Chapter 6. Building an evidence base on good multilateral funding

Through an innovative multi-dimensional metrics, this chapter develops new evidence for a cornerstone of good multilateral donorship: good multilateral funding. This multi-dimensional approach represents a pioneering attempt to quantify and operationalise elements that have been broadly acknowledged as key components of good multilateral funding. Both the literature and policy discourse identify these components as predictability, flexibility, alignment to the mandate and the agreed programme of work of a multilateral organisation. This new OECD metrics is developed from a case study on the World Health Organization (WHO). The health sector and WHO’s funding situation can act as a “tracer” on effectiveness, offering insights and lessons for other sectors and institutions that face similar funding challenges. Based on the findings from the new metrics, the chapter closes by offering evidence-based building blocks on good multilateral funding for good multilateral donorship in the era of the 2030 Agenda for Sustainable Development.

    

6.1. Why good multilateral funding is a critical aspect of good multilateral donorship and what defines it

Good multilateral funding is a critical aspect of good multilateral donorship

Funding practices crucially affect the ability of multilateral organisations to deliver development results. Although the complexity and scope of the development challenges multilateral organisations are called to address have increased over time, funding that is predictable and aligned to the strategic orientations of multilateral organisations has been falling. Large increases in transaction-heavy and piecemeal funding that is tied to specific themes and projects (i.e. earmarked funding, or non-core funding) and little predictability of financing are increasingly challenging the ability of multilateral organisation to perform well and to deliver on their mandates. If funding is predominantly provided in a piecemeal and project-based fashion, how can multilateral organisation achieve on the integrated and holistic solutions required by the 2030 Agenda and Addis Ababa Agenda for Action (AAAA)? As shown in Chapter 2, earmarked funding has grown in volume and as a share of total funding to multilateral organisations. It is largely concentrated in the United Nations (UN), for which it now accounts for 80% of total funding.

This is why policy communities, particularly within the United Nations Development System (UNDS), have stressed the importance of ensuring adequate resources for the multilateral system and good practices in its delivery, especially on earmarked funding. The Quadrennial Comprehensive Policy Reviews of Operational Activities for Development of the United Nations System (QCPR) – through which the United Nations General Assembly (UNGA) assesses the effectiveness and impact of UN operational activities for development – has raised serious concerns about the funding situation of the UNDS (see UN 2012 and UN 2016). The 2016 QCPR emphasised that achieving the 2030 Agenda requires ensuring resources that are adequate in volume, predictable, flexible, less earmarked and better aligned with programme priorities regulated by intergovernmental bodies and processes.

Overall, both the UNDS and the multilateral development banks (MDBs) have acknowledged financing challenges as potential stumbling blocks to the delivery of the 2030 Agenda. They have placed reforms to attract more and better financing at the core of the strategies they developed to be fit for purpose to achieve the 2030 Agenda. The General Assembly Resolution 71/243 on the QCPR and the 2018 follow up reports of the United Nations Secretary-General (see UN 2017a and UN 2017b) specifically called for “a system-wide strategy to support the implementation of the 2030 Agenda”. To support this strategy, a package of reforms has been proposed, which includes the “Funding Compact”. This is a set of measures to respond to the funding challenges the UNDS faces, including the erosion of core funding and increasing reliance on earmarked resources. With the Funding Compact, UN member states are encouraged to enhance the volume, predictability and flexibility of the financial resources they provide. A 1% co-ordination levy that is part of the funding arrangement of the new system of resident co-ordinators (RCs). It is intended to create a disincentive for hard earmarking (see the “In My View” piece by Silke Weinlich). Recognising the role of MDBs for the 2030 Agenda, the G20 has called on shareholders to advance reforms on representation, capital increases and an effective use of capital resources. To ensure that limited MDB capital resources are used efficiently, MDBs must optimise balance sheets to expand their lending capacity without substantially increasing risks or jeopardising credit ratings (see Section 2 of Chapter 2 of this report for a discussion).

Box 6.1. In My View: The new UN co-ordination levy - can it set the right incentives? By Silke Weinlich1

In May 2018, as part of the larger reform package on the UNDS, UN member states introduced a 1% levy on tightly earmarked financial contributions for development-related activities. While small in scope, the levy is an unprecedented instrument to set actual financial incentives for more efficient, multilateralism- and development-friendly ways of funding the whole UNDS. If effectively implemented by member states and agencies, it could set an example for other multilateral organisations and policy fields, such as humanitarian affairs, that also suffer from fragmentation.

