Footing the aid bill

By Randoph Kent

At times it seems all-pervasive. A sense of falling revenues has cast a pall over many humanitarian agencies, be they multilateral, non-governmental or bilateral. Yet, is that sense of financial tailspin really justified? If there is indeed a funding crisis, then what are the reasons, the consequences and the alternatives? If there is no funding crisis, then what explains the wide-spread belief that revenues are not meeting needs? In any event, should we not be looking at different approaches to address humanitarian crises and different ways to market humanitarianism?

“I do not believe in compassion fatigue,” remarks the International Federation’s Under-Secretary-General for Operations, Margareta Wahlström. “We have constant demonstrations of compassion: every time there is an earthquake or a flood, the money just flows in.”

This generally positive assessment is corroborated by many of her colleagues within the Federation and at the ICRC. According to Urs Boegli, ICRC Head of Communication, “Last year was the best funding year ever for us, at least in terms of cash contributions, in part reflecting donors’ recognition of the growing importance of protection.”

Official statistics tend to bear out the view that overall funding for humanitarian activities is not in any significant decline. According to the OECD’s Development Assistance Committee, humanitarian aid – “aimed at mitigating suffering and privation” – has remained consistently around US$6 billion over the past three years. For the Red Cross and Red Crescent Movement too, the overall funding needs have remained relatively consistent.

At first glance, this upbeat view does not seem to correspond with the reality of an increasing amount of effort required to mobilize resources nor the complexities that have to be faced in competing for shares of the resource pie – whatever its size. In the broadest sense, however, their perspective on funding merely suggests that to date – in the words of one senior ICRC fund-raiser – “As long as the product is good, we can sell it. But if you have a product that is difficult to package, then that’s a bit different...”

Behind the statistics

Gloomy prognoses about the state of humanitarian funding cannot, however, be totally brushed aside. Behind the generally healthy numbers lie much more complicated issues. One issue symptomatic of the dilemmas with which humanitarian organizations have to contend is that major disasters have become vital fuel to sustain the humanitarian aid industry itself. Another is that the very boundaries of humanitarianism have expanded.

The rise or fall in humanitarian aid moneys reflects a logical correlation between emerging crises and humanitarian needs at any particular point in time. It may be obvious, but it is worth recalling that the peak levels of humanitarian contributions occurred in 1984-1985 during the drought that affected 23 African countries, and between 1992-1994, during the collapse of both Somalia and the former Yugoslavia and after the Rwandan genocide.

While emerging crises continue to attract funds, often what is really meant by the decline in humanitarian funding is that intractable crises are not attracting sufficient resources and that the Appeals of an increasing number of aid organizations are not being fully met.

“Governments’ willingness to commit resources to seemingly irresolvable problems such as those found in Somalia or in many parts of the Great Lakes region is declining,” according to a senior Federation official. Some explain this reluctance in terms of governments’ growing frustrations not with irresolvable problems but with a lack of creative solutions. Others point to governmental fears of falling into humanitarian aid quagmires where donors’ cash and “in kind” assistance become semi-permanent features of subsistence economies.

An additional dilemma for donors concerns the very boundaries of humanitarian assistance. A range of expertise and specializations – from psycho-social trauma to mine clearance – are viewed as part of the arsenal of humanitarianism. Their relevance and importance for the sustainable survival of human beings cannot be denied, but inevitably they add to the cost of what had once been the relatively obvious and straightforward instruments of “disaster relief”.

The uncertain boundaries of humanitarian assistance

A decade ago it was a great deal easier to identify the requirements and, hence, the costs of humanitarian intervention. Tube wells, nutritional feeding, clothes, shelter and water supplies, as well as primary health care were the stock in trade of the humanitarian community. However, the substance, tools and boundaries of humanitarianism have expanded significantly since the African droughts of the early 1980s. As the links between failed States, societal collapse, conflict and humanitarian response intensified, the definition of humanitarianism has grown in scope and complexity.

The major crises of the 1990s brought the humanitarian community more directly in contact with political networks and political solutions.

Peacekeeping, sanctions, human rights all became issues enmeshed in humanitarian response. Within the emergency appeals of a growing number of humanitarian actors were requests for basic components to restore government as well as governance. Reconciliation programmes and family tracing, conflict prevention, family planning and the restoration of police forces entered the realm of requirements to ensure the survival of people and their societies. In the words of the Federation’s Under-Secretary General for Communications & Policy Co-ordination, Steve Davey, “The boundaries of humanitarian assistance are less and less defined by what you’re doing and more and more by the circumstances in which you’re doing it.”

