DONOR CONDITIONS Objective 2.1 - PowerPoint Presentation

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DONOR CONDITIONS

Objective 2.1Renegotiate donor requirements or conditions that contribute to reducing the burden

Interim presentation of findings to the IASC Task Team on Humanitarian Financing24 July 2015

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HFTT

workplan

stream

co-led

by WFP and UNFPA - This document is designed as support to the oral presentation

.

As the findings are still draft, please do not circulate beyond IASC HFTT members.

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IntroductionThis update only concentrates on steps undertaken since the last update to the IASC HFTT in May.

Introduction

The impact of conditions were defined from a 1 to 5 severity and averaged into three quartiles in order to prioritise the top quartile as being the top

conditions. Objective: Focus only on the conditionalities with the most significant impact

3Methodology

used

Quartiles

THIRD Quartile

MEDIAN

Quartile

FIRST

Quartile

Severity

of

Conditionalities54321

Significant impact (Presents constraints to

adequately fulfilling organizational objectives)

Large

impact

Medium impact

Small impact

Little impact

Respondents

: 13 in total (8 UNOs and 5 NGOs)

UN Agencies4

FAO

UNICEF

IOM

WFP

UNFPA

OCHA

WHO

UNHCR

NGOs

Handicap Int.

Oxfam

Action Aid Christian Aid

CAFOD

After a number of extensions, the survey was closed on 30

June 2015

Quartiles

HIGH IMPACT

MEDIUM IMPACT

SMALL IMPACT

5

General

F

indings (I)

Conditionality

Financial

Restrictions

Earmarking

Reporting

Risk Management

Due DiligenceCounter-terrorism Limited Predictability

Disclosure/Transparency

Value for Money

Anti-corruption/fraud/misuse of funds

Visibility

Environmental impact/Climate change

Lobbying

Restrictions on staff with donor country’s nationality

Emerging trends from top conditions out of 14 ranked by severity of conditions.

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ConditionalityHumanitarian Principles

DetailsPercentage of Impact Level Financial Restrictions

Lack of flexibility, predictability and timely funding: 1,2,8

Unspent balances to be returned rather than used for similar activities- The probability of having to refund is significantly higher than the probability that donors agree on reprogramming

19%

Spending deadlines (sometimes with no possibility of no-cost extensions)

Disbursement delayed or split up into tranches

Organisations have to request funding to cover immediate needs

Earmarking

Lack

of flexibility, predictability and timely funding:

1,2,8Aid based on need assessment:

2,8Project/Activity

16%Geographic Area ReportingFlexibility, predictability, excessive reporting requirements:1,8Additional reporting requested which differs from the standardised reporting format10%Disbursement from multi-year agreements are subject to approval of the reports by the donorRisk ManagementRequest for aid diversion reports10%Request for reporting on burn ratesDonors request to update the risk management plan provided as part of the Project Proposal at least quarterly, based on performance information assessmentsDonors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being

usedfor

the agreed project

Due Diligence

8%

Lack of flexibility, predictability and timely funding: 1,2,8

Lack of flexibility:

1,2,8

Additional observations:

The top 5 conditionalities are closely followed by the next five: Counter-terrorismLimited predictability

Disclosure/transparencyValue for moneyAnti-corruptionBecause of the small difference in cumulative totals for the following 5 conditionalities, the suggestion is to also cover the next 5 in the messaging.

If disaggregated by UNO and NGO, the only real difference is the higher effect of disclosure/transparency on NGOs, but otherwise the results are quite consistent for the two groups.

