Humanitarian financing: Where’s the system shift?

21 June 2017
Graph showing that despite international humanitarian assistance reached yet another record high of US$27.3 billion in 2016, funding grew far less than in previous years.

Sophia Swithern is Head of Research and Analysis at Development Initiatives, whose Global Humanitarian Assistance Report 2017 was published on Wednesday 21 June. It’s a comprehensive, independent and data-led overview of financing for crises which includes detail behind all of the points in this blog.

It’s been a busy year for humanitarian financing. In the midst of so many commitments, discussions, assessments, recommendations and appeals it can be hard to tell what’s really changed. Despite international humanitarian assistance reaching yet another record high of US$27.3 billion in 2016, we now know that funding grew far less than in previous years. So what’s going on beyond this headline figure? Here’s the evidence behind three shifts in humanitarian financing that did or didn’t happen last year:

Where the funding comes from

Despite calls to diversify the funding base, most international humanitarian assistance still comes from a handful of major donors. Nearly two thirds of funding from international governments came from a familiar group of five in 2016, including 31% from the US alone, which raises obvious questions about how this concentration might change in 2017.

Knowing that these usual donors can’t fill the long-standing humanitarian financing gap on their own, hopes were pinned on an increase of funds from Gulf governments and private donors. But after rising by 425% between 2011 and 2015, reported funding from donors in the Middle East actually fell by 24% in 2016, with marked drops from Kuwait, Qatar and Saudi Arabia. Funding from private donors (individuals, trusts and foundations and companies) did grow, but only by 6% – a more modest rise than in the previous year, when it had grown sharply in response to a number of high profile crises.

The World Humanitarian Summit also brought hopes of ‘innovative financing’, with announcements on Islamic Social Financing instruments and Humanitarian Impact Bonds. However, slow progress should temper expectations that these initiatives will provide immediate panaceas.

Chart showing direct funding to local and national responders reported to UN OCHA FTS, 2016
How it gets there: too early for evidence of real change

Of course shifting humanitarian financing isn’t just about raising funds, it’s also about spending them better. This was the aim of the Grand Bargain process. But as signatories take stock and negotiate next steps, there’s no evidence yet that it’s created major system change. Indeed, many of the ten commitment areas are still trying to determine the starting line and work out how to measure progress. That’s one of the reasons why the first commitment of ‘Greater transparency’ is so important.

Cash programming and ‘localisation’ drew attention for their potential to disrupt the status quo, and we’ve crunched the data to evidence where they stood last year. The cash commitment didn’t specify targets, promoting an ‘increase beyond current low levels’. Our research estimates investments in cash-based programming were over US$2 billion in 2015, and recent data suggests a significant rise in 2016. Promising moves are afoot to enable funding for cash to be systematically tracked in future.

The second commitment for ‘More support and funding tools for local and national responders’ famously set a target for 25% of humanitarian assistance to go ‘as directly as possible’ to local and national responders. Given the high stakes involved, discussion remains live on what and who counts within this. Our analysis shows that national and local responders directly received just 2% of FTS-reported funding in 2016. But we can’t yet know how much they received indirectly, nor the quality of this funding – this demands improved traceability of both volumes and conditions of what’s passed on.

Beyond humanitarian financing: is the shift happening elsewhere?

While they’re absorbed in details of the Grand Bargain, humanitarians also need to watch developments elsewhere. After all, even for the 20 countries that receive the highest volumes of humanitarian assistance, it only makes up around 29% of development assistance and 5% of all international resource flows.

Protracted refugee situations and the predictable impacts of El Nino that dominated needs in 2016 reinforced demand for a wider financing approach and toolkit. Talk of bridging the humanitarian-development divide with a New Way of Working may instil déjà-vu, but there do seem to be some signs of change. This comes particularly from the World Bank with major new investments and an array of instruments under a new Global Crisis Financing Platform.

These and other instruments bring a different financing lexicon: from concessional loans in Lebanon and Jordan to restructured IDA support in Yemen and risk financing in Ethiopia. Clearly, not all of these are new, nor are they being realised at sufficient scale or appropriate everywhere. But being more fluent in this lexicon is essential to track their effectiveness in practice, see where the gaps lie, and understand what role they play in a bigger system of better financing for people facing crises.