Financing in Crisis? Making humanitarian finance fit for the future

Rachel Scott
2015

Summary

This paper expands on the Future Humanitarian Financing initiative’s recommendations about how to close the humanitarian funding gap. It summarises good practices by DAC members and attempts to find solutions to common challenges:

  • Predictable funding for predicable costs.
  • Funding for longer-term – protracted – crises that helps boost the resilience of crisis-affected communities; going beyond immediate life-threatening needs and supporting self-reliance.
  • Reworking funding tools and approaches for crises in middle income countries – learning from the challenges facing the countries affected by the conflict in Syria.
  • Thinking differently about funding disaster response and recovery, and about funding disaster affected states and local response actors.
  • Making the money go further; reducing the cost, and increasing the cost-benefit, of humanitarian operations.

Key messages:

  • There is not enough quality money – money that arrives in the right place, in the right way, and at the right time – to fund humanitarian crises.
  • The solution to this will include improving the predictability of funding and expanding the financing pool for protracted crises.
  • Crises in middle income countries pose a special financing challenge, which could be solved by wider use of development finance, rather than just humanitarian funding.
  • Examples of good practice include providing technical expertise to high disaster-risk countries; providing liquidity for disaster-affected governments; and ensuring that risk reduction is systematically mainstreamed into all development activities.

The report provides suggestions for increasing the value for money of humanitarian programming, including:

  • shifting donor funding towards results, rather than activities; thus allowing operational agencies to shift programming towards more cost-effective practices as contexts evolve;
  • using business case models, with sound economic analysis, to help guide donors to more objective funding decisions;
  • reviewing the trend towards fewer, larger, grants, which offer cost savings for donors, but also create long chains, with overhead at each level that might reduce the value of the overall grant by the time it reaches beneficiaries;
  • supporting the private fundraising efforts of operational partners, by systematically providing free airtime and tax breaks;
  • transferring donor learning from recent times of government austerity to operational agencies: on cost effective systems, approaches and staffing structures;
  • streamlining reporting requirements: a potential win-win for everyone, reducing waste and improving accountability at all levels.

Source

Scott, R. (2015). Financing in Crisis? Making humanitarian finance fit for the future (OECD Development Cooperation Working Paper 22). Paris: OECD.