PART ii: financial analysis
requirements

Requirements

In late 2006, OCHA forecast that its activities in 2007 (as described in OCHA in 2007: Activities and Extrabudgetary Funding Requirements) would require US$ 159 million. The United Nations Regular Budget allocation for 2007 was US$ 12.7 million (in addition, the amount appropriated from the Regular Budget for natural disaster grants was US$ 762,000) and OCHA anticipated that it would draw US$ 11 million from the Special Account for Programme Support. OCHA’s request to donors in voluntary (extra budgetary) contributions for 2007 was therefore US$ 135.4 million.

This financial analysis is based on OCHA’s total budget in relation to both activities managed by OCHA (as detailed in OCHA in 2007) and those of its partners for which OCHA manages the associated funds (referred to as ‘specially designated contributions’ in this report). The financial analyses in OCHA’s recent Annual Reports have primarily discussed OCHA’s financial position in relation to its annual appeal as detailed in OCHA in 200X (which does not include ‘specially designated contributions’).

As a result of OCHA’s annual Mid-Year Review which considered changes in the humanitarian environment, requirements for voluntary donor contributions were revised to US$ 167.8 million (bringing the total requirements to US$ 182.3 million).

This increase was primarily due to significant or unexpected additional requirements in the field for (in order of magnitude) Sudan, Iraq, Chad, the Regional Office for Central and East Africa, and Timor-Leste, and for newly scoped headquarters activities including the work of the Gender Advisory Team and the Information Management Review.

Funding for OCHA’s planned activities comes from two main sources – assessed contributions through the United Nations Regular Budget and voluntary donor contributions.

United Nations Regular Budget

The United Nations Regular Budget is approved by the General Assembly every two years and allocated on an annual basis.

Regular Budget funds are for core activities and some posts at headquarters. Unutilized Regular Budget funds cannot be carried forward to the following biennium.

Despite the increase in requirements for OCHA’s activities, which are acknowledged to be a core part of the United Nations’ activities overall, the appropriation from the Regular Budget has not increased correspondingly (US$ 10.45 million in 2002 to US$ 13.5 million in 2007). The possibility of a bid for significantly increased Regular Budget funding for the next biennium (2010–2011) is being considered.

In 2007, OCHA received US$ 13.5 million (including US$ 762,000 for natural disaster grants) from the Regular Budget for OCHA activities.

Voluntary donor contributions

Voluntary donor contributions are administered through a series of trust funds. The use of these contributions depends on the degree of flexibility stipulated by donors: funds are received earmarked or unearmarked.

Original and revised requirements for activities detailed in OCHA in 2007 (US$)

 Regular Budget Appropriation
Staff and Non-Staff
12,720,476
Staff and Non-Staff, and Grants 
13,482,476 
 Requirements for Voluntary Donor  Contributions
Requirements (OCHA in 2007)
146,359,163
Revised Requirements (OCHA in 2007) 
167,796,867 
 Total
159,079,639
181,279,343 

Earmarked contributions can only be used for the specific field office or project indicated by the donor. They cannot be used to supplement shortfalls in other countries or projects without the consent of the donor.

Unearmarked contributions are provided for use at OCHA’s discretion. OCHA allocates contributions to a field office or headquarters activity according to need, taking into account cash flow and anticipated earmarked contributions. Unearmarked contributions may initially be used as ‘advances’ to cover the cost of activities until earmarked funds that have been pledged are received. At year end, these advances are amended as ‘contributions’ and the donor source is indicated. (‘Loosely earmarked’ contributions are those which have some conditions attached, but allow OCHA to use its discretion within the parameters defined by the donor.)

In 2007, OCHA received US$ 139.3 million in voluntary donor contributions for OCHA activities.

The two main trust funds used to manage voluntary donor contributions are the Trust Fund for the Strengthening of OCHA and the Trust Fund for Disaster Relief Assistance.

Within the Trust Fund for Disaster Relief Assistance, there are two funds – the Budgetary Cash Reserve Fund (BCRF) and the Field Coordination Reserve Fund (FCRF) – which OCHA uses as internal accounting mechanisms for cash management (see p. 26). In addition, there is a ‘Special Account for Programme Support’ for which funds are sourced through a levy of 3–13 per cent on the expenditures of trust funds administered by OCHA (see p. 27).