The decision to introduce the levy came as part of a last minute compromise for ensuring adequate, predictable and sustainable funding for the reinvigorated resident co-ordinator system (RCS), which was at the same time detached from the UN development programme. Instead of using assessed contributions as proposed by the UN Secretary-General, a hybrid model to fund the new RCS was adopted. It consists of 1) the co-ordination levy; 2) doubling of cost-sharing contributions from UN entities; and 3) voluntary contributions to raise an estimated USD 290 million annually. This sum supposedly covers the costs for the UN’s 129 RCs and their small teams of five people, as well as for the UN development operations coordination office. It also provides some support funds for co-ordination within UN country teams – a cornerstone of the reform package. Based on data from 2016, it is expected that the levy will generate between USD 60 and 80 million.

The levy has a direct and a more indirect objective. Directly, it pays for co-ordination efforts: while small in scale, it is to help securing the vital RCS functioning and thereby provide the ground for a successful reform implementation. It can be seen as a form of royalty for system-wide co-ordination, charged for those financial contributions that could potentially undermine co-operation within the UNDS to the greatest degree. These include bilateral agency- and project-specific contributions, which currently account for nearly 80% of all earmarked contributions for development-related activities. Indirectly, the levy aims to change funding patterns and donor behaviour: by making tight earmarking more expensive it should steer contributors away from less desired funding modalities towards more flexible and predictable forms. In turn, this reinforces the Secretary-General’s proposal to increase core and pooled funding in the context of the envisaged Funding Compact. Since the levy was authorised as a system-wide approach by the General Assembly, it applies to all agencies and thereby has a potentially unifying role. It will be charged in addition to agency-specific cost-sharing provisions that compensate for (some of the) direct and indirect costs of a project. In a way, the money raised by the levy can be regarded as system-wide core funds – and an investment in turning the UNDS into something greater than the sum of its parts.

For the levy to realise its potential, it is crucial that it is put into practice in a system-wide, transparent, efficient and effective way, leaving as few loopholes as possible. Time is of the essence: the RCS system needs resources from 2019 on, and the hybrid funding model will be revisited two years from now. A number of questions still need to be answered, most importantly, who pays, to what type of funding will the levy apply, and what are the modalities for collecting the levy?

The levy is aimed at governments. Foundations, civil society and private sector, as well as transfers between UN agencies, are to be initially excluded according to a UN Secretariat proposal. It will be mostly OECD DAC contributors who pay, since contributions for South-South co-operation and local costs (contributed by developing country governments for disbursement within their own borders) are also exempted. The exceptions seem logical in light of the necessity to diversify funding patterns beyond the handful of OECD DAC donors that currently fund the largest part of the UNDS. Yet in the mid to long run, the cost for co-ordination should be borne by all contributors of tightly earmarked contributions; UN agencies should already take this into account in their preparations.

The levy will be applied to all development-related activities – some indeed argue that this also covers humanitarian affairs. In line with the intention to incentivise more flexible forms of funding, interagency pooled funds and agency-specific thematic funding will be excluded; there is still debate on how to treat vertical funds. Clear and transparent criteria need to be established throughout the UNDS to distinguish development-related activities from humanitarian ones, and also to prevent re-labelling of contributions. The UNDS agencies must also take a unified approach to applying the levy to more tightly earmarked contributions within pooled-funding arrangements.

It will be more complicated to decide on how the levy will be collected, by whom and who is responsible for administrating and reporting. The resolution specifies that the levy is collected “at source”, suggesting that governments play a key role. Some argue that governments should make lump sum contributions, calculated on the basis of their previous years’ tightly earmarked contributions and paid directly to the Secretariat. Others argue for a more decentralised arrangement, whereby the levy is included in a new contribution agreement, and paid either to the respective UN entity, the RC office or the Secretariat. All proposals have up- and downsides: While a centralised approach could be a transparent and cost-effective solution, it might be difficult for governments, e.g. those where many ministries make contributions, to justify and allocate such an additional amount of money, especially when the chances for extra funding seem small. And what do you do with governments that do not pay? A decentralised approach could lead to additional bureaucracy, especially for UN agencies that in all likelihood end up shouldering the administrative burden. If not transparently managed, decentralisation also creates incentives for non-compliance and free-riding by agencies, contributors and programme countries.

