Sufficient volumes of funding and effective delivery mechanisms are key to the efficiency and effectiveness of humanitarian responses. The aspirations of the Grand Bargain, to drive greater efficiency and effectiveness, have yet to be fulfilled. Progress has been made over the past five years but has been uneven against key commitments. Critically, the ability of the humanitarian community to understand and monitor progress is impeded by limited accessible, accurate and granular data.

The Covid-19 pandemic has reinforced the importance of funding to local and national actors to provide responsive assistance to people in need. Patterns of funding to first-level recipients remained largely unchanged in 2019, with most funding from public donors going to multilateral organisations (66%, US$15.8 billion). Funding given directly to local and national actors continues to constitute only a small proportion of total international humanitarian assistance – just 3.1% in 2020. The volume of funding channelled directly to local and national actors increased in 2020 (US$756 million), recovering after a fall in 2019. For all funding channels, there continues to be insufficient data on secondary transactions beyond first recipients.

Pooled funds allow for a collective and flexible response. Total contributions to UN-coordinated pooled funds fell in 2020 by 18% to US$1.5 billion, after significant growth in 2019. This was primarily due to a US$449 million reduction in contributions from the UK. While overall funding to country-based pooled funds decreased in 2020, the proportion directed to national organisations continued to grow, up from 24% in 2016 to 34%.

Unearmarked and multi-year funding provide flexibility and predictability to recipients. Data collected by Development Initiatives (DI) from nine UN agencies shows that between 2016 and 2020 unearmarked funding increased by US$535 million, reaching US$3.3 billion in 2020. The proportion of total humanitarian funding provided to these agencies as unearmarked funding grew in 2020 – rising for the first time in five years to 17%, though remaining below 2016 levels of 19%. More positively, comparable data from eight leading donors shows multi-year funding increased as a proportion of the total assistance they provide, from 27% in 2016 to 41% in 2020, despite a fall between 2019 and 2020.

Cash and voucher assistance (CVA) continued to grow in 2020. The ability to scale up and deliver remotely meant that many implementers preferred to use cash to deliver humanitarian assistance during the Covid-19 pandemic response. In 2020, total programming costs for CVA grew to US$6.3 billion, having grown consistently year on year from US$2.0 billion in 2015.

International humanitarian assistance was delivered in 2019 in largely the same way as in previous years. Overall, multilateral organisations received most of the funding from public donors, while non-governmental organisations (NGOs) received the majority of assistance from private donors. While funding can often be passed through multiple intermediaries before reaching the final recipient, there continues to be a lack of data around how funding is channelled beyond first-level recipients.

• In 2019, two thirds (66%, US$15.8 billion) of international humanitarian assistance from government donors was channelled through multilateral organisations, an increase on the volume and proportion provided in 2018 (62%, US$15.5 billion). This represents the highest proportion of funding channelled to multilateral organisations in the last five years, an increase from 58% in 2015.
• A further 18% (US$4.3 billion) of international humanitarian assistance from governments was channelled to NGOs, of which the majority came from governments in the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) (US$4.2 billion).
• Private sector international humanitarian assistance was predominantly channelled through NGOs (86%, US$5.9 billion), with multilateral organisations receiving just 11% (US$742 million).
• The majority of funds (85%, US$1.7 billion) channelled to the International Red Cross and Red Crescent Movement (RCRC) in 2019 came from DAC donor governments. Overall, funding to the RCRC fell in 2019 by US$1.2 billion, due to a drop in funding from non-DAC public donors, however this returned levels of funding to those of previous years, after a significant jump in 2018.
• The public sector received 44% less funding in 2019 (US$1.1 billion) compared to 2018 (US$2.0 billion), due to a decrease in funding from both DAC and non-DAC governments.

The OECD DAC Creditor Reporting System provides data on recipients of international humanitarian assistance only after two years. For more up-to-date information on channels of delivery in response to the Covid-19 pandemic in 2020, the Financial Tracking Service (FTS) of the UN Office for the Coordination of Humanitarian Affairs provides an indicative, though not comprehensive, picture.

