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  • Background paper

Multi-year humanitarian funding: Global baselines and trends: Chapter 7

First-level recipients’ reported multi-year humanitarian income

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Figure 6: First-level recipients’ reported multi-year humanitarian income is growing, but the majority of it remains short-term

Figure 6: First-level recipients’ reported multi-year humanitarian income is growing, but the majority of it remains short-term

Multi-year humanitarian income reported by first-level recipients has grown from 1 billion US dollars in 2016, or 8 percent of total funding, to 2.3 billion US dollars, or 13 percent, in 2018. However, the majority of their income has been short-term over this period. In 2016, recipients received 10.9 billion US dollars in short-term contributions, and in 2018 they received 15.5 billion US dollars in short-term contributions.

Source: Development Initiatives, based on data provided bilaterally. Data was collected between April and August 2019.

Notes: The data shown in the chart comprises 10 aid organisations that are Grand Bargain signatories and reported to our survey. These organisations’ humanitarian income accounts for 54% of total humanitarian assistance for the period 2016–2018. Multi-year funding also refers to funding agreements ranging between 12 and 24 months when defined as multi-year by the aid organisations. Data is in constant 2017 prices.

As illustrated in the section called ‘Donor contributions’, data collected from donors indicates a steep 75% increase in the volume of their multi-year allocations from 2016 to 2018. Similarly, data from aid organisations shows that the volume of income they identify as “multi-year” and “humanitarian” (See Appendix 1, Methodology) also rose sharply, more than doubling over the same period. However, this multi-year income represents a notably smaller proportion of their income when compared to the reported share of donor allocations that donors identify as multi-year.

  • The volume of income identified as multi-year that aid organisations report receiving more than doubled over the study period, rising by 134% from US$1.0 billion in 2016 to US$2.3 billion in 2018. Although most organisations report incremental year-on-year increases in their multi-year income, the growth rate varies between organisations.
  • In 2018, the aggregate reported income among these 10 aid organisations (US$2.3 billion) was below donors’ own reported multi-year allocations (US$4.8 billion). However, the aid organisations reporting data through our survey provide only a partial picture of the multi-year landscape. They received 54% of total humanitarian assistance in 2018, in contrast with the larger pool of recipients which donors report they are funding.

However, comparisons between the proportion of aid organisation income reported as multi-year and the proportion of donor allocations identified as multi-year suggest a discrepancy in the reported data. As a proportion of the total income reported by aid organisations, the share of multi-year funding increased from 8% to 13% between 2016 and 2018, reaching its highest level in 2017 (15% of total funding). This compares with the proportion of total allocations identified by donors as multi-year, of 29% in 2016, 31% in 2017 and 36% in 2018 (see ‘Donor contributions’).

Several factors may account for this discrepancy in reporting (see also the section called ‘Financial tracking and reporting: Data gaps and challenges’). The absence of a commonly used definition may lead to different interpretations between aid organisations and donors of what constitutes “multi-year” funding. Aid organisations pool varied income streams together (public and private, humanitarian and non-humanitarian), which means they may count humanitarian-related funding differently. There also exist several stages in the multi-year grant cycle, ranging from commitments to contracted funding and subsequent disbursements. How donors quantify their overall volumes of multi-year funding may differ from aid organisations’ approach to quantifying the funding they receive.

Where increases in multi-year income have occurred, aid organisations identified several factors that helped them make the case to donors. These included sharing organisation-specific multi-year strategies and plans, and demonstrating links to multi-year UN coordinated appeals (such as the Afghanistan Humanitarian Response Plan for 2019–2021 or the Syria Regional Refugee and Resilience Plan). High-visibility pledging conferences and securing multi-year grants from individual donors were also identified as having incentivised other donors to provide multi-year funding.

While multi-year income has grown, aid organisations report that current levels of multi-year funding are largely insufficient to change their modus operandi. Aid organisations recognise there is a level of financial reassurance that comes with multi-year commitments from donors. However, since the Grand Bargain, aid organisations reported that the increase in allocations of multi-year grants has not occurred at a pace that would encourage a significant change in how they plan and implement programmes. Generally insufficient funding within the humanitarian system was highlighted as a factor that limits aid organisations’ opportunities for trialling new approaches (where there may be a higher risk of not meeting donor expectations). It also hampers investment in learning and building an evidence base, and resourcing in-country capacity.

The volume of funding is not the sole factor limiting the development and impact of multi-year programming. For some aid organisations, multi-year programming is not yet a mature enough approach. Although there are some settings where they could establish or trial programmes with longer-term outcomes, some aid organisations noted that they may not yet have sufficient expertise to roll these out, as well as not being in the position to manage the financial risk associated with trialling these longer-term programmes. This again leaves limited opportunity for trialling a different approach from the usual annual programme cycle. Challenges in increasing multi-year planning and funding are, to an extent, not unique to multi-year approaches. Many pervade the humanitarian system – for instance, staff retention, gaps in funding cycles and, in cases of escalation or sudden onset of crisis, higher transaction costs and challenges in establishing or scaling up programme administration. A multi-year approach needs to overcome some of these ingrained issues, as well as deliver better results.