Introducing the levy to the UN’s toolbox of soft incentives testifies to member states’ willingness to balance and modify current funding practices that undermine the UNDS’ effectiveness. This is crucial for implementing the 2030 Agenda for sustainable development. Despite challenges, the levy can be put into practice in a way that raises RCS funds in a timely, reliable and transparent manner. It could have a positive effect on funding practices and encourage a unified approach over the whole system. Unfortunately, success is far from guaranteed. Our research on earmarked funding has shown that governments are often caught up in their own rationalities and path dependencies, as are UN agencies. It remains to be seen whether member states decide on an effective operationalisation of the levy to turn it into successful model. It could very well happen that the Secretary-General must remind member states that the levy is only a small yet crucial detail in a much larger attempt to make the UNDS fit for the 2030 Agenda they subscribed to.

1. Senior Researcher and Head of Project on UN development system reform, German Development Institute (Deutsches Institut für Entwicklungspolitik DIE)

What defines good multilateral funding?

Policy research and institutional domains agree on identifying “good-quality funding” as funding that is predictable, flexible, aligned to the mandate and the agreed programme of work and budget of the organisation, transparent, and not excessively transaction heavy or fragmented. It must be sufficient in quantitative terms, for the programme of work and budget that the multilateral organisation has agreed with their membership. These characteristics are often identified explicitly, such as in the Good Humanitarian Donorship (GHD) principles. In these, sovereign states are called upon to “ensure predictability and flexibility in funding to UN agencies, funds and programmes and to other key humanitarian organisations”. The aims should be “reducing, or enhancing the flexibility of, earmarking, and of introducing longer-term funding arrangements”. An explicit reference is also found in the 2018 General Assembly Resolution presenting the elements of the Funding Compact. At other times the characteristics of good-quality funding are identified indirectly, by highlighting the perils and challenges of funding that is not aligned, or that is transaction heavy and strongly earmarked. While not an exhaustive mapping, Table 6.1 provides an overview of the elements of good multilateral funding that emerge in key official policy documents and the literature.

Table 6.1. Several recurrent ‘dimensions’ of good multilateral funding have been identified through policy process and in the literature

Dimensions of good multilateral funding

Source

Predictability

Flexibility

Alignment

Reduced fragmentation*

Programme budget financing and implementation

Reduced vulnerability **

Transparency and accountability ***

Funding Compact

X

X

X

X

Good Humanitarian Donorship

X

X

X

Grand Bargain

X

X

X

X

OECD recommendations

X

X

X

Germany’s principles of good earmarked funding

X

X

WHO Financing Dialogue Principles

X

X

X

X

X

Sweden’s strategy for multilateral development cooperation

X

X

X

X

Reinsberg (ODI, 2017)

X

X

X

Thalwitz (2013)

X

X

X

Note: * Only for contributors; ** Only for the funding of the multilateral organisation overall

*** Only for the Secretariat of multilateral organisation

Source: (United Nations, 2018[1]); (Good Humanitarian Donorship (GHD) Initiative, 2003[2]); (The Grand Bargain, 2016[3]); (OECD, 2015[4]); (World Health Organization, 2013[5]); (Government Offices of Sweden, 2007[6]); (Reinsberg, 2017[7]); (Thalwitz, 2013[8]).

 StatLink https://doi.org/10.1787/888933875131

While there is convergence on predictability, flexibility and alignment as elements of good multilateral funding, what each of those dimensions means in practice, and how to measure them, remain unexplored. To fill this gap, pioneering analytical work has been conducted for this report based on an in-depth pilot study on one organisation, WHO. This work is presented below.

6.2. A new multi-dimensional approach for measuring and encouraging effective multilateral funding

Through an innovative multi-dimensional metrics, this chapter develops new evidence for the cornerstone of good multilateral donorship: good multilateral funding. This multi-dimensional approach1 represents a pioneering attempt to quantify and operationalise elements that have been broadly acknowledged, both in the literature and the policy discourse, as key components of good multilateral funding. These include predictability, flexibility, and alignment to the mandate and the agreed programme of work of the multilateral organisation (Figure 6.1). This approach is innovative also in that it assesses the performance of both contributors (i.e. donors) and the multilateral organisation against each of the quality dimensions.

