Super Typhoon Haiyan displaced millions of people in the Philippines © Gemma Cortes - OCHA
ELEMENTS OF OCHA’S BUDGET
OCHA’s budget covers two types of activities: programme activities—those that are necessary for OCHA to achieve its mandate—and administrative activities—those that support administration and financial management.
OCHA’s activities derive from its mandate, as established by General Assembly resolution 46/182. To fund these activities, OCHA receives an assessed contribution from Member States and voluntary contributions. The assessed contribution, referred to as the regular budget, on which no Programme Support Costs (PSCs) are applied, contributed only 5 per cent to OCHA’s total activities in 2013.
This amount is not sufficient to finance the range of activities that Member States expect OCHA to deliver, as none of the assessed contributions can directly fund field activities.
OCHA raises significant voluntary contributions from Member States and other donors to cover the remaining 95 per cent of its programme activities. This is referred to as the extrabudgetary programme budget. These voluntary contributions are assessed on a PSC levy of 13 per cent. The administrative activities are then paid for out of the PSC levy.
2013 was a successful financial year for OCHA. By three key determinants for income—timeliness, flexibility and volume—OCHA was well supported by its donors.
OCHA maintained strict budget discipline, aligning its budget with projected income, considering carry-over funds. OCHA’s final 2013 total programme budget (funded from the regular budget and from extrabudgetary income—see “The Elements of OCHA’s Budget”) was $292 million. This is an increase of 9 per cent ($24 million) compared with the final 2012 budget. The increase reflected OCHA’s need to respond to additional humanitarian requirements in the second half of the year.
Due to this needs expansion, the extrabudgetary component of OCHA’s programme budget rose from $255.9 million in January to $277.3 million by December. This difference included the cost plans of the five CHF management units and a net increase of $16.4 million, the majority of which was for operational requirements in the field. (See annex I for a detailed budget breakdown.)
Receiving funding in a timely manner is critical to the success of OCHA’s operations. Fifty-one per cent of the total funding to OCHA was given in the first quarter of the year, and 47 per cent of funding received was unearmarked, giving OCHA financial flexibility. In terms of volume, assessed annual contributions from UN Member States for the regular budget were $14.9 million, and OCHA raised an additional $233.2 million in voluntary contributions.
OCHA spent $225.6 million4 on programme expenditures and $35.1 million on administrative direct expenditures. This is a higher expenditure rate than in 2012.
With the increased operating demands on OCHA, the closing balance fell by $5.5 million to $180 million, and the expenditure rate was 87 per cent. Donor income and those elements of the carry-over that could be used in 2013 covered OCHA’s requirements of $277.3 million.
A significant portion of donor funding received in 2013 had flexible implementation dates, which allowed OCHA to carry over unspent funds to 2014 as necessary.
|Budget Total for 2013||Original||Midyear||Final|
|Regular budget activities (funded from assessed contributions)||13,938,400||13,938,400||14,934,800|
|Extrabudgetary programme budget (funded from voluntary contributions)||255,880,929||270,154,719||272,462,670|
|Common Humanitarian Funds||5,081,590||4,883,215||4,883,217|
|Total Programme Budget||274,900,919||288,976,334||292,280,687|
|Extrabudgetary administrative budget (funded from programme support cost)||39,366,067||40,305,682||39,981,636|
INCOME IN 2013
2013 Donor Income
EARMARKED AND UNEARMARKED FUNDS
To enable the allocation of funds where and when they are needed, OCHA needs some flexibility in the contributions it receives. Some donors’ policies allow, or indeed favour, the allocation of unearmarked funding to humanitarian organizations in return for corporate-performance commitments, and an expectation that funds will be internally allocated where they are most needed, including during a sudden-onset emergency. An important part of OCHA’s resource mobilization strategy is thus to secure a healthy balance between earmarked and unearmarked funding from donors and, where possible, to secure those commitments on a multi-year basis.
The following OCHA Donor Support Group (ODSG) members have provided a majority or the totality of their funding unearmarked: Australia, Denmark, Finland, France, Ireland, Luxembourg, Netherlands, New Zealand, Norway, Sweden and United Kingdom.
Other donors, however, prefer to give earmarked funds or have funding policies that do not allow them to provide corporate funding. They need to earmark contributions for specific projects or activities. ODSG donors such as Austria, Canada, the European Commission, Italy, Poland, the Russian Federation, Spain, Switzerland and the United States provided the majority or totality of their funding earmarked for specific activities.
In recognition of the challenge this places on financing the activities of an organization whose main expenditure relates to staff costs, OCHA needs to maximize the funding it can obtain. Therefore, while OCHA’s policy is to maximize the amount of unearmarked funding, it also seeks earmarked support to cover its planned expenditure. OCHA does not fundraise for earmarked support where this is not required. When targeting donors for earmarked funds, OCHA considers each donor’s funding mechanisms and the potential alignment of interest between a specific donor and a specific country office, regional office or headquarters’ activity.