It was commonly noted that multi-year programming within aid organisations has yet to reach the scale at which more transformational outcomes could be achieved. Most aid organisations did report that they are increasingly taking a multi-year approach where they have a sustained presence. However, there is no common framework for reporting the results and outcomes of multi-year programmes, and there have been very few evaluations of such programmes. As a result, it is not yet possible to have a clear system-wide sense of their results and outcomes. Aid organisations also reported that there has to date been limited knowledge-sharing on good and less-successful practice in using multi-year funding and programming, which has further inhibited learning.

Box 2

How do multi-year programming and funding interlink?

As previous papers have observed[1], multi-year funding alone does not bring about efficiency and effectiveness gains unless it is deliberately managed to do so. Aid organisations are increasingly planning multi-year programmes (see the section ‘First-level recipients’ reported multi-year humanitarian income’), although they are at different stages in the development of their internal processes and learning. Clearly, funding and programming run in parallel and feed into one another in some circumstances and in some aid organisations’ financial models direct programming approaches. However, this is not the case for all aid organisations. Broadly, there appear to be two categories that define how multi-year funding and programming interlink. Multi-year programming is either driven by the receipt and availability of multi-year funds, or aid organisations programme on a multi-year basis irrespective of the volumes of multi-year funding secured.

The first approach was found to be more common among aid organisations whose mandate is primarily humanitarian and for which a single programme is likely to be funded by a single grant. Many aid organisations consider the availability of multi-year grants to be a guarantor of multi-year programming. In the absence of funding, they are less likely to assume the long-term risk to their programme, whether they self-implement or work with downstream partners. For these organisations, it is likely that multi-year programming is still nascent, or a potential spin-off from the Grand Bargain and the subsequent increases in volumes of multi-year funding they have received from donors. While they have developed multi-year programmes in some larger crises, they still seek further funding for similar programmes in smaller-scale crises.

For multi-mandate aid organisations, the second approach is often more common, with multi-year programming more intrinsic to existing ways of working and less driven by external reforms. These organisations may often plan and programme on a multi-year basis irrespective of funding secured. In these circumstances, the availability of greater volumes of unearmarked income was identified as an enabling factor. These aid organisations build on their long-term in-country presence, and their programmes pursue objectives beyond humanitarian ones. Their internal structures are more attuned to delivering cross-cutting or wider programmes, and they are likely to be supported by greater and more flexible income.

However, several factors complicate aid organisations’ ability to sustain a multi-year approach to programming, both at a country level and more so across a range of country programmes. These include a complex mix of income streams: private or institutional, humanitarian or non-humanitarian, multi-year or short-term, flexible or earmarked, or fully core awards. They may involve varying levels of certainty on timeframe and volume. Aid organisations therefore have to align this mix of income streams to optimise programming. They reported that to be able to programme more confidently on a multi-year basis, they require greater volumes of multi-year funding from donors, which would provide them with greater income visibility.

Box 3

Localisation and pass-through funding

The Grand Bargain explicitly commits aid organisations and donors to “increase multi-year, collaborative and flexible planning and multi-year funding instruments…ensuring that recipients apply the same funding arrangements with their implementing partners”.[2] It also commits aid organisations and donors to “increase and support multi-year investment in the institutional capacities of local and national responders”.[3] Of the 11 aid organisations that provided data, only four shared granular data on the multi-year funding they passed on to second-level recipients. This limited pool of data shows that multi-year humanitarian funding remains primarily directed to international organisations (see the section called ‘Recipient organisations of funding’). And while local and national NGOs reportedly received increasing levels of predictable funding, these remain at very low levels.

Increasing the quantity of funding passed through to downstream partners is complex. Aid organisations are already facing a conflicting choice: deciding between remaining nimble or providing long-term funding to a select number of local and national organisations. The latter is perceived as going against the grain of being agile and able to respond flexibly through diverse partners. However, more evidence is required to substantiate these perceptions.

Conditionalities applied to first-level recipients trickle onward to downstream partners. The restrictions original grants carry are transferred to downstream partners, potentially in addition to other conditions. Funding to downstream partners may also form part of existing long-term agreements and become short-term when directed to specific projects. While larger aid organisations may be able to afford to make multi-year plans based on donor commitments, they do not usually assume the risk of multi-year plans with their sub-grantees.

Aid organisations report that there are currently insufficient volumes of multi-year grants to pass on to downstream partners. First-level recipient organisations report receiving relatively low volumes of predictable or flexible grants for their own operations, which leaves them with limited funds to pass down in similar vein. It is important to note that first-level recipients will also implement programmes themselves – particularly in large protracted crises where they have access, established supply chains and logistical capabilities. In these cases, multi-year funding will not flow to local or national actors.

Some donors stated that they encourage aid organisations to ensure their pass-through funding maintains the same qualities as the original grants. However, official donor requirements for aid organisations to pass on multi-year funding were not reported. As such, aid organisations have the latitude, albeit constrained, to choose how they direct multi-year or unearmarked funding to their partners.

Notes

  • 1

    NRC, FAO and OCHA, Living up to the promise of multi-year humanitarian funding (2017); OECD, Multi-Year Humanitarian Funding (2017), page 15.

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