• FTS data suggests that the proportion of international humanitarian assistance from government donors channelled to multilateral organisations remained constant from 2019 (66%) to 2020 (67%), with some variation between donors. Of the 10 largest DAC government donors, the Netherlands saw the greatest increase in the proportion of funding for multilateral organisations, from 63% in 2019 to 74% in 2020. The donor allocating the lowest proportion of assistance to multilaterals in 2020 was Norway (55%).
• On the other hand, FTS data shows that the proportion of government funding to NGOs increased in 2020, from 12% in 2019 to 19% in 2020, while the proportion channelled to ‘others’ decreased. Following a drop in 2019, the three largest donors (the US, Germany and the UK) all increased their proportion of funding to non-governmental and civil society organisations in 2020 to varying degrees. The US increased contributions from 14% of its total funding in 2019 to 27% in 2020.
• In total, four of the top ten donors contributed over 20% of their international humanitarian assistance to NGOs: Norway (28%), the US (27%), the Netherlands (26%) and Sweden (20%). Additionally, over the last five years, Norway and Sweden have contributed the highest proportion of assistance to the RCRC.

Local and national actors, including governments, NGOs and societies, are often the first to respond to crisis. The scale of need as a result of the Covid-19 pandemic, and subsequent restrictions on access for international actors, has reinforced the centrality of local and national actors in humanitarian response.

Through the localisation agenda, there has been a growing focus on enhancing the role of local and national actors in decision-making and coordination processes, as well as access to funding. Commitments made at the Grand Bargain included a global target of 25% of total international humanitarian assistance to be passed to local and national actors “as directly as possible” by 2020.^[1] Five years on from the Grand Bargain, absolute volumes of international humanitarian assistance passed directly to local and national responders have increased. However, in the context of the scale of change desired, this growth falls far short of aspirations.

• Between 2016 and 2020, direct funding to local and national responders increased by 23%, from US$615 million to US$756 million. However, despite this growth, this represents just 3.1% of total international humanitarian assistance and only a marginal increase from 2.8% in 2016 when the Grand Bargain commitment was made.

Total volumes of funding channelled directly to local and national actors recovered in 2020 after a significant fall in 2019.

• Direct funding to local and national responders grew by 69% in 2020, from the previous year. As a result, the share of total international humanitarian assistance passed directly to local and national actors increased to 3.1% (US$756 million) in 2020, from 2.1% (US$448 million) in 2019, recovering to nearer 2018 levels after a substantial drop in 2019 funding.
• Most funding to local and national actors in 2020 continued to be directed to national governments (83%, US$624 million). This follows a sharp drop in funding received by national governments in 2019, which occurred mainly because of a large decrease (68%) in assistance to the Yemeni government.
• Direct funding to local and national NGOs reduced by volume and as a proportion of total assistance in 2020 to 14% (US$103 million), from 24% (US109 million) in 2019.

Funding is also passed indirectly to local and national actors through intermediaries. For example, country-based pooled funds (CBPFs) are an effective way of channelling greater volumes of funding to local and national actors in crisis contexts. While indirect funding is thought to represent a greater proportion of funding than direct flows, inconsistent reporting means data on exact volumes is limited and insufficient to establish a full understanding of funding to local and national actors.

Pooled funds are an increasingly important part of the humanitarian financing landscape. The responsiveness and flexibility of pooled funds allows assistance to be quickly targeted and delivered where it is needed most. Therefore, pooled funds are seen as playing a key role in delivering the Grand Bargain commitments, especially localisation, and have seen consistent growth in support from donors over the past six years. However, overall funding to pooled funds fell in 2020, driven by a large decrease in funding from one of the biggest donors to pooled funds.

• Contributions to UN pooled funds fell sharply in 2020 to US$1.5 billion, compared to the record US$1.8 billion received in 2019.
• This 18% decrease in 2020 represented a sharp departure from the growth seen in 2019 (when funding rose by 18%) and returned total volumes of contributions to below 2018 levels.
• Both the Central Emergency Response Fund (CERF) and country-based pooled funds (CBPFs) saw a reduction in funding in 2020, although the fall in CERF contributions was higher (27%, US$221 million) than for CBPFs (10%, US$93 million).
• With a fall in total volumes, pooled funds as a proportion of total public contributions also fell to 6.1% in 2020, from 7.4% in 2019. Consistent with previous years, funding to CBPFs in 2020 (3.5%) accounted for a slightly greater proportion of total international humanitarian assistance than funding to the CERF (2.5%).

