Focus on Humanitarian Financing

As part of the broad humanitarian reform process, increasing focus has been placed on mechanisms to make funding for emergency response more timely, flexible and predictable. The trend in donors pooling their funding coincides with growing competition for limited humanitarian resources, a broadening of the donor base and greater attention to monitoring, evaluation and accountability. There is pressure on all involved to make more efficient use of available funding and to ensure that new developments in humanitarian financing are in line with key principles of Good Humanitarian Donorship, which promote rapid and flexible (unearmarked) aid flows targeted to priority needs and based on these needs alone, regardless of political or other considerations.

Along with the expanded Central Emergency Response Fund (CERF) launched in 2006 and the establishment of additional smaller, more targeted Emergency Response Funds (ERFs) at the country level, Common Humanitarian Funds (CHFs) were established in Sudan and the Democratic Republic of the Congo in 2005–06 to promote better decision making on the allocation of limited resources and to help ensure a more effective match between needs and response. These pooled funding mechanisms designate the Humanitarian Coordinator (HC) as the lead in the allocation process – based on the understanding that the HC, in collaboration with the IASC Country Team, is in a better position to make resource allocation decisions based on assessed needs and commonly agreed priorities.

The establishment and operation of pooled funding mechanisms have substantially enhanced the authority of the Emergency Relief Coordinator at headquarters and RCs/HCs on the ground to lead and coordinate humanitarian response through better focused and prioritized action. While these mechanisms are still in their early stages of use, and certainly more experience is needed to further evaluate and better utilize their potential, it is clear that together they represent an opportunity to make an important contribution to improving the timeliness, coherence and predictability of humanitarian action. Pooled funding mechanisms have ensured that the allocation process takes place closer to the actual needs, reducing the risk of political or other factors distorting humanitarian response.

OCHA’s role in the management of pooled funds at headquarters and in the field, as well as support to the RCs where the Office has no field presence, has been recognized as a core function equivalent to coordination, policy development, advocacy and information management. In order to perform this function in 2008, OCHA must put in place the necessary capacities, procedures and competencies, both at headquarters and in the field, in a way that ensures the support and engagement of operational agencies and key humanitarian stakeholders, including donors and NGOs. Their sense of ownership and active involvement in the process of developing effective functioning mechanisms is essential for their success and sustainability.

In 2008, OCHA will continue to work closely with IASC partners to engage them in discussions and secure their cooperation in determining the criteria for the rollout of CHFs and the setting of selection benchmarks. ERFs have already demonstrated significant added value at a relatively low cost; however, to ensure coherence and complementarity, future ERFs will be standardized through a more formal mechanism.

Taking a consistent and coherent approach to the humanitarian financing debate is critical to the success of humanitarian reform and effective humanitarian coordination and action. In 2008, OCHA will strive to support and improve the humanitarian financing system as a whole. In doing so, its focus areas will be:

    1. policy and doctrine – developing standardized and normative guidance based on evaluations of the impact of pooled funds on the ground;
    2. advocacy, fundraising, and donor relations – including analysis of donor trends in relation to humanitarian financing and broadening the donor base;
    3. strategic guidance – for example, with respect to the CHFs, and where and how they might best be established elsewhere;
    4. accountability – ensuring that when OCHA takes on additional responsibilities this is planned for strategically, but also with respect to resources and capacity; without the right monitoring mechanisms, OCHA’s independence and credibility can be threatened; and
    5. administration – strengthening UNDP-dedicated administrative capacity at field and headquarters levels.

OCHA continues to face challenges in its work on humanitarian financing, which include: inadequate global humanitarian funding and fierce competition for resources; divergence among donors in their interpretations of the principles of Good Humanitarian Donorship with regard to funding; lack of coherence between different pooled funding mechanisms; lack of compatibility between demand (CAP and flash appeals) and supply (donors and pooled funds) sides; and limitations in the leadership capacity of RCs/ HC in the management of country-based pooled funding mechanisms (CHFs and HRFs/ERFs) and CERF submissions.