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The governance implications of core funding challenges in the UN

7 May 2023

By Katja Hemmerich


A women in front of a microphone at UN meeting table

This week, the Executive Boards of the NY-based agencies, UNDP, UNFPA, UNICEF and UNWomen have a joint meeting on structured funding. This structured funding dialogue is focused on the issue of declining core funding for the UN Development System, and asks board members what UN entities can do to increase core funding commitments by member states.


Also this week, the Fifth Committee resumes discussion of the request for $100 million in assessed, or core funding, for peacebuilding - a discussion that started last year and has failed to find agreement amongst member states thus far. Consequently, our spotlight is on governance challenges related to core funding modalities. As the UNDP/UNFPA/UNICEF/UNWomen briefing presentation points out, the UN development systems receives significantly more earmarked funding than all other multilateral institutions. Earmarking can happen in a variety of ways, i.e. targeting particular programmes, countries or regions (or excluding them) or requiring particular implementing partners or services to be used. As a landmark analysis by Prof. Erin Graham in 2017 highlighted, these earmarks come with governance challenges for international organizations and the concept of multilateralism more broadly. An over-reliance on earmarked funding means that UN organizations are inherently guided by the demands of those donor states or groups of states, as opposed to the direction and guidance provided by their Executive Boards and the General Assembly. Interestingly, when the UN was first created, earmarked funding was prohibited, precisely because it undermined the concept of multilateral governance. The operational consequences that result from a lack of predictable core funding are spelled out clearly in the briefing presentation: fewer core resources which the organization’s management can leverage for normative mandates, innovation, crisis response and oversight functions. These are challenges that are an issue both for international organizations as well as their member states. Different international organizations are using a variety of means to find sustainable solutions to this problem. UNICEF, a leader in identifying alternative funding sources, has new alternative financing strategy called “Innovative Finance for Children (IF4C)” (see our 22 January newsletter for more detail). Realistically, however, the challenges related to core funding will require more consistent long term funding commitments by member states.


Organizations like WHO, which already have combinations of assessed and voluntary funding mechanisms are working with their member states to find a more reasonable balance between the two.


WHO’s governing body agreed in 2022 to increase its assessed funding to from 16% to 50% of the overall budget by 2028. The Advisory Group of Experts on the Review of the United Nations Peacebuilding Architecture recommended in 2015 the establishment of an annual $100 million assessed funding contribution to the Peacebuilding Fund. The aim, like that of the UN agencies in their structured funding dialogue, was to allow for the same predictability and responsiveness in peacebuilding funding, the majority of which currently comes from only 12 donor countries. But as we pointed out in our 12 March newsletter, this assessed funding also comes with governance challenges. On the one hand, effective core funding commitments (whether assessed or voluntary) are a more stable and predictable funding source, but generally require more complex collective decision-making by member states. On the other hand, earmarked funds tend to provide a more quickly available resources, in particular for emergency or issue-specific programming. This is ultimately the reason that prohibitions on earmarked funding were removed from UN financial rules and regulations many decades ago. But that quick availability of funding is currently predicated on bypassing more complex collective decision making processes - something that both member states and managers in international organizations have found useful, without perhaps appreciating the long term consequences that are currently being felt. As a relatively recent book called Managing Money and Discord in the UN explains:


"states as donors and international bureaucracies in the UN system as resource mobilizers have growing reservations about regular budgeting. Instead of engaging in time-consuming multilateral negotiations over regular budgets that have a tendency to perpetuate the status quo, basing IO operations on selective voluntary support reduces coordination requirements and allows for more rapid adaptation to organizational environments." – R. Patz and K. Goetz, Managing Money and Discord in the UN, 2019


The current challenge of earmarked and declining core funding for the UN system is therefore a a jointly created problem and one that has evolved since the 1990s. The authors of Managing Money and Discord in the UN assert that these funding problems therefore reflect a larger problem of multilateralism over the last 30 years: a growing lack of shared agreement across member states on the specific priorities for the UN. The plethora of UN reform efforts since the 1990s, as well as the recent report of the High Level Advisory Board on Effective Multilateralism (HLAB) implicitly reinforces this theory. One of the challenges to effective multilateralism, outlined by HLAB and which is also highlighted in Managing Money and Discord as a particular complicating factor for UN funding, is the UN's tradition of consensus-based decision making:


"A frequent obstacle to more effective multilateralism is the overreliance on decisions by consensus, which has been interpreted in many settings to mean unanimity without objection. While ostensibly a reflection of collective decision-making, in practice this highly inefficient and unfair approach allows a small number of States to block action that is clearly needed to address issues of global concern.” - High Level Advisory Board for Effective Multilateralism, A Breakthrough for People and Planet , pg. 19)


We are not arguing for or against consensus-based decision-making for resourcing, rather we want to highlight that decision-making processes and member states ability to agree on certain priorities (or not) is an additional factor to consider in funding dialogues. HLAB, for instance, has suggested that states could identify which types of decision-making (consensus, super majority, qualified majority etc.) are most appropriate for different decision-making contexts. HLAB also suggests creating a code of conduct on negotiated agreements to help facilitate more effective decision-making. Some of these suggestions might also translate into funding solutions, i.e. differentiating what level of agreement is needed to fund core or non-core elements of budgets or different types of programmes. Or enhancing UN strategic planning processes to involve member states more in their design and to integrate a code of conduct for member state approval of those strategic plans which includes commitments to cover some level of core funding. Our point, therefore, is that considering the core funding challenges as a symptom of the current problems of multilateralism might allow for new ideas and potential solutions to be injected into this longstanding dialogue. Thus, for those readers participating in the various funding dialogues in NY-based agencies or the Fifth Committee, we suggest considering another discussion question:

What can the UN do to support member states' collective and effective decision-making on core funding priorities and commitments?


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