  OCHA's mandated activities  
     
  The Trust Fund for Disaster Relief Assistance (see Table 4 on p. 26) finances activities in the field and projects implemented by OCHA Geneva. This Trust Fund is composed of: the Budgetary Cash Reserve Fund (BCRF); the Field Coordination Reserve Fund (FCRF) (these contributions are held in reserve accounts pending regular allocations); earmarked contributions; and interest and miscellaneous income/losses (including currency gains/losses). There is some degree of flexibility in the use of the Trust Fund for Disaster Relief Assistance, which is divided into the following categories:  
  Field Activities – regional and field offices and other field-related activities (funds consist of both earmarked and unearmarked contributions);  
  Headquarters Projects Geneva (funds consist mainly of earmarked contributions); and  
  reserves of flexible funds:  
    Unearmarked (includes mandatory reserves)  
    BCRF  
    FCRF  
         
  Specially designated contributions  
  ‘Specially designated contributions' (see Table 5 on p. 27) do not form part of the requirements for activities detailed in OCHA in 2007. They are used for the implementation of emergency relief assistance activities by partners (United Nations Agencies and NGOs) or activities undertaken by OCHA which cannot be foreseen:  
  Natural Disaster Activities – grants for United Nations Agencies and other partners providing emergency relief in the event of a natural disaster (funds may be earmarked for a specific purpose or disaster, such as the purchase of relief items, UNDAC deployments, surge capacity deployments or the management of OCHA's relief stocks held in the United Nations Humanitarian Response Depot);  
  Natural Disaster Reserve Pre-positioned Funds – pre-positioned reserves that are loosely earmarked by donors and held in reserve for natural disaster response in any country; and  
  Other Humanitarian Funds – includes funds consisting of contributions that are earmarked by donors as grants for United Nations Agencies and NGOs implementing relief activities in the field (in 2007, voluntary donor contributions were received for Emergency/ Humanitarian Response Funds in Côte d'Ivoire, Democratic Republic of the Congo, Ethiopia, Haiti, Indonesia, Iraq, occupied Palestinian territory, Republic of Congo, Somalia and Zimbabwe).  
       
  Although these ‘specially designated contributions' are for the activities of partners, the amounts appear in OCHA's financial statements.  

Trust Fund for the Strengthening of OCHA

The Trust Fund for the Strengthening of OCHA (also known as the ‘Trust Fund for Strengthening of the Office of the Emergency Relief Coordinator’) was established in 1974 pursuant to General Assembly Resolution 3243. It is funded mainly from unearmarked contributions and is comprised of the main fund and a sub-account for the Integrated Regional Information Networks (IRIN). In combination with Regular Budget allocations, voluntary contributions to this Trust Fund finance part of OCHA’s operations at headquarters (New York and Geneva).

Sub-Account for IRIN

The Sub-Account for IRIN within the Trust Fund for the Strengthening of OCHA was established to finance IRIN’s needs at headquarters and in the field. While some specific IRIN projects receive earmarked contributions, to a large extent IRIN funding is allocated from unearmarked contributions.

In 2007, the Trust Fund for the Strengthening of OCHA received US$ 44.1 million from voluntary donor contributions. This included US$ 8.7 million received in the Sub-Account for IRIN within this Trust Fund.

Trust Fund for Disaster Relief Assistance

The Trust Fund for Disaster Relief Assistance was established in 1971 pursuant to General Assembly Resolution 2816 to finance OCHA’s (formerly UNDRO) mandated coordination and relief activities in countries affected by conflict, natural disasters or industrial or technological accidents.

There are also some ‘specially designated contributions’ that are managed within this Trust Fund. These voluntary donor contributions are intended to be used for activities (unforeseen or otherwise) that have not been detailed by OCHA in its annual appeal – primarily contributions to a number of country-specific Emergency/Humanitarian Response Funds which are managed by OCHA.

In 2007, the Trust Fund for Disaster Relief Assistance received US$ 154.4 million through voluntary donor contributions. US$ 107.8 million of this was for OCHA activities, and US$ 46.6 million was ‘specially designated contributions’.

Budgetary Cash Reserve Fund

The BCRF was established in late 2005 to meet shortfalls in the funding required to cover the costs of staff contracts and operating costs for the following year. Advances from the BCRF are reimbursable and the BCRF is replenished during the course of each year when earmarked or other suitable contributions are received, to be redeployed as advances at the end of the following year. The Fund has grown over the past two years with the receipt of additional earmarked contributions and through allocations by OCHA from several unearmarked donor contributions.

In 2007, voluntary donor contributions to the BCRF totalled US$ 5.8 million.

Field Coordination Reserve Fund

The FCRF was established in 1999 to manage contributions that are unearmarked or loosely earmarked for field coordination. Funds from the FCRF are allocated throughout the year to field or regional offices to meet shortfalls in earmarked contributions.

In 2007, voluntary donor contributions to the FCRF totalled US$ 7.5 million.

Special Account for Programme Support

The funds in the Special Account for Programme Support are sourced from ‘programme support costs’ (overheads) levied on activities financed by OCHA’s trust funds. The levy ranges from 3 per cent on grants to United Nations Agencies and NGOs to 13 per cent for OCHA’s own activities. The funds are used to support administrative costs and common services, including those provided by the United Nations Secretariat in New York and the United Nations Office in Geneva.

In 2007, programme support income from the Trust Funds in the Special Account for Programme Support totalled US$ 18.8 million.