This new OECD metrics is developed on the basis of the financing situation and the statistical data of a case study of WHO. Overall, the health sector and WHO’s funding situation can act as a “tracer” on effectiveness, offering insights and lessons for other sectors and institutions that face similar challenges in terms of insufficient co-ordination, alignment, flexibility, etc. Findings from this case study can thus elucidate the broader discussion on effectiveness and leverage action for a more co-ordinated and coherent approach to the global development co-operation architecture overall. Further details on this multi-dimensional approach and the findings drawn from its application are presented in the following sections.

Figure 6.1. Quality dimensions of the OECD metrics on good multilateral funding
picture

Source: Authors

Underpinnings of a new approach for measuring and encouraging good multilateral funding

A number of considerations underpin the new OECD metrics on good multilateral funding. this work. First, multilateral organisation and sovereign states have a common responsibility to ensure that multilateral financing is provided in ways that enable greater development results. Both can take actions to achieve this. This mutual responsibility is also embedded in the 2018 Funding Compact which is conceived as a “pact” between member states and multilateral organisations. It calls on donors to improve their practices in providing good multilateral finance. It also urges the UN governing bodies to enhance transparency and find ways to incentivise contributors to provide adequate and predictable funding on a multi-year basis and to broaden and diversify the donor base in order to reduce the reliance of the system on a limited number of donors. Therefore, the analytical framework proposed measures the performance of both donors and of the multilateral organisation’s Secretariat. It also assesses the quality of the overall funding situation resulting from the actions of both sets of stakeholders.

Second, the approach proposed posits that while not all funding is the same, there is no “good” or “bad” funding per se. The ways in which funding is provided by donors affect the ability of multilateral organisations to invest it effectively. Increasing transparency, predictability and flexibility of funding also increases the ability of multilateral organisations to plan and allocate resources. Given their specific political and organisational situations, however, different donors have different levels of flexibility to improve the way they provide funding. One donor, for example, may be able to improve funding along one dimension – e.g. predictability – but not on the others. In addition, while a funding award from a donor could be good because it helps the organisation fill a gap in an underfunded programme area and it contributes to overall funding volumes, it could be bad because it attaches too many conditions or because it has been given at a short notice. Therefore, by using a multi-dimensional approach to disentangle the different quality components of multilateral funding, multilateral organisations and their donors can identify successful practices and areas that need improvement. They can identify trade-offs and tensions. They can also identify specific areas that each donor or the multilateral institution itself can improve on, encouraging an evidence-based dialogue that considers the political and practical constraints faced by donors and multilateral organisations alike. The full list of considerations that guided the development of this approach is presented in Box 6.2.

Box 6.2. Underpinnings of the OECD metrics on good multilateral funding

The OECD metrics on good multilateral funding has been developed to reflect the following considerations and aims:

Multilateral organisations and donors have a common responsibility to ensure that multilateral financing is provided in ways that enable greater development results. Both can take actions to this end. Therefore, the metrics is based on three main sets of composite indicators to assess: 1) how well donors are adopting the financing dialogue’s principles; 2) how well the Secretariat is adopting the financing dialogue’s principles; 3) the organisation’s overall funding situation.

Not all funding is the same, and yet there is no “good” or “bad” funding per se. The ways in which funding is provided by donors affect the ability of multilateral organisation to invest it effectively. Increasing transparency, predictability and flexibility of funding also increases the ability of multilateral organisations to plan and allocate resources, as identified by the funding principles. Given their specific political and organisational situations, however, different donors have different room for manoeuvre to improve on the way they provide funding. One donor, for example, may be able to improve funding along one dimension – let’s say predictability – but not on the others. Therefore, disentangling the different dimensions of good multilateral funding (e.g. predictability, alignment, flexibility, etc.) allows the identification of the specific areas that each donor, or the multilateral organisation itself, can improve on.

The aim of the metrics is to enable constructive dialogue among donors and multilateral organisations, and encourage better behaviour of both is the aim of the metrics, not “public bashing”. The metrics avoids donor ranking and yet allows for an aggregate snapshot of performance against the dimensions of good financing. A multi-dimensional overview across donors is provided.

