International Development CommitteeWritten evidence submitted by Consortium of British Humanitarian Agencies

About the Consortium of British Humanitarian Agencies (CBHA)

The CBHA consists of eighteen NGOs1 that form an innovative node in the global civil society network. The consortium was formed in 2010 with an initial two-year pilot grant from the UK Department for International Development (DFID).

Executive Summary

0.1 Humanitarian response and prevention has been segmented from overall development cooperation by the international community.2 The future development agenda should recognise challenges of a humanitarian nature. Improper humanitarian risk management continues to contribute to lost developmental gains.3

0.2 The impact of disasters will become more frequent and intense in decades ahead, and current levels of global capacity cannot match this increased level of need. A number of universal trends, such as demographic change, climate change, urbanisation and economic turbulence will add to the humanitarian caseload and the complexity involved. The existing system is biased towards large scale infrequent events, even though suffering in smaller, frequent crises is enormous.

0.3 The humanitarian system is constantly evolving, but crisis-affected people and local actors still have little influence over the decisions that are made. Civil society’s role in humanitarian response, preparedness and prevention is not maximised; NGOs & CBOs implement the majority of humanitarian work on the ground, but have little influence over how, when and where this funding is spent as well as whom is best placed to respond.

0.4 The NGO “business model” has eroded NGO proactive capacity, because in most cases NGOs leverage privately raised resources into larger scale government donor contracts. This has a strong effect on the humanitarian system, as timely humanitarian action is vital for effective and cost-efficient results. The problems can be summarised as follows:

(1)The direct funding for humanitarian action, preparedness and prevention by NGOs is insufficient, especially funding made available to local and national civil society actors.

(2)Humanitarian funding is not timely due to indirect flows via multilateral administered pooled funds and front-loaded controls; it takes weeks (or months) before international, national and local NGOs have access to response funding.

(3)The funding that eventually reaches civil society partners is unaffordable and unsustainable due to the unrealistic provision for cost recovery rate (overheads) offered on grants by donors such as DFID.

0.5 These issues require leadership from the UN, other multilaterals as well as bilateral donors such as DFID. The CBHA has developed an initiative to address this business model challenge, namely the Start Fund, which aims to contribute to a more proactive, sustainable, and locally-led model for the contiguum4 of humanitarian action.

1. Introduction

1.1 There is a false divide between humanitarian and development aid. Long-term development objectives try to address root causes of poverty and vulnerability, but repeated exposure to extreme events further weaken community resilience. The Organisation for Economic Co-operation and Development (OECD) has recognised that failing development efforts in fragile contexts can leave humanitarianism overstretched.5

1.2 A few core principles play a central part in humanitarian action that are based on over 100 years of practice and enshrined in international legal instruments. The core principles are: humanity (human kind shall be treated humanely in all circumstances); humanitarian imperative (the right to receive and give humanitarian assistance); impartiality (provision of assistance must not discriminate but be based on need alone); and independence (humanitarian agencies must formulate and implement their own policies independently of third party motives).6 Essentially, the principles aim to ensure on the one hand that affected communities can understand and trust humanitarian actors and on the other that humanitarian actors can establish and maintain access to affected people.

1.3 Most international NGOs originated with a humanitarian imperative which widened over the years to more of a “development narrative” in order to address the root causes of human suffering. Over time, despite frequent and recurrent humanitarian crises, the development sector has outgrown the humanitarian one, which is partly visible in financial terms. In 2009–2010 DFID spent only 6.3% (GBP 428 million) of its overall budget on humanitarian assistance.7 Another indicator is that the ratio of staff in agencies working on humanitarian versus long term development is biased towards the latter. Worldwide, spending to support resilience, preparedness, or disaster risk reduction is minimal.8

2. External Challenges of a Changing World

2.1 Natural and manmade disasters are affecting more people, more often, and at more cost than ever before. According to the UN International Strategy for Disaster Reduction (UNISDR), disasters killed 1.3 million people and affected 4.4 billion people between 1982 and 2012. They also caused US$2 trillion of damage, more than the total development aid given over the same period.9 The world currently counts “over 70 million people who are forced migrants—which is more than one in every 100 citizens—displaced by factors like conflict, political upheaval, violence and disasters.”10 Disasters and conflicts have negative macro-economic effects, and significantly affect world trade flows.11 Furthermore, there are indirect and long-term negative effects of crises, such as the impact on people’s mental health and children’s cognitive and developmental capacities.12