UN pooled funds receive the majority of contributions from a small group of public donors. Several key donors increased their contributions in 2020. However, the UK – the largest donor to UN pooled funds in 2019 – cut its funding in 2020, with significant impact on overall volumes received.

• The fall in contributions to UN pooled funds in 2020 was predominantly due to a 63% (US$449 million) decrease in UK contributions, from US$714 million in 2019 to US$266 million in 2020. This fall follows a large increase in funding (US$347 million) from the UK in 2019, an increase of 95% on 2018. While this is in line with overall cuts to UK aid (see Figure 3.1, Chapter 3), the proportion of the UK’s total international humanitarian assistance to pooled funds fell from nearly a quarter (24%) of all spending in 2019 to 13% in 2020.
• In contrast, two thirds (10 countries) of the top 15 donors to pooled funds increased their contributions in 2020 from the previous year. Excluding UK contributions, funding from the top 15 donors increased by US$143 million, a 14% rise. While a notable increase, this fell some way short of counterbalancing the reduction in UK contributions that drove the overall decrease in funding to UN pooled funds.
• The largest donors were Germany (US$342 million) and the Netherlands (US$167 million), which increased their contributions in 2020 by 26% (Germany) and 35% (Netherlands). Other notable increases in contributions to UN-managed pooled funds came from Switzerland (US$51 million, an increase of 66%) and Finland (US$16 million, an increase of 77%).

CBPFs are managed in-country and provide funding to delivery partners who can best respond to specific, identified need. As in previous years, NGOs received the highest share (75%) of CBPF allocations. Despite total volumes channelled to CBPFs falling by 13% in 2020, the proportion of total funding channelled to national organisations grew slightly.

• The share of total CBPF allocations channelled through local and national organisations continues to increase slowly. In 2020, 34% (US$307 million) of CBPF funding was directed to local and national NGOs, up from 33% in 2019.
• Funding to national organisations through CBPFs is largely direct, although nearly a quarter (23%) in 2020 was in the form of sub-grants. This level of indirect funding to national organisations is consistent with the pattern seen in recent years, where the proportion of funding channelled indirectly has been between 20% and 24% in four of the past five years.
• Allocations to national organisations varied significantly across different CBPFs and, to a lesser degree, across years. In 2020, the four largest CBPFs accounted for 57% of all CBPF funding to national organisations. The largest CBPF, the Syria Cross Border, drove overall volumes, accounting for over a third (41%) of total funding to national organisations from CBPFs. In total, the Syria Cross Border CBPF allocated 69% (US$125 million) of funding to national organisations in 2020, an increase of 59% (US$46 million) from 2019.
• Allocations to national organisations in Yemen, the second-largest CBPF, fell by 81% (US$67 million): from 34% (US$82 million) of total Yemen CBPF funding in 2019 to 16% (US$16 million) in 2020.
• In total, seven CBPFs allocated less than a quarter of funding to national organisations (Central African Republic, Sudan, Ethiopia, Yemen, Afghanistan, Nigeria and Syria). As well as the Syria Cross Border CBPF, the Pakistan and Somalia CBPFs allocated over 50% to national organisations.

No new CBPFs were established in 2020, with a total of 18 operating in 2019 and 2020. Looking forward, allocations have been made to a new CBPF in Venezuela in 2021,^[2] and discussions are underway around a new regional pooled fund for the Sahel.^[3]

• The four largest CBPFs in 2020 accounted for nearly half of total CBPF allocations: Syria Cross Border (US$182 million), Yemen (US$97 million), Sudan (US$74 million) and Democratic Republic of the Congo (US$74 million). This followed a similar pattern to 2019 with the exception of the Iraq CBPF which decreased in funds by 67%, from US$82 million in 2019 to US$27 million in 2020, and the South Sudan CBPF which fell by nearly a quarter (23%) from US$80 million in 2019 to US$62 million in 2020.
• There were notable variations in funding to certain CBPFs. In line with overall reductions in international humanitarian assistance to Yemen, allocations to the Yemen CBPF in 2020 fell by 59% (US$142 million) compared to 2019, while allocations to the Syria Cross Border CBPF increased by 56% (US$65 million).

‘Quality funding’ refers to a range of properties that support and facilitate more responsive and effective programming, including multi-year planning and funding, reducing the earmarking of donor contributions (see the section entitled, ‘Multi-year funding’ in this chapter) and providing more flexible grant conditions. To this end, Grand Bargain commitments included a target of 30% of international humanitarian assistance to be unearmarked or softly earmarked funds by 2020.