Striking an adequate balance between comprehensiveness and simplicity. While the indicators need to provide an accurate picture, it is also important to prioritise ease of understanding and communication of the indicators. Therefore, the number of indicators and sub-indicators selected reflects the need.

Encouraging replicability and creating a common language. The metrics has been developed using WHO’s data and context as a critical reference. At the same time, the metrics operationalises widely recognised dimensions of good multilateral funding. Therefore, the metrics aims to be, to the greatest possible extent, applicable to other multilateral organisations. The metrics could constitute a “common language” for international dialogue among sovereign states and multilateral organisations to improve funding practices and thus the ability of multilateral organisations to contribute to achieve the 2030 Agenda.

The health sector and WHO as a “tracer” on effectiveness

This new OECD metrics uses the financing situation and the statistical data of WHO as a case study. Overall, the health sector and WHO’s funding situation can act as a “tracer” on effectiveness, offering insights and lessons for other sectors and institutions that face similar challenges in terms of insufficient co-ordination, alignment, flexibility, etc. Findings from this case study can thus help shed light on the broader discussions on effectiveness and prompt action for a more co-ordinated and coherent approach to the global development co-operation architecture. This approach is similar to the one adopted by the Task Team on Health as a Tracer Sector in the framework of studies on aid effectiveness (OECD , 2012[9]).

WHO was also chosen as a pilot because of its strong commitment towards the Financing Dialogues. This is an initiative created by WHO with member states and key non-state contributors in 2013 to ensure a better match between donor funding and the deliverables of its programme budget. Another financing dialogue was held in November 2015 in preparation for the 2016-2017 budget. This initiative, which is a pillar of WHO’s internal reform, was centred on key principles to enhance funding and ultimately WHO’s ability to deliver. It is also a major step towards greater transparency. As in the Financing Dialogue, the WHO Secretariat and donors engage in discussion informed by an innovative use of real-time data and effective visual tools, such as the WHO Programme Budget web portal2. Ultimately, through this initiative, the WHO Secretariat was also able to provide the OECD with more granular data than is available in the OECD Creditor Reporting System (CRS). This allowed an analysis of good multilateral financing that would not have been possible using OECD data alone.

Indeed, WHO faces several challenges that are common to other multilateral organisations. WHO has been operating in an increasingly complex and diversified global co-operation architecture. In recent years, many initiatives and organisations focusing on global health issues have been established, making global co-operation on health a much more crowded space. New institutions also spurred greater diversification in terms of the mandates and structures of the multilateral bodies that were part of this larger multilateral universe. For instance, vertical funds established in the early 2000s, such as the Global Fund and Global Alliance for Vaccines and Immunisation (GAVI), came with highly innovative partnership models. These were based on inclusive governance structures that encompassed private philanthropy, corporations and communities of beneficiaries, along with sovereign states. Therefore, in the last two decades WHO has had to redefine its place in the global health architecture. For instance, funding to WHO has grown modestly compared to resources for the Global Fund and GAVI. Overall, ODA funding to WHO is less than one-third of that provided to the Global Fund. Funding to WHO is also considerably more earmarked than the resource envelope provided to GAVI (Figure 6.2).

Figure 6.2. In a crowded global architecture of co-operation on health, WHO receives less than one-third of the ODA funding allocated to the Global Fund and a greater share of earmarked resources than GAVI
Core and non-core ODA from DAC countries to GAVI, the Global Funds and the WHO (2009-2016)
picture

Note: ODA disbursements (2016). Only health and reproductive health

Source: Authors’ calculations based on (OECD, 2018[10]), “Creditor Reporting System” (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs1.

