Driving change in quality funding with improved transparency

In June 2021, donors and aid agencies reaffirmed their commitment to provide ‘a critical mass of quality funding’ and to transfer a greater proportion of funding to local actors. As the humanitarian system seeks to meet a growing need that has little prospect of abating, the commitment to provide resourcing that enables more effective, efficient and localised responses is both welcome and necessary. So, what role does data on quality humanitarian funding play in driving progress towards this commitment, and what do we need to do to improve the transparency of quality funding?

Fundamental, system-wide change is required to reach a critical mass of quality funding. Specifically, the policy and behaviour of donor and implementing agencies will need to shift. Questions of risk and domestic political expectations of humanitarian aid need to be addressed, as do the competing – and at times contradictory – pressures on how, where and in what form funding is allocated. And significant changes in grant management practices and approaches to programme design are also needed.

However, how this change is realised and indeed what ‘a critical mass of quality funding’ looks like is unclear. Indeed, the concept of quality funding, referring as it does to a range of characteristics of funding (such as multi-year, predictable funding, un- or softly-earmarked funding, and a number of flexible features of funding arrangements) makes identifying progress complex.

Our own analysis suggests that since 2016, the volume of multi-year funding provided by donors has increased – yet the proportion of funding provided unearmarked has not. This poses the following questions: at what scale and in what combination do these characteristics add up to the envisioned critical mass? How do we account for the differing value of individual characteristics in certain contexts – sudden onset crisis versus protracted crisis – and to different actors?

Comprehensive and timely data on quality funding is a necessary foundation for achieving change and monitoring progress. A more complete picture of existing practice in quality funding will help unpick the broader political challenges, informing how, in what form and by whom change is required. Such transparency on quality funding means donors and recipients can be held to account, which in turn can help reduce resistance to change.

The Grand Bargain 2.0 Framework explicitly calls for improved funding transparency, stating that ‘appropriate tracking and transparency around usage and impact of funding’ is required. At Development Initiatives (DI), we have worked for the past five years to support the improved transparency of humanitarian funding. From our work analysing multi-year and unearmarked funding flows and quality funding practices and funding cascaded to local and national actors, and work to improve publication to and use of IATI data, we know that the open data published on the different components of quality funding is not comprehensive or timely enough.

As a consequence, most of the data we have analysed has had to be collected directly from donors and implementers, rather than from public data platforms. Currently, we have an incomplete picture of where, how and at what scale quality funding, in its different forms, is being provided and cascaded within the humanitarian system.

We therefore need to ensure that we have access to the data on quality funding, which is required to accurately monitor Grand Bargain commitments and is also critical to informing learning, planning, coordination and wider accountability. And we also need to consider how the data and information to be collected and analysed should be determined.

There are four key questions that need answering:

1. What elements and characteristics of quality funding do we need to quantify and measure? Transparent and consistent reporting of volumes of funding – multi-year and disaggregated by earmarking classification ­– as well as how funding is cascaded are the obvious starting points. But are there other characteristics of flexibility that would be valuable to assess, such as the percentage of funding passed on to cover indirect costs? When making these choices it will be critical that the interests of all stakeholders – frontline responders (local and international), UN agencies and donors – are taken into account. This will require acknowledging both individual and collective interests.
2. What data and information do we need to measure these characteristics? In this regard, it is important to recognise that measuring progress should not be the sole consideration. A more comprehensive, joined-up assessment of the value of data on quality funding needs to be made, balancing the data needs for monitoring progress with those for informing learning, coordination, programme planning and wider accountability.
3. What data and information do different actors therefore need to report, and what cost and capacity implications would follow? There will inevitably be a balance to strike between the added value provided by the visibility of certain data and the cost of collating and reporting this data. Undoubtedly, competing interests and needs will need to be reconciled. As a result, there will likely be an incremental process that prioritises fundamental data needs initially, building a more detailed picture over time.
4. How should this data be collated, published and analysed in a timely and comprehensive manner? UN OCHA’s Financial Tracking Service (FTS) and the International Aid Transparency Initiative (IATI) data standard are widely used, with Grand Bargain signatories having committed to publishing to IATI. However, reporting and publishing need to improve. Beyond this, we need to consider whether investment is needed to further develop data systems, platforms and tools, in particular to collate, access and use data at national and local levels as well as the level of support required for publishers.

At DI, we are beginning to unpack these questions by considering the options available and consulting with stakeholders from the NGO, UN and donor communities. If you are invested in the quality funding and/or data-driven transparency agendas and are interested in the work that we are undertaking, please do get in touch with Angus by email.