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Organization

ConditionalityDetails8

Top 3 conditionalities among the top 10 donors

(*donor names are listed in alphabetical

order)

Canada

Limited Predictability

Limited predictability and multi-year funding for most donors, which hinders the development of resilience and government capacity-building

programmes

Earmarking

Project/Activity

Counter-terrorism

Standard counter-terrorism language cleared by legal departments

EULimited Predictability

Limited predictability and multi-year funding for most donors, which hinders the development of resilience and government capacity-building programmesFinancial Restrictions Request to co-fund 20% funded projectsCounter-terrorismRequest to ban certain groups from implementing or benefitting from the projectGermanyRisk Management Donors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being used for the agreed projectLimited Predictability Limited predictability and multi-year funding for most donors, which hinders the development of resilience and government capacity-building programmesEarmarkingProject/Activity

Japan

Earmarking

Project/Activity

Financial Restrictions

Spending deadlines (sometimes with no possibility of no-cost extensions)

Earmarking

Geographic area

Organization

ConditionalityDetails9

Top 3 conditionalities among the top 10 donors

*

(*donor names are listed in alphabetical order)

Netherlands

Earmarking

Project/Activity

Reporting

Disbursement from multi-year agreements are subject to approval of the reports by the donors

Limited Predictability

Limited predictability and multi-year funding for most donors, which hinders the development of resilience and government capacity-building programmes

Norway

Risk ManagementDonors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being used for the agreed project

Anti-corruption/fraud/misuse of fundsThe use of the contribution and the management of funds shall comply with the professionally accepted book-keeping rules and practicesEarmarking Project/ActivitySwitzerlandRisk ManagementDonors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being used for the agreed projectReportingDisbursement from multi-year agreements are subject to approval of the reports by the donorsEarmarkingProject/ActivitySweden

Financial Restrictions

Unspent balances to be returned rather than used for similar activities. The probability of having to refund is significantly higher than the probability that donors agree on reprogramming

Due Diligence

Each contribution shall be subject to internal and external auditing procedures

Risk Management

Donors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being used for the agreed project

Organization

ConditionalityDetails10

Top 3 conditionalities among the top 10 donors *

(*donor names are listed in alphabetical order)

UK

Reporting

Additional reporting requested which differs from the standardised reporting format

Counter-terrorism

Request to ban certain groups from implementing or benefitting from the project

Due diligence

Robust due diligence process-per theme, per humanitarian action + desk review

USA

Counter-terrorism

Standard counter-terrorism language cleared by legal departments

Risk ManagementDonors reserve right to stop transfers, claim repayment if contractual obligations are not met or if it emerges that funds are not being used for the agreed projectCounter-terrorismRequest to ban certain groups from implementing or benefitting from the projectCERF *Limited Predictability Limited predictability and multi-year funding for most donors, which hinders the development of resilience and government capacity-building programmesEarmarkingProject/ActivityFinancial Restrictions Staff costs limited to 10%, staff costs limited also for more labour-intensive activities which are treated the same as other non-labour intesive activities

Draft headline messages – to be developed

Financial Restrictions affect the overall efficiency of recipient organizations – they slow down implementation and increase overall transaction costs. Earmarking affects costs effectiveness by inhibiting the equitable distribution of resources – increasing risks for over/under funding beneficiaries caseloads, impacting programme decisions.

Heavy reporting requirements can significantly affect transaction costs and can absorb human and other resources that could be perhaps better spent on implementation. Risk management will push organizations towards a more risk-averse mode of operation rather than one governed by needs on the ground.

Due diligence processes can significantly delay the implementation of humanitarian activities.

Limited predictability

prevents more equitable planning, lower return on investment by limiting negotiating power with partners (including suppliers) as budgets/procurement activities are carried out within a short funding horizon. A lack of multi-year funding also prevents organization from stabilizing outcome gains as the continuity of implemented activities cannot be guaranteed.

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Suggestions – for discussion

Steer away from providing too much detail of the survey to donors which might detract from end result we want to achieve. Concentrate on messaging on how conditionalities affect humanitarian operations (evidence) and why we would need to change them.Further examples to substantiate impact of

conditionalities will be needed – are we able to provide them and how? Key audiences: SG High Level Panel, GHD (September), WHS

Continue with consortium-to-consortium approach for now.

Focus on top 5 or more? Even if little scope for improvement has been suggested?

The analysis so far does not suggest significant differences between UN and NGOs – so the suggestions is to continue treating it as one group.

Should we share with donors the top 3

conditionalities

? With each individually or for the group? Would we need to cross-check the findings with colleagues handling these donor portfolios?

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