 StatLink https://doi.org/10.1787/888933875150

An evolving global health co-operation architecture has also re-shaped the weight of WHO’s contributions to developing countries, compared to other multilateral organisations. A global health co-operation architecture populated by a larger number of multilateral players has overall led to greater global support for health in developing countries. Multilateral development partners collectively took concessional funding levels for health to almost USD 8 billion in 2016 (up from USD 5.4 billion in 2009). While WHO has increased its disbursements to developing countries over time, greater donor resources to the Global Fund have also translated into greater health spending from the Global Fund. Together with the World Banks’s International Development Association (IDA) and GAVI, the Global Fund makes up more than two-thirds of concessional finance for health from multilateral donors (Figure 6.3). Overall, disbursements from WHO did not keep pace with increases in funding from the global vertical funds: GAVI’s disbursements for health quadrupled from USD 400 million in 2009 to USD 1.2 billion in 2016. Financing from the Global Fund also increased substantially from USD 2.2 billion in 2009 to 3.6 in 2016. Over the same period, WHO’s disbursements plateaued at around USD 400 million with a peak of USD 575 million in 2015. However, as WHO is an organisation engaged in normative and policy work, amounts are not fully comparable with those of operational organisations.

Figure 6.3. WHO’s disbursements to developing countries did not keep the pace with disbursements by vertical funds
Concessional finance for health by major multilateral organisations (2009-2016)
picture

Note: ODA disbursements (2016). Only health and reproductive health.

Source: Authors’ calculations based on (OECD, 2018[10]), “Creditor Reporting System” (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs1.

 StatLink https://doi.org/10.1787/888933875169

Like other multilateral organisation, WHO has faced tension between delivering long-term investments and achieving measurable and short-term results that donors would be more likely to fund. Longer-term programmes and policy and normative work, which is more uncertain and difficult to quantify, has received proportionally less funding. At the same time, a growing emphasis has been placed on delivering health care and disease control programmes, as shown in Figure 6.4. As for other multilateral organisations, WHO has faced a number of financing challenges. These are discussed in more detail in the following section, as part of the results from the OECD metrics.

Figure 6.4. Concessional finance from multilateral organisations for health increasingly targets quantifiable outputs (2009-2016)
Concessional finance for health by multilateral organisations (2009-2016)
picture

Note: ODA disbursements (2016). Only health and reproductive health

Source: Authors’ calculations based on (OECD, 2018[10]), “Creditor Reporting System” (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs1.

 StatLink https://doi.org/10.1787/888933875188

6.3. What can we learn from measuring the quality of multilateral funding?

By applying the new OECD multi-dimensional metrics to the WHO case study, the following findings emerge:

  • Although WHO is operating in an increasingly crowded global health architecture, it has been able to maintain adequate funding levels and to fund, on average, its programme of work. However, beyond volumes, there are critical issues on the quality of the funding received.

  • “Hard” earmarking of funds has strongly reduced the quality of funding because of a misalignment of resources. Hard-earmarked resources have largely targeted specific projects in overfunded areas, restricting the organisation’s ability to shift resources to respond to needs and to fully achieve results.

  • While not all funding is equally “good”, earmarked funding is not necessarily bad. The metrics show examples of earmarked funding that is provided as large and predictable streams of funds, thus enhancing overall predictability and helping to reduce fragmentation. Also, when provided as “softly” earmarked funding, it allowed for greater flexibility.

  • Measuring the performance of both the contributors and the multilateral organisations has shown that progress cannot be made if adequate actions are not put in place by both parties. This highlights the necessity of a mutual commitment. For example, without contributors providing more flexible and well-aligned funding, the ability of a multilateral organisation to respond to emerging needs and deliver on underfunded areas is compromised.

  • Contributors face different challenges and trade-offs to improving the quality of the multilateral funding they provide, due to the political, structural and organisational realities they are confronted with. Disentangling the quality of financing over dimensions has shed light on specific steps for improvement or good practices from contributors.

More detailed findings are presented below, organised in three sets: 1) WHO’s overall financing situation; 2) the funding patterns of 12 of the top financial contributors to WHO; 3) the contribution of WHO’s Secretariat to good multilateral funding.

WHO’s overall funding situation shows some improvements but also a worrying trend of continued misalignment and increasing hard-earmarked funding

The following situation emerges when using the OECD metrics on good multilateral funding to assess WHO’s overall funding situation in the 2014-2015 programme and budget biennium, compared to the previous two biennia (Figure 6.5).

  • WHO’s programme of work and budget agreed with its constituency was, on average, fully funded. The main source of revenue for WHO are its member states, mainly DAC members, who account for two-thirds of the total funding. They have been key in fuelling WHO’s revenue growth, providing between half and two-thirds of incremental revenues in 2010-15.