2.2 Humanitarians are, in Lord Ashdown’s words, losing the race between the growing size of the humanitarian challenge and our ability to cope. The frequency of both small- and large-scale emergencies is growing, according to the 2012 UK Government Foresight report. The report predicts that global environmental change and demographic shifts will contribute most to increased hazard exposure and vulnerability.13 By the end of the 21st century, 1-in-20 year events are expected to become 1-in-15 or even 1-in-5-year events in many regions.14

2.3 At the same time, cyclical, small-scale recurring events and conflict pose a continuous threat and erode communities’ resilience. In fact, smaller and recurring disasters might cause more suffering overall than a few collective large-scale events. The UNISDR biennial study found in 2011 that extensive risk—recurrent small-scale disasters—had a greater impact on losses than intensive risk. The study said: “extensive risk account[ed] for 53.9% of houses damaged, 80% of people affected, 83.1% of people injured, 45.2% of damage to schools and 55.2% of damage to health facilities.”15 A similar message is conveyed in the table below from UNISDR, Asia-Pacific Disaster Report 2012, which shows that in Nepal, overall extensive risk (measured in the number of deaths) is much higher than irregular intensive shocks. This example typifies the balance between intensive and extensive risk around the world.

2.4 Members of the CBHA responded to 90 crises in 2012, which is indicative of the number of small- or medium-scale disasters that require support. Many events are predictable or cyclical and take place in different parts of one country. For example, CBHA agencies responded to three different crises in Colombia: floods; volcanic eruption; and protection of indigenous populations.

2.5 The UK Foresight report concludes that the effect of the main drivers of humanitarian crises and their interaction is complex and unpredictable, inevitably leading to more uncertainty.16 The report advocates scientists and humanitarians to work together on building strategies around probabilistic scenarios. In addition, the Humanitarian Futures Programme at King’s College London encourages agencies to think about the interconnections in systems, and the potential of novel shocks such as cybernetic failure to create humanitarian crises.17

2.6 This increased awareness that the demands of the future are extensive and complex is set within an economic paradigm of austerity, which makes support to the third sector unstable and unpredictable. Public giving rates may fall18 while humanitarian spending by institutional donors has not been immune to budget cuts. Taken together, it is not clear how a higher humanitarian caseload will be matched by the required level of investment.

3. Challenges within the Humanitarian System

3.1 NGOs today represent an extensive global network. For example, the 18 agency CBHA network, including international family members and partners, extends to nearly 6,889 organisations, operating in over 200 countries and territories, and assisting approximately 370 million people annually.19 Added to this are incalculable levels of assistance provided by communities themselves to help people in crisis.

3.2 NGOs implement the majority of humanitarian assistance. Although there is little data available to evidence this argument due to lack of adequate transparency within several existing funding streams,20 the generally accepted estimate is that NGOs implement approximately 70% of all humanitarian assistance, even though most of it is indirectly financed (ie through UN sub contracts).21 Hence, civil society organisations form a critical component of the end delivery of humanitarian assistance; many people in crises depend on the impartial and proactive capacity of NGOs.

3.3 However, critics argue that civil society is not always maximising its full potential to stimulate transformative change and resilience to humanitarian crises at the grass roots level. NGOs can be seen to have drifted into “sub-contractor” roles, which prioritise upward accountability (to donors) instead of downward (to communities).22

3.4 This contracting trend is entrenched in the current business model for humanitarian aid. This business model hampers pro-active and impartial response, and instead creates several layers of dependency. Most international NGOs leverage privately raised resources into larger scale government donor contracts, whereas national and local organisations are even more dependent on (sub) contracts from donors or international NGOs.

