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Future Humanitarian Financing is an initiative to bring fresh thinking and expertise from beyond the humanitarian sector to address the growing problem of how we meet the financial costs of responding to humanitarian crises.

Problem

An urgent and alarming funding gap.

In wake of the earthquake in Haiti and huge flooding in Pakistan, that placed huge strain on the international response system in 2010, in 2011 the Inter-Agency Standing Committee created a classification and set of protocols for large-scale emergencies, henceforth to be designated Level three emergencies.

They probably did not envisage that within a few years, they would be responding to five Level three emergencies in a single year (Typhoon Haiyan, Syria, CAR, South Sudan and Iraq) without even taking into consideration the Ebola outbreak in West Africa.

The scale of needs and financing requirements in 2014 is extraordinary. And its not only that there are more crises, but some of the largest ones are in extremely difficult environments – Syria, South Sudan – where the costs of response are high.

By July 2014, requirements per targeted beneficiary in the UN’s coordinated appeals stood at US$204, up from US$168 in 2013.

While the scale of crises in 2014 may be exceptional right now, high-levels of humanitarian needs may not be unusual in the future.

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Outlook of continued high-levels of needs

Increase in small-scale crises, but also large crises with complex, compound and far-reaching impacts.

Urbanisation, climate change, population growth.

Two major scenarios:

  1. Response where international resources and capacities work in cooperation to support and complement domestic actors. Often in response to natural disasters, disease outbreaks and man-made disasters such as industrial accidents.
  2. Humanitarian response in the most contested and difficult places, such as Syria, Somalia, South Sudan, Afghanistan, Democratic Republic of Congo, where independent and impartial actors may be uniquely placed to respond.

Spectrum

Expanded Ambition

The System is not well configured for its primary purpose and is not structured to fund its new ambitions of preparedness through to recovery. In 2012 just 6% of funds were spent on emergency preparedness and two thirds of all spending was concentrated on long-term recipients but still disbursed on an annual and unpredictable basis.

Adapting for the future

Changing cast of actors

The origins of modern humanitarian action arose from European battlefields of the late nineteenth century.

The ‘system’ which has evolved and currently comprises the international humanitarian enterprise evolved in the latter half of the twentieth century. And a system of coordination established in 1991.

There is much to commend this system, but there are many existing challenges and many areas in which the old approaches, models and actors no-longer reflect our current challenges. Growing recognition of need to work differently, to develop a more open and adaptive system.

Cast of responding and financing actors is changing rapidly. Growth in MICs including the capacity and intention of governments to lead and coordinate response. People are globally connected and change happens rapidly.

Growing role of the private sector: Philippines response more than half of all assistance provided by the private sector.

Proportion

Financial flows to Disaster Affected Countries:

There is plenty of money. Humanitarian assistance is tiny compared with the full range of domestic and international resource flows, even in the most crisis-affected countries.

Global changes have brought great opportunities as well as challenges.

Private sector in crisis-affected states: more than half of response to typhoon Haiyan from private sector – in particular in response to the Ebola Crisis.

Leveraging new sources of private funding through web-based social activism.

Insurance against disaster risks increasingly technically feasible in many developing countries

Governments have far greater commitment and capacity to respond and Non-traditional donors playing growing role.

Outside of our existing experience:

New forms of structuring finance: impact investing, Alternative uses of insurance including insuring humanitarian organisations themselves against peak demand, and levies and taxes.

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Shared Responsibility

More than half the world’s population lived in a country affected by a major disaster or conflict in 2012, the cost of crises is in fact a common concern.

How do we promote and enable shared responsibility for responding to crises across all of these different groups.

How do we enable affected citizens, their representatives and networks, including civil society organisations, diaspora and governments, to better withstand the financial costs and shocks of disasters? How could we use communication technology, forecasting and financial products and services including banking, transfer and insurance to do this?

Can we enable those concerned to engage better – quicker, more reliably and more cost effectively, and can we use their influence as advocates better? How could we use new communication and financing technology and platforms to do this?

Can we strengthen the sense of duty or obligation to respond, particularly among governments? That might increase the predictability of the financing response?

How do we engage those who are currently not contributing? How do we communicate, inform and educate? How do we provide channels through which they can engage? How do we make the best use of their unique capacities and comparative advantages? How do we bring them closer towards being concerned or even feeling a sense of shared responsibility and duty to respond?

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