No.48-December 2017

by Stephen Browne, Nina Connelly and Thomas G. Weiss

Funding the UN: Order from Chaos?


A detailed analysis of Sweden’s financing of the UN’s funds and programmes finds two dominant characteristics relevant for all donors: distortions due to a rapid increase in non-core funding; and a haphazard and irrational pattern of financing. The report’s recommendations include a proposal for an independent commission to rationalize the UN funding structures to make the UN development system (UNDS) fitter for Agenda 2030 purposes.

Assistance channelled through the UN should be seen in the context of the broader development landscape, which is undergoing constant change. Thanks in part to the MDGs, and the additional development focus provided, Official Development Assistance (ODA) has grown in the present century, including through the UN. However, ODA represents less than a tenth of total flows to developing countries; it is dwarfed by remittances and private capital. The UN’s contribution within this totality of resource flows is now less than 2%.
The combination of a shrinking role for ODA and of the UNDS’s share make it imperative to continue to examine and refine the UN’s role, particularly in the light of the 2030 Agenda. The UN’s narrowing window of opportunity implies a greater concentration on its normative and standard-setting role and an operational focus on poorer countries, states in crisis, and humanitarian relief. There is currently much introspection about the UN’s fitness for purpose, including by Secretary-General António Guterres. The present briefing contributes to that discussion through the lens of the current funding patterns of the UN funds and programmes.
Total funding to the UN system has become more diverse and reached an all-time high of $48 billion in 2015. Of the $30 billion of ODA disbursed by the system, about half was allocated to development activities and half to humanitarian relief, with the UN concentrating its funds increasingly on countries in crisis. Traditionally, contributions by member-states to the UN funds and programmes were to support its core activities and were provided either through assessed contributions from the entire UN membership as a treaty obligation, or voluntarily.
Between 1999 and 2014, while core funding grew by 20 percent, non-core funding increased by 190 percent. Today, fully 80 percent of the resources are non-core, meaning that some funds and programmes have predominantly become implementers on behalf of other multilateral and bilateral sources, rather than donors in their own right.
Non-core funding can be interpreted in different ways. On the one hand, it has enabled UN funds and programmes to maintain and expand their operations. In particular for humanitarian action, the UN system has been able to respond more fully than previously—although the gaps between assessed needs and budgetary allocations remain stark.
At the same time, underlying the availability of earmarked funds is the waning confidence in the UN to determine its priorities independently, along with the desire by donor countries (and their parliaments and taxpayers) to disburse multilateral aid mainly for purposes prescribed by them, and to keep closer tabs on the effectiveness of activities.
Voluntary, non-core funding predominates today with the four largest funds and programmes—UNICEF, WFP, UNDP, and UNHCR, representing at least 75% of their budgets. UN specialized agencies show similar funding trends—with WHO now being both the largest and with the largest percentage of non-core (some 80%). The increase in non-core funding has had various policy and operational consequences, which the study found to be often deleterious.
The donor-driven nature of most UN funding leads to a diversion and dilution of the core mandates of funds and programmes, transforming them into implementers of donor agendas, which may not be aligned to developing–country priorities. The competition for funding, moreover, leads to a further atomization of the UNDS. Organizations follow the money rather than their mandates and encroach on one another’s territory. Non-core funding also places more emphasis on short-term results rather than longer-term capacity building. Non-core funding also pulls resources away from other purposes; some specifically designated UN staff spend excessive time in courting donors. There has also been a tendency to reduce overhead charges in response to donor pressure. This race-to-the-bottom competition means that core funds are necessarily diverted to support the management of operations.
While non-core funding has permitted an expansion in the scale of the UN’s humanitarian relief work, the call for more resources to address new crises has also grown more than commensurately. Non-core resources lead to imbalances in the allocation of funding: some appeals are oversubscribed, others undersubscribed, according to donor preferences. With fewer core resources, longer-term crises become harder to support, as donor interest wanes with time. A preponderance of non-core resources also strains the permanent staff and administrative capacities of humanitarian organizations.
A key finding of the study is the haphazard and irrational pattern of funding within the UN system. The problem begins with the failure of the UNDS to agree to a standard nomenclature for the various sources of funding. “Core” funding is also known as “regular” (UNICEF), “unearmarked” (UNHCR), and “window 1” (ITC). The absence of a standard nomenclature even within this inner circle of the UN is a source of ambiguity and non-comparability.
Worse is the absence of any developmental logic in the allocation of the core funds that fall under the authority of the UN General Assembly and are managed by the UN secretary-general. Organizations originally called “voluntary” receive almost no funds from the assessed budget—three of the four largest (UNICEF, UNDP, and WFP) receive none while UNHCR a modest 1-2%. The big four’s core funds are thus raised almost exclusive through voluntary contributions. Of the other funds and programmes, UNEP, UNCTAD and ITC receive quite generous amounts of core funding from the assessed budget (30% or more). Meanwhile, UNODC is an organization with a huge normative mandate covering drug control, international crime, trafficking, and corruption but receives less than 10%. The five UN regional commissions, whose activities overlap with those of the funds and programes, receive a generous $400 million per year from the assessed budget.
Throughout the UN’s existence, there has been neither the means nor the inclination to redress such imbalances. There is no effective overseer of the UNDS in a position to reallocate funding on the basis of country needs. Consequently, the respective budgets are customarily rolled over every two years, with little or no reference to performance or relevance.
The report concludes with several recommendations, starting with the creation of a new Independent International Commission on UN Funding. It would include the establishment of rational criteria to apportion the UN assessed biennial budget for UN funds and programmes (as well as the five regional commissions) according to minimum core needs based on costs, performances, and normative mandates. Each UN fund and programme should establish thresholds for core resources as a target for donors (as several have already done) and the justifications for core support.
The Commission should identify and catalogue the non-core operational overlaps among funds and programmes. It should draw up guidelines, based on organizational performance, to encourage donors to allocate non-core resources to the most effective organizations and examine the funding implications of closing or merging funds and programmes for which there is clear evidence of duplication. The Commission should develop clear definitions of different types and sources of funding and propose a more reliable way of recording them. The report also calls for donors to contribute more to pooled UN funds, provide more predictable funding for UN normative activities, and give more generous percentages on non-core funds to cover overheads.
The report proposes a controversial back-to-the-future recommendation that UNDP concentrate on its original 1966 mandate, giving more emphasis to its role in mobilizing funds on behalf of the UN development system, rather than for itself, and concentrating on the desperately-needed functions of field coordination for which there is no alternative. Commensurately, its non-core operational activities should be phased out where they overlap with those of other more specialized UN organizations.
This recommendation in tandem with the autonomous Commission—outside of the UN secretariat’s control—would be building blocks for the “Funding Compact” that Secretary-General António Guterres proposed to ECOSOC in July to make the system more capable of supporting the 2030 Agenda.