3.5 In this business model, funding mostly becomes available when situations escalate. There is predictable suffering in many places around the world where there are never resources to address it. The East Africa crisis of 2011 illustrated the reactive nature of the system, as many stakeholders were aware of the unfolding crisis for a long time. Research has confirmed that it takes approximately nine months for DFID to trigger a response to a spike in a protracted crisis, as the response is often through multilateral organisations.23 Late response is expensive, and hence a few protracted crises absorb a large percentage of the humanitarian funding available. Funding for these crises dwarfs spending to build resilience, finance preparedness or support disaster risk reduction initiatives. Indeed, funding for the latter programmes accounted for only 0.5% of non-humanitarian Overseas Development Assistance (ODA) from 2006–11.24

3.6 Analysis of trends in a number of neglected crises by LSE graduate students indicates numerous similarities.25 Neglected crises are for instance commonly based in former British colonies, dominated by a single religion and based in a wider economy that is service based (instead of depending heavily on agriculture or industry). These parallels could point to a deficiency of needs-based decision making which leave certain crises neglected but the causalities at play need to be researched further.

3.7 In more detail, the present funding architecture creates the following blockages for effective civil society action:

3.7.1The first problem is that NGOs receive a lot of their funding indirectly. Institutional funding is increasingly being channelled through the UN and UN-managed pooled funds, which leaves a gap in the system. In 2011, 84% of DFID humanitarian funding was allocated to the UN, while just 7% was allocated directly to NGOs.26 This is a broad trend evidenced across most OECD donors. National and local organisations in the South struggle even more to access funds directly, and are dependent on their relationships with international organisations (UN or International NGOs).

3.7.2Secondly, indirect funding slows humanitarian action down, making early (to prevent) and timely (to respond) interventions difficult to achieve. The average time it takes for civil society organisations to receive pass-through funding from the Central Emergency Revolving Fund (CERF) via a UN agency is 13 weeks for “rapid response” and 19 weeks for underfunded emergencies.27 There are similar delays with the Common Humanitarian Funds (CHFs) and Emergency Response Funds (ERFs) in the countries where they are deployed (5 CHFs and 13 ERFs). The 2012 Global ERF evaluation found that the time between formal receipt of an application to the issuance of the first payment averaged between 45 and 70 days, indicating that the ERF is not a first responder.28 Nevertheless, the global evaluation considered the ERF still a significantly faster mechanism than bilateral donors like the European Community Humanitarian Office (ECHO) and Office of U.S. Foreign Disaster Assistance (OFDA).29

3.7.3Third, implementation is becoming unaffordable for not for profit organisations. Organisations lose time and money on unsuccessful grants, donor contracts require considerable management investments from implementing agencies, while “cascading overheads” leave little funding for overheads directly associated with implementation.30 For example, the CERF fund passes through the UN Secretariat, which takes 3% in overheads, then the funds are allocated to a UN agency which can take up to another 7% in overheads.31 Therefore before reaching the implementing partner, up to 10% of funds may have been spent on administration. Consequently, funders place a limit on the indirect field costs that can be covered by directly implementing agencies. This poses a significant challenge for NGOs, as their actual required overhead rate is closer to 15–20%. In effect, this means NGO contracts demand a subsidy from private donations which is not sustainable for most organisations (especially at the national and local level), and would for example be unacceptable to private sector contracting firms.32

3.8 In response to the Humanitarian Emergency Response Review of 2011, DFID established the Rapid Response Facility (RRF) in 2012, to enable fast response to rapid onset disasters through pre-qualified NGOs partners. The RRF was activated once that year to address a cholera outbreak in Sierra Leone; NGO partners made several additional requests to DFID to trigger the RRF (for example, in response to the Upper Nile crisis, South Sudan and to Haiti Hurricane Sandy), but no other crisis was found to be a suitable match. This indicates that the RRF is designed to cover a niche area of humanitarian crises and does not resolve the challenge around the pro-active and impartial capacity of NGOs that has been identified.

3.9 Previously this paper indicated that humanitarian funds will be stretched even further in the future, and “new aid” will not per definition solve this problem or strengthen impartial proactive action by NGOs, who focus on the most vulnerable people. Newly emerging economic powers show little opposition to spending money where it also suits their national interests; and similarly, it may be difficult for private sector corporations to manage their philanthropic and business interests separately. This leaves private donations as the main source for “impartial funding”, but one to one aid (through platforms like Kiva, for example) is becoming increasingly popular over institutional emergency assistance.

