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  • Background paper

Executive summary

A comprehensive breakdown of multi-year humanitarian funding, looking at long-term trends in donors, recipients and earmarking. Are Grand Bargain recommendations being met?

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The Grand Bargain calls for aid organisations and donors to increase multi-year humanitarian planning and funding. However, the extent to which progress is being made remains unclear. Existing data sources – including the Grand Bargain self-reporting process, the Financial Tracking Service (FTS) of the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), the International Aid Transparency Initiative (IATI) and independent research – do not currently provide a clear picture of the quantity of multi-year funding passing through the humanitarian system.

This study seeks to provide an indicative baseline for multi-year humanitarian funding, analysing data collected directly from Grand Bargain signatories – 11 donors and 10 aid organisations. Key findings drawn from data analysis and key informant interviews are as follows:

Donor allocations of multi-year humanitarian funding have grown

Data collected directly from 11 donors shows that the volume of humanitarian funding they provide and identify as “multi-year” has grown year-on-year, both by volume and as a proportion of their total humanitarian contributions since 2016. Between 2016 and 2018, multi-year funding from these donors grew to US$4.8 billion, a 75% increase. In 2018, multi-year funding accounted for 36% of total humanitarian assistance from these donors.

A variety of factors drive growth in multi-year humanitarian funding from donors

The growth in multi-year contributions was felt, by both donor and aid organisation interviewees, to have been in part enabled by the Grand Bargain process, though only a small number indicated that the Grand Bargain had triggered an overhaul in approach. For donors, in-house efficiencies in managing grants often generated some of the immediate transitions to multi-year approaches.

Data on earmarking is limited, but where reported, it shows that the majority of multi-year humanitarian funding is earmarked

Data collected on the earmarking of multi-year humanitarian funding for 2016 to 2018 was limited, with an average of 65% not reported with an earmarking category. Where data did indicate the extent of earmarking, “earmarked” or “tightly earmarked” funds account for the majority of multi-year funds in all three years between 2016 and 2018. These “earmarked” and “tightly earmarked” funds grew as a proportion of multi-year funding for which an earmarking category was provided, from 74% in 2016 to 80% in 2017, before decreasing to 65% in 2018.

Earmarking of multi-year humanitarian funding was reported by aid organisations as a significant factor limiting progress

Earmarked multi-year grants are reported to be reducing aid organisations’ ability to adapt multi-year programmes. Stipulations on country, sector or activity are perceived to be diluting the benefits of predictable funding by compelling aid organisations to channel their programmes toward pre-defined priorities, which may supersede the humanitarian imperative.

Multi-year humanitarian funding from donors is primarily channelled to international responders

In 2018, UN agencies received 45% of reported multi-year humanitarian funding, with international NGOs receiving 19%. Despite increasing since 2016, multi-year contributions to local and national NGOs and pooled funds collectively accounted for only 2% of total reported multi-year contributions in 2018.

Aid organisations receive growing volumes of multi-year humanitarian funding, but this accounts for a smaller than expected share of total income

Data from aid organisations shows that the volume of multi-year income they received rose sharply, more than doubling between 2016 and 2018. However, this multi-year income represents a notably smaller proportion of their income (13% in 2018) when compared to the reported share of allocations that donors identify as multi-year (36% in 2018). Several reasons may explain this apparent discrepancy: differing interpretations of “multi-year funding”; the pooling of aid organisations’ varied income streams; a lack of alignment between donor and aid organisation funding cycles; and divergent practices in quantifying volumes of funding.

There remain several challenges to making further progress with the Grand Bargain’s multi-year planning and funding commitments

These include the unresolved tension between responding to current unmet needs versus future anticipated ones. Aid organisations also report that current volumes of multi-year funding are insufficient to change their modus operandi or to be passed on to downstream partners (with data on pass-through lacking). While multi-year funding has enabled alignment of some aid organisations’ humanitarian and non-humanitarian programmes, questions persist around funding the pursuit of future alignment. Questions also remain around what results can realistically be achieved with humanitarian funding, and how to prioritise multi-year funding by sector.

Previously reported perceptions of the benefits of multi-year humanitarian funding were confirmed

Consensus points towards the suitability of long-term funding primarily in protracted or recurrent crises, enabling responders to sustain operations, invest in partners and strengthen their capacity, as well as to invest in learning and development. Multi-year grants were also identified as acting as bridge funding when crises escalate, until crisis-specific institutional funding is released.

The significant data gaps on multi-year humanitarian funding indicate that better and more comprehensive reporting is required

A fundamental issue is the absence of a commonly used definition of multi-year funding, including an agreed duration for funding considered “multi-year”. Encouragingly, the Grand Bargain Enhanced Quality Funding workstream is currently seeking to address this issue. OCHA’s FTS and IATI do have the functionality to provide some tracking of both multi-year and earmarked funding, although both have their own limitations. However, the extent of current reporting of multi-year and earmarked flows is limited. This is especially the case for flows beyond the first recipient in the transaction chain. In terms of results, no common set of indicators has yet been developed to measure multi-year effectiveness, and clarity is needed on what multi-year funding is expected to achieve.

Recommendations

  • Donors and aid organisations should agree a shared definition and lexicon for multi-year humanitarian funding.
  • Donors and aid organisations should discuss and agree on the expected outcomes and results that multi-year humanitarian funding can realistically achieve.
  • While there is need for more evidence on multi-year humanitarian funding, including through programme evaluations, donors and aid organisations should as a first step share existing evidence more systematically.
  • Donors should indicate the timeframe of funding when they report to OCHA’s FTS and publish to IATI. Similarly, aid organisations should comprehensively report and publish the funding they distribute, indicating the timeframe.
  • Donors should seek to enhance the coordination of funding decisions with other donors, acknowledging that the scope for taking multi-year approaches in the short term varies between donors.
  • Donors and aid organisations should continue to pursue coordination between their multi-year programmes and multi-year UN appeals.
  • Aid organisations should seek to build on the closer alignment with non-humanitarian responders which multi-year programming has enabled in some crisis settings.