OCHA values donors’ efforts to consult prior to making earmarking decisions, to ensure an even spread of funds. To ensure full coverage of its planned expenditure, OCHA will continue to ask relevant donors to provide earmarked support for its priority activities and response to sudden-onset emergencies. This will complement the sustained and predictable unearmarked support also provided to OCHA.
OCHA and Multi-Year Agreements
OCHA has multi-year funding and partnership agreements with 11 donors: Australia, Canada, Finland, France, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland and the UK. Eight of these agreements include predictable funding volumes, while the remaining three move towards more timely and flexible funding.
In addition to these core agreements, OCHA has multi-year agreements covering earmarked funding to specific countries and operations. All of these agreements help ensure reliable, year-on-year funding for OCHA’s activities, and they are a vitally important component of OCHA’s income.
In 2013, assessed income provided through the UN regular budget was $14.9 million, an increase of $1.5 million compared with 2012. Voluntary donor income was $233.2 million, an increase of $2.7 million. Miscellaneous income was $0.5 million. This is based on the balance of gains in investment income of $2.6 million, gains in foreign exchange of $0.8 million and negative net adjustments of $2.9 million. Together, the total income for 2013 was $248.6 million, a portion of which will be carried over to start 2014 operations. (See below on cash management and closing balance.)
On the administrative budget, OCHA’s direct expenditure on programme activities generated $27.2 million in PSC levies. This was supplemented by $6.9 million in other income and adjustments, bringing total administrative revenue to $34.1 million. A total of $35 million was spent on administrative and indirect support costs activities, including central human resources, finance, procurement, resource mobilization and field-level administrative support. As a result, the carry-over on the Programme Support Account (which can only finance indirect and administrative costs) was reduced to $43.9 million, down from $44.8 million at the end of 2012.
HOW AND WHERE OCHA SPENT ITS BUDGET IN 2013
Out of OCHA’s revised $277.3 million extrabudgetary component, approximately 70 per cent ($193 million) was budgeted directly for field activities and approximately 30 per cent ($84.3 million) for headquarters activities. However, by including headquarters programmes directly supporting the field—namely the Coordination and Response Division and the Programme Support Branch—the proportion of the budget focused on the field or on field support increases to 84 per cent ($233 million).
Approximately 90 per cent of OCHA’s budget growth in 2013 was in the field, as OCHA responded to a series of complex and demanding emergencies. The largest budget increases were in the offices responding to the L3 emergencies in Syria and in response to Super Typhoon Haiyan. Other notable increases were for CAR, Mali, Somalia and Sudan. The overall budget increased throughout the year, but there was significant variability across projects, with reductions in headquarters and other field operations in reaction to changing crisis conditions and risk dynamics. Demonstrating OCHA’s commitment to continued prioritization and rationalization of its budget and to controlling costs, offices in Colombia, Côte d’Ivoire, Haiti, Pakistan and Sri Lanka were scaled down following the mid-year review of the budget, and other savings were achieved at headquarters.
Sixty-eight per cent of OCHA’s total expenditure was on staff costs, and 32 per cent was on non-staff costs. Of these amounts, 65 and 35 per cent respectively of staff and non-staff costs were spent directly in the field. As a coordination agency, OCHA delivers its mandate mainly through its staff. Approximately 80 per cent of OCHA’s programme expenditure was on activities supporting field-based humanitarian coordination and direct HQ support for field coordination, with 64 per cent spent directly in the field. See first bar of graphic “Direct expenditures by programme activities” below.
Twelve per cent of spending went to other core functions that have a global reach: policy development, partnerships, and communications and information management. Six per cent covered OCHA’s executive management, and 2 per cent went to administrative activities. Expenditure by programme and administrative activities is outlined in the charts below.
CASH MANAGEMENT AND CLOSING BALANCE 2013
Total direct expenditure amounted to $273.9 million. This included $238.9 million in programme activities and $35 million in administrative activities. The average expenditure rate reached 87 per cent (down slightly from 89 per cent in 2012). The tables in annex I show a detailed breakdown of expenditure for programme and administrative activities. The slightly lower expenditure rate was partly due to delays in staff recruitment and the higher number of emergencies staffed through surge personnel.
The flexibility and timeliness of OCHA’s donor income remain key determinants for effective cash management. Early payments reduce administrative transaction costs and facilitate programme implementation. At the beginning of any year, OCHA needs a sufficient cash balance to renew contracts and ensure a seamless transition of activities. OCHA aims to have enough cash in its reserves at any one time to cover six months of staff costs and three months of operating costs.
The carry-over decreased in 2013 by $5.5 million to $180 million. Parts of these funds were used to cover headquarters and field activities from January to April 2014.
OCHA spent $7.8 million more on administrative activities than it generated in PSC income. This was in line with the organization’s strategy to reduce the closing balance in the Programme Support Account to match expected annual administrative expenditure. The table on page 45 outlines the detailed financial status at 31 December 2013.
