What is the $22 billion made of?
USD 22 billion: the best estimate for total international humanitarian response in 2013. Government donors (OECD Development Assistance Committee members and others) accounted for three quarters of this, contributing $16.4 billion. Private sources provided an estimated $5.6 billion. Despite this, only 65% of the needs budgeted by the United Nations co-ordinated appeals that year were met.
Of the $13.48 billion from OECD DAC members, most was provided as cash donations (grants). A small amount was also provided as direct technical assistance – skilled personnel, for example urban search and rescue teams, water engineers, nurses and doctors etc. – this type of assistance totalled $129 million in 2013. Some of the funding was provided as goods (for example food or medicines) that will then need to be transported to the war or disaster affected country.
A small, but growing, proportion of the finance is provided as risk finance and transfer mechanisms (bonds, contingent credit lines, insurance with parametric triggers, etc).
Aid can also be provided as loans to affected governments, for example Italy provided $74million of humanitarian loans in 2012. France, Germany, Italy, Japan and Korea have provided humanitarian loans in the past.
It is fairly certain that the amount of funding – the $22 billion – will remain constant in the near future. Certainly, no major growth in OECD government humanitarian budgets is foreseen, given the current global economic climate.
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What do we know about the quality of the funds?
The funds come from a range of different sources – mostly government budgets and private giving, but also from various other sources such as taxes on air tickets etc.
Funding decisions and pledges happen at different times of the year: government funding decisions are usually made at the beginning or near the end of budget cycles – usually 1 January, 1 April or 1 July, so there is never a full picture of the funding available for a particular calendar year.
Funds can be sent all at once, or payments may be spread across the year. Many donors make two or three payments each year. Additional funding decisions can be made by governments if, for example, there is a major earthquake, epidemic or new conflict – but there is no guarantee.
There is no legal or international obligation to provide humanitarian funds. There are no international agreements, targets or commitments about the volume of humanitarian finance. So, funding is based on goodwill and moral obligation– and thus highly susceptible to things that may erode that moral obligation, such as fraud.
There is also no system to co-ordinate the different revenue streams – even for a new crisis. Staff in one government funding agency are unlikely to know the names or email addresses of staff in another government’s funding agency – even if they are working on the same crisis country or region.
The cash is provided in a range of different currencies – EUR, USD, AUD, JPY, GBP, etc. – but expenses are mainly in US dollars; creating significant currency exposure for the broader system.
The time delay between agreeing to provide funds (pledging) and cash actually arriving in organisation’s bank accounts can be significant – often months, sometimes years. This is also the case with major pledging conferences, such as that for the Syria affected region: pledges may take a long time to turn into cash.
Governments of developing countries affected by wars and disasters rarely spend very much money on meeting the needs of their citizens. This is mostly because they lack liquidity – sufficient cash flow – in the aftermath of a disaster, and so cannot respond, even if they want to. Funding directly to disaster affected countries – as happens in the Pacific – can help overcome cash flow problems, and avoid expensive international responses.
|Can these funds be used any way we like?
Humanitarian funds often come with conditions – 85-90% of funds must be spent on certain wars or disasters, within a certain timeframe, and/or on specified activities.
Funds that are provided with “no strings attached” are often used by organisations to fund their overhead costs (mostly their headquarters costs and their fundraising costs). Other organisations deduct a service charge from funds received for humanitarian operations to pay their overheads.
Funds are mostly given directly to organisations who implement the response – dictating what type of aid will be provided: funds provided to a food organisation, for example, will not be used for providing water.
Funds are often passed on from one organisation to another, which can create a long chain of service charges and increase the time taken to respond. For example, funds can be provided:
A growing amount of funding is provided in the form of cash (often through debit cards). However, this cash is mostly managed by humanitarian organisations – and a service charge is removed.
| How do we know we are getting maximum value for money?
The cost of responding to wars and disasters has increased by 660% since 2000, when the world committed to the Millennium Development Goals (figures adjusted for inflation).
There is no system to prioritise the use of resources.
There is very little economic modelling in the sector – resulting in very little consideration given to cost-benefit analysis and comparing scenarios.
Many of the goods (food, medicines, tents etc.) could be bought in bulk when market prices are low, but often they are not, because organisations are never sure when funds will arrive.
Organisations receiving funds fiercely guard their independence, which includes resisting calls to be more transparent and accountable for their costs.