The increasingly fluid boundaries of humanitarianism in no small part explain why resources seem to be less available: more organizations competing for resources to meet a growing list of activities under the uncertain rubric of humanitarianism. Donors seem more prepared to accept a wider interpretation of humanitarian needs and response, and for that they are generally awarded high marks. In so doing, however, the boundaries between the political and the humanitarian are becoming increasingly blurred.

The thin line between what constitutes emergency assistance, development and politics can pose real problems for humanitarian organizations. As Margareta Wahlström says, “We’ve been pushed so much closer together – maybe that was inevitable. The way we define ourselves – political or neutral – is in a sense at stake.” It is a sentiment that in part echoes Andreas Lendorff’s own view after heading the ICRC’s Relief Division for almost
20 years before assuming fund-raising responsibilities. Humanitarian organizations find themselves more and more “in no peace, no war situations,” he says. “The neutrality that underpins all humanitarian activities may increasingly depend upon more conventionally political instruments such as peacekeeping forces.”

The costs of improved humanitarian response

Humanitarianism’s uncertain boun-daries is certainly a variable in the intensifying competition for funds. Ironically so too are more sensitive approaches to humanitarian intervention. Urs Boegli maintains that conventional relief operations are generally easy to fund. Paradoxically, difficulties can often arise when programmes are culturally sensitive and geared towards more permanent solutions, such as “providing seeds rather than food or cattle vaccines rather than cattle as we did in southern Sudan and Somalia.” He goes on: “In other words, the more you spot the ‘missing link’, the more holistic you get, the harder it is to raise the resources.”

Donors may prefer to give bulk food rather than provide funds to buy local seeds. They may reject humanitarian resources being used to support the seemingly high costs of experts, although such experts are helping people to find alternatives to conventional relief handouts.

They may opt for the sorts of projects that can be readily explained to parliaments and ministries of finance as well as to the media or constituency groups. In that regard, the consequences of humanitarianism’s uncertain boundaries come at a time when many donors are reviewing their expectations and assumptions about humanitarian response.

Control, earmarking and partnerships

Public demands for greater accountability over the use of public funds, the political sensitivities surrounding a number of actual and potential humanitarian crises and greater governmental professionalism all go some way towards explaining efforts to “get a better handle on”, or – dare one say – have some control over humanitarian activities. Efforts to control are reflected to some extent in the earmarking of funds, proposals for donor-agency partnerships and demands for accountability.

“Earmarking” of funds is not new to the world of humanitarian funding. Despite efforts by various organizations over the years to persuade donors to abandon the practice, many donors remain inclined to designate how exactly their funds are to be used. It is a form of control and eventually serves as a basis for accountability.

The ICRC’s Lendorff has little problem with most types of earmarking. In fact, he finds over 80 per cent of so-called “earmarked” funds that the ICRC receives to be very acceptable. There is nothing wrong from his perspective for governments to attach broad expenditure parameters to their contributions; for example, earmarked funds for specific regions, e.g. Africa, or for certain programmes, e.g. protection, which “still gives us considerable room for manoeuvre.”

The problem for the ICRC as for most humanitarian organizations is when earmarking becomes so specific and so inflexible that there is no room to adjust projects to meet rapidly changing requirements or when such projects do not relate to a more holistic and programmatic approach to humanitarian assistance.

There is a growing inclination among some donors to look for partnerships with non-governmental and even multilateral organizations. This trend is seen as a mixed blessing. Given the political nature of a number of on-going and potential humanitarian crises, there is more than a little concern that partnerships between donor governments and humanitarian organizations are the thin end of a wedge that will undermine humanitarianism’s much vaunted neutrality and impartiality. This was the unofficial cry of one major multilateral organization in 1994 which felt that funding from the European Commission’s Humanitarian Office (ECHO) was forcing an arrangement upon it that might threaten its own protection programmes in the Great Lakes and would at the same time undermine any hope of effective inter-agency co-ordination.

Of course, a lot depends upon what one means by “partnership”. The accumulated experience and expertise of many within government aid departments offer great opportunities to enhance assessment and even, up to a point, emergency planning processes. Somalia by the mid-1990s demonstrated a relatively effective means of donor government-humanitarian agency collaboration. United Nations agencies, at least since 1992, always seem in principle to welcome the participation of donor representatives in the consolidated inter-agency appeals process, partially as a means to expedite funding.

Yet, strong doubts persist about the wisdom of bringing both sides too closely together. Having a couple of donor representatives involved in stages of the response process may suggest that out of such partnerships will soon emerge a more coherent and rational donor approach for contributing to humanitarian appeals. Remarks one ICRC staff member, “If the late 1990s might be a period when we get our [humanitarian] house in order, including coordination, the next decade may be about better coordination among the donors themselves.”