Download 'Funding the UN: Order from Chaos?' in full in pdf

This briefing is based on the authors’ Sweden’s Financing of UN Funds and Programmes: Analyzing the Past, Looking to the Future (Stockholm: Expertgruppen för bistandsanalys (EBA), November 2017), Report 2017:11. Available on the EBA website here

Stephen Browne is Co-director of the Future of the UN Development System (FUNDS) and Senior Fellow of the Ralph Bunche Institute for International Studies, The Graduate Center, The City University of New York and former Deputy Executive Director of the International Trade Centre, Geneva. He is the author of several books on development and the UN, including United Nations Industrial Development Organization (2012), The United Nations Development Program me and System (2011), and co-editor with Thomas G. Weiss of Post-2015 UN Development: Making Change Happen? (2014).
Nina Connelly is a research associate at the Ralph Bunche Institute of the CUNY Graduate Center, where she is researching international development and the United Nations. She is a PhD candidate in political science and teaches at Baruch College. Prior to graduate school, she worked with the International Rescue Committee.
Thomas G. Weiss is Presidential Professor of Political Science and Director Emeritus of the Ralph Bunche Institute for International Studies at The City University of New York’s Graduate Center; he also is Co-director of the FUNDS Project and of the Wartime History and the Future UN Project. Past President of the International Studies Association (2009-10) and chair of the Academic Council on the UN System (2006-9), his most recent single-authored books include Would the World Be Better without the UN? (2018); Governing the World? Addressing “Problems without Passports” (2014); Globa Governance: Why? What? Whither? (2013); Humanitarian Business (2013); What’s Wrong with the United Nations and How to Fix It (2012); and Humanitarian Intervention: Ideas in Action (2012).


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