PART ii: financial analysis
allocation of funds
Late in the foregoing year an analysis is conducted of the funds required to finance staff contracts and operating costs for the next year. Requirements are matched with the available voluntary donor contributions and shortfalls are identified. Staff contracts are extended based on the availability of cash for allocation in OCHA’s trust funds, including the BCRF (on a reimbursable basis) and the FCRF.
United Nations Regular Budget
Expenditure of Regular Budget funds is authorized through appropriations issued by the General Assembly and the funds are allocated to OCHA by the United Nations Office of Programme Planning, Budget and Accounts at the beginning of the year. This allocation covers staff and non-staff costs, including travel, equipment leasing, supplies and other common costs. It also includes an amount for grants for United Nations Agencies providing emergency relief in the event of a natural disaster. Expenditure of Regular Budget funds may not exceed approved allocations.
Voluntary Donor Contributions
Voluntary donor contributions are allocated by OCHA for activities detailed in its cost plans as authorized by the United Nations Office of Programme Planning, Budget and Accounts. OCHA’s allocation of unearmarked voluntary donor contributions depends on cash available at the time. On a quarterly basis, forecasts for spending by headquarters and field offices are reviewed against the cash at hand. Where shortfalls are identified after earmarked funds have been matched to requirements, cash is allocated at OCHA’s discretion from unearmarked funds.
In line with the principles of Good Humanitarian Donorship, OCHA promotes the unearmarking of a greater share of voluntary donor contributions – allowing for more equitable distribution of resources. If a degree of earmarking is necessary, donors are encouraged to earmark loosely; for example, to field offices or for headquarter activities in general, or thematic areas. Contributions that are earmarked loosely in this manner can be allocated to those field offices or thematic areas that have limited funding or increased requirements due to changing situations. While in 2007 unearmarked contributions decreased in terms of percentage (from 43 per cent in 2006 to 39 per cent in 2007), they increased by US$ 2 million in real terms.
Regular Budget Grants
The ‘grants’ components of the Regular Budget appropriation is US$ 762,000 to be channelled to United Nations Agencies; it cannot be used to fund staff and nonstaff costs.
The implementation of activities using voluntary donor contributions is dependent on when contributions are received. In 2007 there was an improvement in the timeliness of voluntary donor contributions: by end March, 27 per cent of the total donor contributions had been received, by end June 62 per cent, and by end September 75 per cent.
OCHA continues to aim for receipt of at least 75 per cent of annual contributions by the end of the second quarter to enhance cash management and allow for the start-up of new or continuation of ongoing activities without delays or interruptions. OCHA can only incur expenditures against cash contributions received (not against funds pledged).
Following good financial management practices, OCHA adopts the position that there must be a minimum amount of cash available in November to cover the cost of staff contracts and activities (if possible for twelve months) and operations (for three months) for the following year.