3.10 Populations affected by crises will continue to depend on the impartial and needs-based approach of civil society actors, and hence civil society’s role should be changed and strengthened. To enable a resilient ecosystem to flourish, NGOs will need a business model that enables them to re-connect to local civil society as facilitators and supporters, so that communities themselves can engage in dialogue and negotiations to enhance their collective assets and capabilities.33 This requires different funding structures that strengthen local capacity and increase the effectiveness of international support.

4. NGO Effort to Transform the Business Model

4.1 There are efforts underway which aim to address some of the described challenges to civil society in humanitarian action. One effort is to create a multi-donor,34 global humanitarian fund, managed by and for civil society, called the Start Fund. The Start Fund is led by a consortium of 18 NGOs, focusses on timely funding for frontline NGOs and CBOs in rapid onset crises, and it will provide early funding in slow onset crises. This will fill a crucial gap and thereby complement the existing financial architecture. The evidence from a DFID-funded pilot is that this sort of collective NGO effort can be effective and provide good value for money for the British taxpayer.

4.2 The evidence underpinning the Start Fund is based on the CBHA Emergency Response Fund pilot (2010–12), funded by DFID with £4 Million. This pilot fund disbursed funding via a peer-review mechanism within 72 hours to 12 different crises, where operations started within seven days and were completed within 30 days. The evaluation of the two-year pilot applauded the early, fast and cost-effective attributes of the fund.35 It concluded that financing the initial response to small-scale emergencies, as the CBHA pilot did, especially with national staff or local NGOs/CBOs, preserves capacity in the system, “making them better prepared and resilient when large scale emergencies occur.”36 The recent Chatham House study on translating early warning into early response also highlighted the effectiveness of the fund, particularly in the 2011 Horn of Africa crisis, when it disbursed money several months ahead of the declaration of famine.37

4.3 The design of such mechanisms is fundamental to achieving effective humanitarian response in a rapidly changing world. Start Fund will not earmark funding to certain crises, although its main emphasis will be on extensive risk, the frequent small and medium sized emergencies that lack the visibility required to trigger international finance mechanisms. The future structure for the Start Fund will consist of a network of appropriately governed and resourced local funds with better access to the full ecosystem of civil society humanitarian responders: local, national and international. The CBHA believes humanitarian leadership should be local, supported by international organisations according to the principle of subsidiarity.

5. Conclusion

5.1 Initiatives that strengthen the independent capacity of civil society are important in a multipolar humanitarian system. This is not to obviate the importance of states as duty-bearers of the right of all people to receive humanitarian assistance. A resilient humanitarian system will need a range of mechanisms, while allowing different actors to maximise their potential to collaborate and contribute. An independent civil society mechanism will in some instances ensure that the core principle of impartiality in the provision of humanitarian assistance is upheld. The UK has explicitly and repeatedly committed to this core principle since 199138 and hence might be interested in opportunities that further the implementation of this principle in practice worldwide.

June 2013

1 Action Against Hunger, ActionAid, CAFOD, Care International, Christian Aid, Concern Worldwide, Handicap International UK, HelpAge International, International Medical Corps, International Rescue Committee, Islamic Relief Worldwide, Muslim Aid, Oxfam, Relief International, Save The Children, Tearfund, War Child and World Vision.

2 Oxfam argues in its recent 2013 publication No Accident: Resilience and Inequality of Risk that “development aid has often been blind to the shocks and uncertainties that poor people face, and naïve in assuming that development takes place in largely stable environments” (p. 4).

3 The widely quoted World Bank estimate that every dollar spent on risk reduction saves $7 in relief and repairs is seen as a benchmark for illustrating the cost effectiveness of DRR.

4 In current resilience discourse “contiguum” refers to a situation where there is not necessarily a smooth linear progression from disaster to sustainable development, as invariably there can be a number of felt shocks and stresses that require intervention, making the process more circular.