OCHA will continue to draw down the current programme and administrative carry-over in conjunction with its financial, budgeting and fundraising strategies over the next few years. The roll-out of International Public Sector Accounting Standards processes and Umoja in 2014 will enhance OCHA’s ability to proactively manage the carry-over and provide essential real-time information on expenditure to improve the alignment of cash allocation and fundraising targets with projected expenditure.
In 2013, OCHA received 48 per cent ($110.9 million) of its donor income in unearmarked funding. While slightly lower than in 2012, this remains a good balance for OCHA to effectively manage its cash flow.
Ninety per cent of earmarked funds in 2013 were targeted at country and regional offices. OCHA offices receiving the most earmarked funding were in Africa (40 per cent of total earmarked funds), followed by the regional offices (19 per cent), Northern and Central Asia (12 per cent), Middle East (11 per cent) and Asia (8 per cent).
PREDICTABILITY AND TIMELINESS
The predictability and timeliness of income to OCHA continued to improve in 2013, with 51 per cent of the total funding to OCHA in 2013 given in the first quarter of the year, and a further 25 per cent given by June. This meant that OCHA was 76 per cent funded by the middle of the year. Third- and fourth-quarter funding was, respectively, 10 per cent and 14 per cent of donor contributions to OCHA.
The spike in funding in the last quarter was, as outlined above, in large part due to the rapid and generous donor response to OCHA’s operations in the L3 emergency in the Philippines. Overall, 86 per cent of requirements were covered by the third quarter, allowing for rapid scale-up in response to the L3 emergency in CAR and the corporate emergency in South Sudan.
DIVERSITY OF THE FUNDING BASE
In 2013, OCHA received voluntary contributions from 40 Member States or donors, one more than in 2012. Despite OCHA’s ongoing attempts to diversify its donor base, the base remains narrow. OCHA’s top 10 donors accounted for 81 per cent ($188 million) of all funding received in 2013. Since 2010, the number of donors giving $5 million or more has grown from eight to 13; these donors now represent 88 per cent ($204.5 million) of OCHA’s donor income. They include, in addition to the top 10 donors, Denmark, Germany and Spain.
Besides the contributions from all UN Member States received via the regular budget, the overwhelming majority of voluntary contributions (93 per cent, or $216.4 million) continued to be provided by donors from the Western European and Others Group. The Asia-Pacific and Eastern European groups provided another 4 per cent and 1 per cent, respectively. The Latin American and Caribbean Group provided less than 1 per cent.
INVESTING IN COORDINATION
OCHA’s financial situation in 2013 was strong. This is a good indicator of the importance that donors place on coordination in general, and of the trust placed in OCHA’s coordination mandate in particular. Measuring up to donors’ trust in OCHA, and given the range of pressing operational demands upon the organization, OCHA’s budget reflected clear priorities in emergency response and field effectiveness.
Continued investment in OCHA is investment towards emergency response that is faster, more predictable, better managed and more equitable.
OCHA is responsible for managing many of the tools, mechanisms and practices that guide each stage of humanitarian response. Timely assessment and joint planning, for example, are essential components of an efficient and cost-effective response.
Global humanitarian aid was estimated at over $14.3 billion in 2013. It was provided by a wide range of stakeholders, Member States, civil-society and private-sector organizations, and regional and multilateral bodies. Much of the aid was coordinated through or by the tools and services OCHA provides or manages, such as the CAP process, country-based pooled funds and CERF.
OCHA’s financial requirements were less than 2 per cent of global humanitarian aid. However, OCHA’s ability to fulfil its coordination mandate remains dependent on the financial support of a small group of donors—essentially those Member States that constitute the ODSG. In recognition that multilateral coordination also enables more effective bilateral aid, OCHA will continue to encourage donors who prioritize direct implementation over multilateral aid to consider contributing to OCHA’s costs.
OCHA Donor Support Group
OCHA’s main donors come together in an informal group, the ODSG, which gives financial, political and technical support in all areas of OCHA’s work. The group is an important sounding board and source of advice, and it facilitates the exchange of views on challenges facing OCHA. It discusses measures that may be taken individually or collectively by ODSG members to help OCHA achieve its goals. In 2013, ODSG members provided 97.4 per cent of OCHA’s voluntary contributions, as well as considerable policy and advocacy support.
The ODSG meets regularly at the expert level in Geneva and New York and annually at the high level, under the leadership of a Chair that sits for a year. In 2013, Germany was the Chair until June, after which the European Commission took over. The group also conducts field missions. A mission to Indonesia was conducted in April 2013.
The group currently comprises 25 members: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Poland, Republic of Korea, Russian Federation, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, United States and the European Commission.
Member States committed to principled and coordinated multilateral humanitarian action are welcome to join the group at any time. Estonia applied for ODSG membership and was granted observer status in 2013.