1.     A widening funding gap

The international humanitarian response system is already stretched beyond its capacity and faces an urgent and widening funding gap. A decade ago, the international response system assisted 30–40 million people annually; by 2013 this had risen to 50–70 million.[i] In 2014 the international humanitarian response system is under immense strain, responding to humanitarian needs on an unprecedented scale. Financing requirements in the UN’s humanitarian appeal reached a record USD19.2 billion.[ii] This is without taking into account the additional USD1 billion the UN has requested to finance the response to Ebola in West Africa.

Donor contributions have grown substantially during the last decade but they have failed to keep pace with the growth in demand.

Figure 1: Humanitarian financing requirements in UN-coordinated appeals are three times higher than in 2004

Source: UN OCHA Financial Tracking Service (FTS)* Funding as at 18 August 2014.

The future outlook is one of sustained high levels of humanitarian need and shifting concentrations of vulnerability. Climate change is altering the frequency, intensity and location of hazards in ways that are difficult to predict. The number of reported natural disasters has increased significantly since 1990 – doubling for example in sub-Saharan Africa – and drought, flooding, extreme weather events and water scarcity are expected to increase in some parts of the world (see Box 2).

Global social, economic and demographic changes are altering the distribution and vulnerability to crisis risks. Population growth will be concentrated in the poorest countries, where people are increasingly likely to live in urban, often unplanned, settlements in high-risk areas such as flood plains and hillsides. Poorly regulated industrial development may also increase risk of, and exposure to, industrial disasters.

Absolute poverty has fallen rapidly since 1990 – but not at the same rate everywhere: by 2030, the majority of the remaining global poor will be in sub-Saharan Africa and South-East Asia. Moreover, the rate of poverty reduction is slowest in conflict-affected and fragile states, which are already home to half of the world’s poor.[iii] We can therefore expect a significant proportion of people in need of humanitarian assistance to be living in some of the most dangerous and difficult places. In addition, rising inequality combined with youthful populations and under-employment have contributed to a new wave of internal conflicts in the Middle East and North Africa, which have had major unexpected humanitarian consequences.

Latterly, humanitarian actors find themselves responding to often large-scale crises with multiple causes and compound impacts, which may be felt across areas of wide geographical scope.

Box 1: Rising vulnerability to crisis risks

  • The world population will reach 9.6 billion by 2030. Most of this growth will occur in developing countries, where populations are projected to rise from 5.9 billion in 2013 to 8.2 billion in 2050.
  • The number of people living in urban areas will reach 6.3 billion by 2050.
  • By 2050, global demand for food is expected to have increased by 70%.
  • By 2030, 47% of world population will be living in areas of high water stress.
  • Extreme precipitation events over mid-latitude and tropical regions will very likely become more intense and more frequent by 2100, contributing to increased ­flooding.
  • Droughts will intensify in some seasons and areas.
  • The number of people exposed to coastal fl­ooding in Asia will increase by 50% by 2030.

Source: World Humanitarian Data and Trends 2013, UN OCHA

 

It is clear that new sources of finance need to be leveraged in order to protect against and assist those affected by crises both now and in the future. The majority of humanitarian aid channelled through the international response system has historically come from members of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC).[iv] Traditional humanitarian donors may have reached the limits of their growth potential however. Shifting global patterns of economic wealth suggest that, at least in theory, the potential for financing humanitarian response lies beyond traditional Western government donors. Instead we might expect growth to come from non-OECD high income and middle-income countries, the international and domestic private sectors and the public. We might also expect to see increased financial capacity among some crisis-affected states themselves, Figure 2 illustrates the rapid growth in volumes of government revenues in developing and emerging economies.

Figure 2: Major resource flows in developing and emerging economies, 2000–2013

Source: International Monetary Fund (IMF) World Economic Outlook, April 2014; World Bank inward remittances data April 2013 adjusted to OECD list of developing countries.

 

2.     Adapting for the future

The nature and impact of humanitarian crises are changing and new modes of response and actors are emerging. But our existing modes of financing do not fit these new contexts and actors. The humanitarian community has invested considerable effort and resources into improving its financing response over the last 15 years including creating new principles, commitments to accountability, funding mechanisms and approaches – but many formidable challenges remain. Moreover, humanitarian actors need to work within a much more diverse network of actors in order to ensure humanitarian assistance reaches populations in need in contexts that may be increasingly urban, highly insecure and where national actors play a more assertive role.

The remit of humanitarian action has expanded dramatically but funding approaches have yet to fully adapt. Humanitarians are under pressure to respond to an ever growing scope of activities – including building resilience to crisis risks. In reality donors must prioritise a range of different types of ‘response’, which increasingly include emergency preparedness and resilience as well as acute and chronic needs. Balancing these competing priorities is extremely difficult and chronic and future needs are often subject to ‘funding flight’ when major, acute crises occur. In addition, humanitarian and development actors have yet to achieve functional working relationships that could support coordinated investments in addressing vulnerability to crises.

Reforms have failed to reliably ensure timely, flexible and needs-based humanitarian funding. Donors have committed to allocating funds on the basis of assessed needs – but there has been little progress in advancing a division of labour among donors and, in practice, some crises are relatively under-funded or neglected.[v]

There are few incentives for donors to commit funds in the critical early stages of crises and funding often arrives too late to arrest deteriorating situations. The practice of appealing for funds in particular encourages late response and individual donors are not penalised for waiting to see how other donors will respond.

Humanitarian funding is heavily concentrated in a relatively small number of protracted crises. In the last decade, five major protracted crises accounted for 70% of funding requirements in UN-coordinated appeals.[vi] In reality, humanitarian organisations in these contexts are often providing basic services and welfare for many years. Many donors have latterly moved towards providing flexible multi-year funding – but financing for protracted crises is still predominantly allocated on an ad hoc and annual basis.

