12 March 2023
By Katja Hemmerich
Next week the UN’s Fifth Committee begins its informal consultations on the Secretary-General’s request for US$100 million of assessed funding for peacebuilding each year, which was originally presented at its previous 76th session without a decision. The proposal is an important one from the perspective of multilateralism and how the UN engages in peacebuilding now, and in the future. Our spotlight outlines the issues and analyses the governance aspects of the different funding modalities for the Peacebuilding Fund.
Assessed funding is essentially a mandatory contribution that all member states must pay or risk losing their voting rights. For this reason, it is a relatively predictable and stable funding source which makes it easier for long term planning of operations. This was a key reason why WHO’s member states agreed in 2022 to increase the proportion of assessed funding from the current 16% to 50% of WHO’s resource base by 2028. Nevertheless, UN member states are generally reluctant to increase assessed funding, and there are also pros and cons for international organizations, which this week’s spotlight explores.
Aside from planning and operational benefits arising from the predictable nature of assessed funding, the fact that all member states contribute means it signals a strong show of global support for those programmes. As highlighted by the WHO debate on assessed funding, when all member states provide mandatory funding, it also results in a global prioritization of how that money is used, as opposed to allowing earmarked voluntary funding to define programmatic activities. However, earmarked voluntary funding has made up an increasing proportion of UN funding, growing from 51% in 2010 to 62% in 2020. Over the same period, assessed funding has shrunk from 33.5% of UN system funding to 22% of 2020’s $62.6 billion of funding for the UN system (see the Dag Hammarskjold Foundation’s 2022 Annual Report on UN Development Financing for more detail).
This over-reliance on earmarked funding represents more than just a planning and predictability challenge, it highlights a governance problem as well. Increased reliance on voluntary donor funding allows for smaller groups of donor states to influence priorities and in some cases include conditionality for funding that impacts how an international organization delivers. Consequently, some researchers have referred to this ability of a smaller group of states to influence international organizations through voluntary funding as ‘mini-lateralism’, contrasting it with the symbolic multilateralism inherent to assessed funding modalities.
The Peacebuilding Fund, which has been funded solely through voluntary contributions to date, has relied on only 12 donors (6% of UN member states) to provide 88% of its funding commitments from 2006-2024. Aside from Japan, all those donors are from the Western European and Other Group (WEOG). As repeatedly highlighted in the SG’s report (A/76/732), the Peacebuilding Fund has maintained a remarkably flexible and responsive approach to how it uses its funds, which is one significant benefit of voluntary funding sources. The $100 million annual assessed contribution only covers 20% of the SG’s target of $500 million for peacebuilding each year, and represents 3.4% of the Secretariat’s current regular (assessed) budget (or less than 1% of the assessed funding across the UN system). Its impact therefore is both operational and symbolic in demonstrating a global investment in peacebuilding by all member states.
The challenge that comes with a global approach is that decision-making on funding becomes more complex with the involvement of all member states, especially in the Fifth Committee which aims to make decisions with the highest level of agreement possible, ideally by consensus. Any member state, therefore has a de facto veto, resulting in more complex negotiations to find compromise across all member states and regional groups. Managing multiple sources of funding also comes with increased management burdens and transaction costs, which can also reduce operational responsiveness. The Secretary-General’s report indicates that the Peacebuilding Fund aims to mitigate these challenges by:
committing to maintaining the assessed funding contribution at $100 million annually so that the Fifth Committee does not need to find agreement on the programme plan and varied funding levels each year; and
using the same management arrangements for the assessed funding as for the voluntary contributions.
This approach means that member state oversight is focused on reviewing performance reports ex-post facto and avoids creating additional management and reporting mechanisms and related costs.
It will be interesting to see how the Fifth Committee reacts to this somewhat novel approach, particularly for other operational entities that rely on assessed and voluntary funding. As outlined in the Peacebuilding Fund’s Strategic Plan for 2020-2024, considerable investments have been made into oversight and accountability mechanisms, including mandatory project evaluations, Joint Steering Committees in Peacebuilding Recovery Facility (PRF) countries, quarterly meetings with the PBF Group of Friends and an Annual Strategic Financing Dialogue with top donors, as well as a detailed public Dashboard on priorities and funding. Nevertheless, the Advisory Committee on Administrative and Budgetary Questions (ACABQ) has recommended that the Fifth Committee request more information on the management and oversight arrangements stressing that
"the appropriate oversight by Member States in the management and utilization of assessed contributions is indispensable." – ACABQ (A/76/821)
One feature of other UN agencies, funds and programmes' accountability mechanisms that might be considered when discussing oversight, is ensuring representation of each region on the PBF’s existing accountability and governance mechanisms to better reflect the multilateral character of its assessed funding. This geographic balance is generally required for all Executive Boards in UN agencies, funds and programmes. In the case of the PBF, the annual Strategic Financing Dialogue is an obvious mechanism that could benefit from comprehensive regional participation if assessed funding is approved and all member states become donors. Similarly the PBF External Advisory Group, which currently does not include members from the Middle East or Asia, is another mechanism that could benefit from broader multilateral representation to ensure member state oversight of assessed funding.
Operational flexibility, predictable funding and member state oversight of the funds are important requirements not just for peacebuilding but essentially all UN programmes. As the debate around assessed funding for peacebuidling highlights, reconciling these three issues is not as easy in practice as it appears on paper. We will keep our readers informed of the Fifth's Committee decision on this issue, as it has potential impacts for many other international organizations struggling to reconcile their operational, funding and oversight challenges.
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