The urgency of the Covid-19 response, and its impact on ongoing humanitarian crises, has reinforced the need for better and more flexible funding arrangements. Following the outbreak of Covid-19, and aligning with existing Grand Bargain commitments, the Inter-Agency Standing Committee set out guidelines on how donors can better support the pandemic response and ongoing humanitarian operations through flexible funding and simplification of funding requirements. This guidance requested that donors increase the flexibility of both existing and new funding, for example through increased cost eligibility, re-programming of funds, simplified reporting processes and no-cost extensions, as well as streamlined funding negotiation and disbursement processes. In return, Inter-Agency Standing Committee members committed to transparent reporting on the use of funds and on cascading this flexibility and simplification downstream to partners, including local and national NGOs.

Donors responded positively to the call for greater funding flexibility in response to Covid-19, and the total volume and proportion of unearmarked funding received by UN agencies increased in 2020, reversing the drop in unearmarked funds in 2019. However, five years on from the Grand Bargain, the proportion of total funding that is unearmarked is well below the agreed targets, and below levels in 2016.

• Between 2016 and 2020, data collected by DI from nine UN agencies shows that unearmarked funding increased by US$535 million, reaching a record US$3.3 billion in 2020. The proportion of total humanitarian funding provided unearmarked to UN agencies grew to 17% in 2020, following a drop to 14% in 2019 and returning to levels similar to those of 2018.
• In total, six agencies reported an increase in volumes of unearmarked funding received in 2020, from the previous year. The increase in the proportion of unearmarked funding in 2020 was mainly driven by a sevenfold increase in unearmarked funding to the World Health Organization, rising from US$98 million in 2019 to US$699 million in 2020. The UN High Commissioner for Refugees (UNHCR), the largest recipient of unearmarked funds in 2020 (US$1.3 billion), also saw a 7% increase, although the proportion of unearmarked funds within overall contributions to the agency fell from 30% to 29% in 2020.
• In addition to the World Health Organization, two other UN agencies reported receiving 30% or more of their humanitarian funding as unearmarked or softly earmarked in 2020, in line with the Grand Bargain target: the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) (64%, US$556 million) and the UN Office for the Coordination of Humanitarian Affairs (52%, US$135 million).
• Between 2016 and 2020, UNRWA remained the UN agency receiving the greatest proportion of their funding unearmarked. Unearmarked funding as a proportion of total funding to UNRWA increased over the five years, from 60% in 2016 to 64% in 2020.
• However, while the proportion of total funding received unearmarked by UNRWA has increased, the volume of unearmarked funding has decreased, as the total volume of funding provided to UNRWA has fallen. In 2020, UNRWA received US$221 million (28%) less in unearmarked contributions than in 2016. Over the same period, the only other agency to receive a reduced volume of unearmarked funding was UNHCR (a decrease of US$56 million, or 4%).

Multi-year funding provides implementing agencies with predictable levels of resourcing that can enable efficiency and effectiveness gains, by allowing them to plan ahead. Because of this, multi-year funding can support a transition from humanitarian to development programming and is regarded as a key property of quality funding. In 2020, the Grand Bargain Enhanced Quality Funding workstream agreed a definition of multi-year funding: funding that lasts for 24 months or more from the start date of the original funding agreement.^[10]

In the continued absence of comprehensive public reporting of volumes of multi-year funding, DI collected data directly from 15 leading donors for 2019 and 2020, adding to an earlier data collection process from 11 donors for the period 2016 to 2018. Multi-year funding has grown since 2016 both in volume and as a proportion of the total funding from these donors. In 2020, multi-year funding made up a significant portion of total funding provided by 15 donors but the volumes provided had decreased from 2019.

• 15 donors, who provided 84% of total humanitarian assistance from governments in 2020, allocated 42% (US$6.5 billion) of their humanitarian funding as multi-year in 2020. This represents a decrease from 2019 when these donors provided 50% (US$7.3 billion) as multi-year funding.
• Just over half (8 of 15) of these donors reduced the volume of multi-year funding they provided in 2020.
• Larger decreases from the US (down 13%) and Germany (down 10%), the two largest public donors of total international humanitarian assistance, drove the overall aggregate fall. The proportion of total assistance provided as multi-year funding by the US had risen sharply in 2019 to 27%. While for Germany, despite the reduction in 2020, the proportion of multi-year funding provided remained high at 63%.
• The notable increases from two donors in 2020 − Japan (up 35% to 40% of total funding provided as multi-year) and Norway (up 16% to 58%) − were not enough to counterbalance reductions from other donors.
• In 2020, the UK reported that 98% of its international humanitarian assistance was provided as multi-year, the largest proportion of funding from any donor.

