-specific working groups making decisions under the ultimate
authority of the UN Humanitarian Coordinator. However, UN agencies
and NGOs tend to be funded differently, with UN agencies usually
seeking funding to help cover broadly defined "programme"
budgets while NGOs usually seek funding for specific projects.
Project funding generally allows less flexibility than programme
funding; in particular, projects usually need guarantees of 100%
financing in order to be viable. This relative inflexibility can
weaken NGOs' position when negotiating funding allocations and
make it less likely that their projects—which may well be
critical to meeting urgent humanitarian needs—will be funded.
When NGOs do accept less than 100% funding they take on the risk
of finding the remainder from other sources or from subsequent
tranches; if no more funds are allocated to a running project
after the first tranche, they risk doing more harm than good by
mobilising communities and then pulling out, scaling down or suspending
a project. This contrasts with the generally reliable project
funding that bilateral donors such as DfID are able to offer.
DfID should ensure that common funds are able
to provide dependable project funding for NGOs and that the allocation
process is not biased against this sort of financing.
(b) Pre-financing requirements
A combination of slow disbursals from donors
and delays in processing funding through the UN system has sometimes
meant that NGO recipients have been asked to pre-finance projects
supported through common funds. In the worst cases, NGOs have
been asked to pre-finance projects even before contracts have
been signed and with no guarantee that funds will eventually be
forthcoming. Unlike UN agencies, pre-financing is not a viable
option for most NGOs, leaving a choice of either delaying project
implementation for months until the funding is delivered or cancelling
planned projects. In the context of a humanitarian aid operation,
either option can lead to loss of life or additional distress
for communities needing immediate humanitarian aid. Pre-financing
requirements particularly limit the participation of smaller and
local NGOs.
DfID should ensure that pre-financing is never
a requirement for accessing common funds.
(c) Needs-based allocations
One perceived strength of pooled funding mechanisms
is that, in contrast to bilateral donor funding, they allow a
more field-driven and better coordinated approach to funding allocations,
with the UN country team usually overseeing in-country sectoral
working groups that determine how resources should best be spent.
However, experience of these mechanisms suggests that the goal
of fully strategic, needs-based funding allocations is still sometimes
compromised by other factors. There is a perception that some
agencies have tended to seek support for programmes at least in
part to fit their own internal priorities, for example because
they are already active in a particular location or sector or
because they feel a need to be seen to be so. If true, these factors
would tend to disadvantage smaller agencies, especially local
NGOs, who are likely to have weaker advocacy capacity and lower
profile. The relative lack of robust needs assessments has been
frequently noted, as have the lack of clarity in the criteria
for selecting projects, the inconsistency with which these criteria
have been implemented and the limited independent oversight of
the allocation process. These factors make it harder to analysis
the actual basis for allocations or the extent to which they match
real humanitarian needs on the ground.
DfID should:
— support greater investment in needs
assessments; and
— promote clearer guidance on selection
criteria and measures to ensure greater transparency about the
basis on which allocations and recommendations to UN Humanitarian
Coordinators are determined.
(d) Monitoring and Evaluation
In addition to ensuring that common fund allocations
are more rigorously based on needs, greater investment is also
required in monitoring and evaluating the projects and programmes
that they support in order to assess whether they are meeting
their objectives. These are an important component of the "Learning
and Accountability" principles established under the Good
Humanitarian Donorship initiative. So far, there has been very
little analysis of the impact of the common funds on beneficiaries
themselves. Moreover, the monitoring requirements are not generally
as robust as those established for projects funded by bilateral
donors such as DfID. More comprehensive data showing the volumes
allocated to NGOs vis a" vis UN agencies, the amount of funding
that UN agencies then subcontract to NGOs and the amounts retained
as indirect support costs would also be useful in assessing whether
common funds lead to a net reduction or a net increase in transaction
costs.
DfID should push for robust ongoing monitoring
and evaluation of projects and programmes funded by common funds.
(e) Relationship building and information
dissemination
UN agencies rely heavily on NGOs as implementing
partners. Building trust and solid working relationships between
UN agencies and NGOs is therefore crucial to timely and effective
humanitarian response. However, pooled funds can compromise the
relationship between NGOs and UN agencies, with the channelling
of NGO funds through the UN system effectively placing NGOs in
a more subordinate position. In our experience, relationships
in the field can vary considerably, depending on the quality of
communication, the level of transparency and other factors. Moreover,
there is evidence that many actors remain ignorant both of the
detail of common fund mechanisms (including implementation timelines,
eligibility criteria, etc) and of the wider policy agenda of which
they are part. Greater clarity on how common funds work will be
required if they are to have their maximum impact.
DfID should:
— encourage greater efforts to publicise
the reforms of the humanitarian system to all actors, including
to international and local NGOs; and
— promote a continued commitment to
consultation, coordination and genuine partnership.
5. Neither humanitarian reform nor DfID's
objective of "doing more with less" are problematic
in themselves; indeed both have much to recommend them. However,
given the centrality of NGOs to the humanitarian system, the impact
of pooled funds on NGO activities needs to be carefully assessed,
and the delivery mechanisms streamlined and improved, before rolling
out similar approaches more broadly. This should be an explicit
requirement of any evaluations of these reforms.
6. Given that the primary object of all
these activities is to ensure better, more strategic, effective,
and accountable outcomes for people in need, it is also essential
to assess the ultimate impact of these approaches on beneficiary
populations before replicating the model elsewhere.
RECOMMENDATIONS
DfID should:
— ensure that common funds are able
to provide dependable project funding for NGOs and that the allocation
process is not biased against this sort of financing;
— ensure that pre-financing is never
a requirement for accessing common funds;
— support greater investment in needs
assessments;
— promote clearer guidance on selection
criteria and measures to ensure greater transparency about the
basis on which allocations and recommendations to UN Humanitarian
Coordinators are determined;
— push for robust ongoing monitoring
and evaluation of projects and programmes funded by common funds;
— encourage greater efforts to publicise
the reforms of the humanitarian system to all actors, including
to international and local NGOs;
— promote a continued commitment to
consultation, coordination and genuine partnership;
— require that evaluations of pooled
funding mechanisms specifically assess their impact on NGO-led
interventions; and
— support evaluations of the ultimate
impact of these mechanisms on people in need before replicating
the model elsewhere.
4 2007 Annual Report, the Department for International
Development, para 7.28-9. Back
5
UN CERF Secretariat homepage: http://ochaonline2.un.org/Default.aspx?alias=ochaonline2.un.org/cerf Back
6
In addition, examples of non-humanitarian pooled funds include
Multi-Donor Trust Funds, which tend to be administered by the
World Bank and UN and are designed to fund reconstruction in post-crisis
situations, and thematic pooled funds (such as multi-donor funds
for HIV/AIDS, orphans, avian flu). Back
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