There are other terms and ways to approach “partnership”. Collaboration on mutually agreed projects, joint evaluations, sharing of information and indeed substantive dialogue. The danger would be for any one partner to determine the direction of another or others against the latters’ mandates and principles. “We recognize”, says the ICRC’s Director of Operations, Jean-Daniel Tauxe, “that we have to be more open, that we have to share our views at a much earlier stage than in the past, but at the same time we have to keep our independence in terms of planning and implementation.” And, in that sense, says Urs Boegli, “Partnerships become bad when they are ill-defined.”

Where the money comes from... and where it goes

The ICRC’s operations are financed entirely through voluntary contributions from governments, National Societies, supranational organizations such as the European Commission, and various public and private sources. Each year the ICRC appeals to its donors for funds to cover its field budget (activities carried out by its over 50 delegations) by means of its “Emergency Appeals” and its headquarters budget (activities at its permanent base in Geneva to manage, coordinate and monitor its humanitarian work world-wide) via the “Headquarters Appeal.” In case of increased or entirely new humanitarian needs arising during a given budgetary year additional funding is sought by means of “Budget Extension Appeals” and “Special Appeals” respectively. Contributions are received in cash, kind and services; contributions stemming from governments and the European Commission account for over 85 per cent of the entire financial support given to the ICRC.

The International Federation mobilizes resources in three different ways for its field
and headquarters activities: statutory income, voluntary funds for headquarters activities, and voluntary funds for disaster response and field programmes including development. Statutory income primarily consists of payments by National Societies according to a quota system established by the Federation’s General Assembly. Voluntary funds for headquarters initiatives are sought from National Societies, governments and other sources to finance the Secretariat’s implementation of the Strategic Work Plan. Voluntary funds for disaster response and field programmes are raised from National Societies, governments, intergovernmental organizations and other sources for operations and programmes outlined in the Emergency Appeal.

Considering the diversity of the National Societies throughout the world, contributions are received from a wide variety of sources. General areas of income include: government subsidies, corporate sector donations, commercial activities, cost recovery schemes, international contributions (Red Cross/Red Crescent and other), membership fees and individual donations.

Top ten donors 1997

ICRC

USA 151.97
EC 92.29
Switzerland 81.01
Sweden 38.77
Netherlands 34.68
UK 33.41
Norway 23.24
Japan 18.59
Canada 17.00
Denmark 11.49
Sfr millions

Federation

EC 59.81
USA 37.91
Sweden 33.84
Norway 27.51
UK 17.51
Japan 14.72
Germany 12.04
Korea Rep. 10.65
Netherlands 9.94
Denmark 9.21

Sfr millions
Incl. ECHO grants to NS, in response to appeals.

Accountability as the alternative to visibility

Effective fund-raising is increasingly linked to accountability. Donors may be willing to be more flexible in the ways that they define “humanitarian” but there is a bottom line and that bottom line is accountability. “Accountable to whom?”, however, remains a persistent problem for donors and humanitarian organizations alike. Are humanitarian organizations principally responsible to beneficiaries, those for whom assistance is ostensibly targeted? Or on a more immediate and practical level, is accountability really the judgement call of government aid agencies, or the purview of finance ministries?

For many, new levels of accountability have created very basic dilemmas. On the one hand donors are pushing for what one might call “global solutions”, but on the other are looking for specific projects that can be readily evaluated and audited in terms of identifiable outputs. In addition, some donors only want to provide for assistance at the field level, and do not want to contribute to headquarters’ overhead costs.

On another level, there are internal bureaucratic problems that frustrate efforts at accountability. Accountability to the victims of emergencies and disasters raises issues such as the appropriateness and timeliness of the aid provided. It is the so-called “implementer” that more often than not is called to account, but this view of accountability is too simplistic, all too often ignoring the operational consequences of donors’ bureaucratic procedures and preferences. Donors will have to examine their own role in the accountability equation, and this level of accountability may not always be appreciated.

The accountability criteria imposed by a finance ministry may also bear little relevance to the criteria used by that donor government’s aid department. Here, too, the humanitarian organization – as it looks towards satisfying the scrutiny of any particular donor – can find itself in a quandary.

Overall, however, humanitarian organizations meet the practical demands of donors’ calls for greater accountability. The day-to-day problem is the amount of time and resources that it takes. More and more donor resources are used to meet donors’ demands for accountability, and it is becoming increasingly apparent that a single accountability criterion is required to reduce administrative burdens. “We have no problem with accountability”, says a representative of the ICRC, “but we just wish that donors could agree on a standard way to do it. It would be one way to enhance our efficiency and lower our costs.”