While data for 2016 to 2018 was provided by 11 donors, which is less than the most recent sample of 15 donors covering 2019 and 2020, the overall trend of rising proportions of funding provided as multi-year appears consistent.

• A complete dataset covering the period 2016 to 2020 is available for eight donors (who in 2020 accounted for 75% of total international humanitarian assistance). In aggregate, multi-year funding from these donors grew from 27% in 2016 to 53% in 2019, before reducing to 41% in 2020.
• Several donors have made large increases since 2016, and in 2020 provided over half of their total humanitarian assistance as multi-year funding: Belgium rising from 20% to 73%; Canada from 9% to 52%; Germany from 26% to 63%; and the Netherlands from 48% to 78%.

The volume of humanitarian cash and voucher assistance (CVA) continued to grow in 2020 across all types of implementing organisations. CVA can be scaled up quickly where markets are functioning well and the payment infrastructure is in place. CVA was consequently often the delivery modality of choice during the Covid-19 pandemic response. Despite the consistent growth in humanitarian CVA programming globally, granular and real-time data on its use remains scarce on publicly accessible reporting platforms.

• Both the volume of funding transferred to recipients (US$5.0 billion, up 16%) and the overall volume of CVA programming (US$6.3 billion, up 13%) increased in 2020, from 2019 levels.
• The volume of CVA implemented by NGOs increased significantly in 2020, and this growth was the main driver behind the year-on-year increase. Growth in the total volumes of CVA in previous years was primarily driven by UN agencies.
• The volume of CVA transferred by NGOs to recipients in 2020 rose from US$0.8 billion to US$1.2 billion, or 25% of the global total that year. Several NGOs reported that, in light of movement restrictions due to the pandemic and the possibility of providing assistance in the form of e-cash, e-vouchers or mobile money, CVA was central to their Covid-19 pandemic response.
• UN agencies and the International Red Cross and Red Crescent Movement (RCRC) also increased the volumes of CVA transferred to recipients in 2020 by 7.5% and 5.2%, respectively.

Preferences for the use of cash or vouchers did not change in 2020 compared with 2019. However, the volume of CVA programming costs accounted for the highest proportion of total assistance in five years of global analysis.

• The breakdown of CVA in 2020 remained the same as in 2019, at 71% for cash and 29% for vouchers.
• According to approximate estimates, CVA programming costs accounted for almost a fifth (19%) of international humanitarian assistance in 2020. This is the highest share since 2015, the first year for which global volumes of CVA have been calculated.

Despite the agreement on minimum requirements for reporting on the volume of CVA, the data available on interagency reporting platforms remains inadequate for useful analysis.

• The Grand Bargain Cash workstream agreed minimum requirements and recommendations for tracking CVA in 2020.^[11] Some reporting improvements have been made, for instance by incorporating data on CVA into the project registration process for humanitarian response plans. However, data on the transfer values of CVA – the minimum reporting requirement as per the workstream agreements – that is granular, close to real time and publicly accessible is still scarce.

Nationally-owned social protection systems expanded drastically in 2020 in response to the impacts of the Covid-19 pandemic, with cash transfers forming an important part of these systems. However, the absence of timely and comprehensive data on CVA limits our understanding of how humanitarian CVA aligns with national social protection systems in practice.

• According to continuously updated research,^[12] cash transfers have made up almost a quarter (23%) of these global social protection responses.
• Several donors, UN agencies, the RCRC and international NGOs are cognisant of the potential synergies with humanitarian CVA and jointly published high-level recommendations on aligning humanitarian CVA responses with national social protection programmes and systems where appropriate and as long as humanitarian principles can be maintained.^[13]
• In the absence of timely and comprehensive data on humanitarian CVA programmes by recipient country, it is currently not possible to examine to what extent synergies are embraced or where opportunities might have been missed.

Figures 4.1 and 4.3, and associated data, were updated on 29 June 2021.