The international humanitarian financing architecture needs to better reflect the diversity of responding actors and be reconfigured to support the evolving ecosystem of participants. The pre-eminence of international humanitarian actors is expected to wane as the cast of responding actors becomes more diverse. International humanitarian organisations currently dominate the formal humanitarian response system and have access to the lions’ share of international financing resources. But crisis-affected governments, private sector actors, international military actors, civil society organisations and citizens of crisis-affected states are expected to play a much greater role in crisis response in the future.

Crisis-affected governments, particularly in Asia and Latin America, have invested in developing national disaster response capacity and increasingly expect to play a more significant role in disaster response and are likely to expect to engage with international actors on their own terms.[vii] Regional bodies too are emerging as new brokers of relationships between international assistance and crisis-affected people.[viii]

Civil society organisations play a major role in responding to crises and many thousands of local and national community-based organisations (CBOs) and NGOs are already engaging in response, in some instances working in partnership with international actors but in many cases mobilising resources and responses independently of the international response.[ix]

System-led humanitarian reforms from the mid-2000s set out to improve the quality and accessibility of humanitarian financing – these further consolidated the position of traditional, international actors as the primary recipients of international funds however.[x] In 2013, national NGOs in crisis-affected countries received just 0.8% of the USD14 billion in humanitarian aid contributions and governments of affected states just 0.6%.[xi] Increasingly, strict fiduciary controls and rising expectations to demonstrate accountability, together with moves to consolidate donor portfolios among a limited number of ‘strategic partners’, is further consolidating access to international humanitarian financing resources among a very small pool of large international organisations. Efforts to work more closely with local and national civil society organisations and the growth of ‘remote control’ modes of operating in highly insecure settings in this climate of donor control and consolidation has resulted in some cases multiple tiers of sub-contracting through international actors to local implementing organisations. The cost effectiveness and timeliness of these attenuated transaction chains is uncertain and often questioned.

Modes of response and approaches to financing are changing fast but humanitarian actors are struggling to keep pace and take advantage of opportunities. The practical tools and conceptual approaches to meeting humanitarian needs are on the cusp of substantial change with a growing policy emphasis on investing in anticipatory response – often through non-humanitarian actors – and the increased use of technology to target and distribute response, disintermediating the traditional chains of assistance. The policy shift towards building resilience and an increasing reliance on technology and electronic cash transfers has brought humanitarian actors into closer collaboration with development and private sector actors. These changes may be a prelude to more radical evolutionary change in humanitarian response, which sees networks of traditional and non-traditional actors converging on common priorities. But humanitarian actors often work in relative isolation in part due to their principled commitment to remain independent and neutral. Culturally and practically therefore, humanitarians still have relatively limited collaborative relationships outside of the humanitarian community and often a limited capacity to foresee future trends. Moreover, the short-term nature of humanitarian funding and planning horizons do not encourage humanitarian organisations to experiment and innovate. Humanitarian actors will need to identify and address barriers and disincentives to greater inclusion, collaboration and adaptation.

[i] United Nations Office for the Coordination of Humanitarian Affairs, World Humanitarian Data and Trends 2013, UN OCHA, New York, 2013.

[ii] Typhoon Haiyan in the Philippines and conflict in Syria, Central Africa Republic (CAR), South Sudan and most recently, Iraq, were declared Level 3 (L3) emergencies by the UN’s Emergency Relief Coordinator. L3 emergencies are those of such scale and complexity that they require ‘system-wide mobilization’ by the UN and partners.

[iii]World Humanitarian Data and Trends 2013, UN OCHA.

[iv] The OECD DAC has 29 members in 2014: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, the European Union, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, the United Kingdom and the United States.

[v] Rachel Scott notes that “funding allocation decisions are currently being made in isolation – there is no forum to discuss donor funding intentions and there are no discussions between donors about division of labour.” Scott, Rachel, ‘10 years on: How are donors implementing the Good Humanitarian Donorship Principles?’ Good Humanitarian Donorship Initiative, 2013.

[vi] World Humanitarian Data and Trends 2013, UN OCHA, 2013.

[vii] Harvey, Paul, Towards good humanitarian government: The role of the affected state in disaster response, Humanitarian Policy Group, Overseas Development Institute, London, 2009.

[viii] For example, the Organisation of Islamic Cooperation (OIC) established a humanitarian department in 2008, and opened an office in Mogadishu in 2011 to coordinate the relief efforts of its members: the Association of Southeast Asian Nations (ASEAN) opened a coordination centre for regional humanitarian assistance in Jakarta in 2008; and the Economic Community of West African States (ECOWAS), is developing a humanitarian policy. Binder, Andrea, and Claudia Meier, C, Opportunity knocks: why non-Western donors enter humanitarianism and how to make the best of it, International Review of the Red Cross, Volume 93, No.884, Geneva, 2011. The African Risk Capacity regional risk pooling mechanism is owned and managed by the African Union.

[ix] The State of the Humanitarian System research identified around 2,800 local and national NGOs working in partnership with international organisations. Taylor, Glyn, et al., The State of the Humanitarian System, ALNAP, London, 2012. The total number of domestic civil society organisations involved in humanitarian response must be many times greater.

[x] The IASC-led Humanitarian Reform process initiated in 2005 introduced global and country-based pooled funds to improve the timeliness, predictability and coordination of humanitarian funding. The Central Emergency Response Fund (CERF) is directly accessible only to UN agencies. Although national NGOs have successfully accessed country-based pooled funds, their share of the total is typically small and funding via these funds is typically short-term and unpredictable.

[xi] Based on data from the UN OCHA Financial Tracking Service (FTS).

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