5 OECD, International Support to Post Conflict Transition: Rethinking Policy, Changing Practice, March 2012.

6 For more information on core humanitarian principles, please refer to the 2012 Sphere Handbook.

7 More recent figures are unfortunately not available as the DFID Annual Report and Accounts 2011-2012 provides no information on humanitarian expenditure in comparison to overall expenditure. This in itself might be an indication of the priority of humanitarian spending within the department overall.

8 Please see a 2013 infographic by the GFDRR & ODI which provides a complete overview.

9 UN International Strategy for Disaster Reduction (2012a), these numbers may well be underestimates because many impacts of disasters go unreported (Foresight 2012, p. 17).

10 World Disasters Report 2012, International Federation of Red Cross and Red Crescent Societies, p. 9.

11 Foresight, 2012, p. 24.

12 Ibid., p. 22.

13 Also see the World Bank publication: “Turn Down the Heat. Why a 4ºC Warmer World Must be Avoided”, November 2012 which indicates that even a 2ºC warming will have far worse consequences than expected just a few years ago.

14 Events of maximum precipitation, IPCC, 2012.

15 UNISDR GAR, 2011, pp. 34–40; see for more information on extensive and intensive risk in GAR 2011 here.

16 Foresight, 2012, p. 38.

17 Humanitarian Futures Programme, King’s College London, http://www.humanitarianfutures.org/content/plan-future-collaborate-innovate

18 A recent report by the Charities Aid Foundation shows that in 2012, charitable rates given fell by 20% between 2010 and 2012

19 See: http://www.thecbha.org/platforms/

20 Development Initiatives, Global Humanitarian Assistance Report 2012.

21 ALNAP (2012) stated that CSOs implemented $7.4 billion humanitarian assistance, while the UN implemented $9.3 billion and the Red Cross/Crescent Movement 1.2 billion (p. 26). However, this does not include any funds that UN agencies subcontract to NGOs which we estimate to be approx. 40% based on indicatory data from UNHCR & WFP. This would bring the NGO proportion total to $11.1 billion, whereas overall humanitarian flows are estimated by the OCHA FTS at $16 billion in 2010. Thus NGO implementation could crudely account for 70% of this total.

22 Banks, Nicola & David Hulme, The role of NGOs and civil society in development and poverty reduction, Brooks World Poverty Institute Working Paper 171, University of Manchester, June 2012; See also work of Michael Edwards: http://futurepositive.org/; Anderson, Mary B., Dayna Brown and Isabella Jean, Time to Listen: hearing people on the receiving end of international aid, CDA Collaborative Learning Projects, Cambridge Massachusetts, November 2012.

23 Venton et al, The Economics of Early Response and Disaster Resilience, 2012.

24 Development Initiatives, Global Humanitarian Assistance Report 2011.

25 Jones, I, Megan Rein, Karen Warner and Carley White, Putting the Pieces Together: an analysis of neglect, LSE research project, 2013.

26 Sutton et al, 2013, p. 9: Comparison of humanitarian funding allocations to selected OECD countries in 2010 and 2011.

27 Channel Research, Five-Year Evaluation of CERF, Final Synthesis Report, 2011.

28 Global ERF evaluation, Universalia, 2012, pp. 10, 11 and 38.

29 Ibid., p. 26.

30 Stoddard, International Humanitarian Financing: Review and Comparative Assessment of Instruments, 2008, p. 28.

31 Channel Research, 2011, p. 845–850.

32 It is unknown what the allowed overhead rates are for private sector companies and NGOs would appreciate transparency on this issue from the standpoint that such rates ought to be commensurate.

33 Ibid., p. 2. See also publications by Oxfam (2012) and Christian Aid (2012) describing the future humanitarian world order.

34 The fund will draw from humanitarian bilateral donors (both traditional and newly emerging), major private philanthropy and matched contributions by members.

35 DARA, Evaluation of the Consortium of British Humanitarian Agencies Pilot, 2012, p. 13.

36 Ibid. 2012, p. 12.

37 Chatham House Report, R Bailey, Managing Famine Risk: Linking Early Warning to Early Action, 2013, p. 65.

38 GA Resolution 46/182

Prepared 11th February 2014