New strategic partnerships

Whatever the case, non-governmental and multilateral organizations are going to have to rationalize the way they operate in emergency-affected countries. The often decried flood of well-intentioned relief actors is at last going to have to stop, and a combination of NGO self-regulation, donor funding instruments and multilateral coordination will have to ensure that agreed response strategies will replace response chaos.

Though such prescriptions have been proposed before, financial pressures, supported by programme as well as financial accountability, have to support more effective response strategies. One way to combine more effective response and greater accountability, suggests Michael Hayes of the Federation’s Institutional Develop-ment Department, would be to focus far more on building up the capacities of local and community institutions. In the case of the Red Cross, a strong National Society is in most instances a far more socially sensitive and cost- effective way to deal with all but the most “complex” of humanitarian crises.

However, the humanitarian community is also going to have to develop contacts with less conventional partners, particularly with the corporate sector. The potential development impact of the corporate sector in most developing countries normally would dwarf the combined efforts of most NGOs and multilateral organizations. Increasingly, though, the corporate sector is beginning to recognize that it needs to play a role in conflict prevention, post-conflict recovery and related humanitarian interests if its investment environment is to be protected. The challenge for the humanitarian community will be how to guide such growing corporate concerns and interests in ways that address the needs of vulnerable people and vulnerable societies without compromising fundamental humanitarian principles.

Corporations are increasingly willing to talk, says Dwight Mihalicz, Director of Revenue Generation at the Federation. They like the “halo effect” of being associated with humanitarian activities, and their employees like being associated with a “caring com-pany”. Corporations are also interested in exchange of views and information about geographical areas of common interest, and the training opportunities arising from the experiences of human-itarian organizations are also of interest.

For the humanitarian organization, corporations can assist in rebuilding or developing infrastructures, promote conflict prevention through sensitive employment policies, provide education and medical facilities and a host of other activities that will deal with growing humanitarian demands. However, both sides of such potential partnerships must proceed carefully; and, for humanitarian organizations, as one ICRC official warns, “Such associations hold political dangers, such as recently witnessed in the oil industry, or accountability hazards when they seek to influence purchasing procedures.”

In the final analysis, though, the corporate sector – their potential influence and support – should not be ignored. The partnership can succeed if humanitarian organizations tenaciously cling to their principles and mandates.

Marketing techniques now and in the future

“Cause-related marketing is in” ever since American Express Corporation helped rebuild the Statue of Liberty over two decades ago. In a variety of ways, a growing number of humanitarian organizations are allowing their names to be used on the products of commercial firms as a means of generating funds. The HelpAd scheme of the Federation reflects some of the possibilities that can accrue from so-called “cross advertising”. Companies can carry a HelpAd logo, and in turn the Red Cross, National Societies as well as the Federation, can reap the proceeds based upon either fixed fees or upon the numbers of commodities carrying the logo.

For the Federation and its members, such ventures into the corporate world require considerable vigilance to ensure that the Red Cross Code of Ethics and Professional Conduct is not infringed. While the net results to date from the HelpAd initiative have not as yet met expectations, these are early days. In no sense have the importance of individual donors and the key National Societies been replaced by the new techniques.

That said, the importance of pushing the bounds of sophisticated marketing that is nevertheless principled continues. Even a lottery organized by supporters of the work of the Red Cross, though in no way part of the Movement, is being tried. As the Federation itself explains, it is increasingly important to test a variety of initiatives to ensure funding for burgeoning humanitarian needs. Telephone cards, Internet fund-raising, corporate fund-raising with National Societies, approaches to foundations and global alliance deals are all in the offing. They symbolize and suggest the sort of techniques that will be needed to meet the demands of a growing humanitarian field.

Marketing humanitarianism

For the humanitarian community the much larger problem remains: where to find resources to meet the expanding though uncertain boundaries of humanitarianism and related instruments of assistance?

Some have argued that if donors would be less rigid in making such clear separations between relief and development funds, a more comprehensive and integrated use of both would promote a more holistic approach to dealing for example with societies in crisis or in reviving failed States. Yet, even this sort of compelling argument still would not be able to provide sufficient resources to keep apace with the expanding boundaries and instruments of humanitarianism.

Not only are those boundaries and instruments expanding, but also as a recent study by the US Agency for International Development suggests, “Based upon key economic, social, political and environmental trends, the numbers, complexity, inter-active nature and geographical reach of future disasters and emergencies will increase”.

Humanitarian organizations will have to go back to the proverbial drawing board to design more effective ways to garner resources for the “humanitarianism-writ-large” of today and indeed of tomorrow. They will have to take a closer look at the ways that they interact among themselves and the types of strategic relationships they should be developing for the future. They will have to look at marketing techniques that are many conceptual miles away from the charity boxes of yesteryear.

Randolph Kent
Randoph Kent is currently an international policy advisor.