  • Financial vulnerability was reduced, as new contributors have funded the organisation. Non-state actors, such as philanthropies and international organisations, mainly from the UN system, have contributed with important shares of total funding, accounting for roughly one-tenth of the total in 2010-2015. While funding from non-governmental organisations (NGOs) and partnerships (mainly with GAVI, Unitaid and the Global Fund), have been small compared to the other funding streams, it increased importantly in 2010-2015 (Figure 6.6).

  • The overall predictability of funding to WHO has increased, as contributors seem to have moved towards the provision of longer funding agreements than in previous biennia. They have also increasingly refrained from providing funding in the last 4 months of the biennium to be spent right away – a common and highly disruptive funding practice in the past.

Figure 6.5. WHO overall funding performance
OECD multi-dimensional index on good multilateral funding
picture

Source: Authors based on statistical data from WHO for the 2014-2015 biennium. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875207

Figure 6.6. Sources beyond sovereign states are slowly helping WHO to broaden its funding base
WHO financing inflows by type of contributor (2010-2015)
picture

Source: Authors' calculations using data provided by the WHO Secretariat.

 StatLink https://doi.org/10.1787/888933875226

  • However, the overall financing situation of WHO also reveals some worrying trends, with the metrics pointing to very low scores on alignment and flexibility. The metrics reveals that funding is increasingly misaligned to the priorities defined by WHO’s membership in the work programme for the biennium. Even more than in the past, contributors earmark funding towards already highly-overfunded areas of WHO’s work programme, while other work areas remain chronically underfunded. This is an important finding, as it clearly shows something that is often mentioned as a disadvantage of earmarked funding, but which is lacking evidence. In the case of WHO, support for polio eradication and outbreak and crisis response were significantly overfunded, receiving 165% and 343% of the funding decided by the membership when the integrated budget and work framework for the biennium was defined. A share of the overfunding was due to high amounts for crisis response to the Ebola outbreak in West Africa. This also demonstrates that earmarked funding can help meet emerging and unforeseen needs. However, there were other overfunded areas, particularly polio eradication, that are overfunded because of contributors’ individual preferences and unilateral priorities. Such resources could have been effectively redirected to underfunded areas, such as transparency, non-communicable diseases and social determinants of health, among others (Table 6.2).

  • Funding provided is less flexible, partly because of the funding practices of new actors. Flexible (i.e. core) finance is the combination of assessed and voluntary core contributions and programme support costs with no strings attached. This is shrinking and resulting in a growing share of voluntary contributions tied to specific projects (i.e. earmarked funding). As Figure 6.7 shows, the share of flexible funding decreased from one-third of total funding in 2010-2011 to one-fourth in 2014-2015. Interestingly, this increase in earmarked funding is not determined solely by the behaviour of sovereign states: it is a direct consequence of the greater role that philanthropy and other sources of financing now play in the overall financing landscape of WHO. In fact, member states provide most of core voluntary contributions, which are entirely flexible, with all the others, e.g. philanthropies and international organisations, giving voluntary financing tied to specific themes and projects.

  • “Hard earmarking” is increasing, as contributors are increasingly earmarking resources for specific projects rather than for broader thematic areas. This limits the WHO Secretariat’s ability to direct funding to areas that are most in need. As shown in Figure 6.7, the volume of voluntary contributions specified for specific projects is high for WHO in the period 2010-2015. It reached an historical peak (over the three biennia considered) at 66% of all resources, both assessed and voluntary, in 2014-2015. Compared to previous studies, this analysis offers a clear quantification of the “softness” of earmarked funding, showing that funds to WHO are increasingly hard earmarked. Both the indicators of softness of voluntary contributions and the share of total core funding over non-core are worse than in the 2010-2011 and 2012-2013 biennia. Moreover, while several multilateral organisations have opened thematic windows to attract more “core-like” funding (e.g. United Nations Children's Fund [UNICEF], United Nations Development Programme [UNDP], etc.), similar thematic windows established by WHO have not been successful in attracting financing and diverting some of the hard-earmarked funding. Contributions to the Contingency Fund (a thematic window aimed at attracting more flexible funding) as a share of all emergency contributions are low.

Table 6.2. WHO level of funding by programme area (2014-2015)

Relevant SDG targets

Programme Area

Approved Budget

(USD million)

Distributed Funding

(USD million)

Share of budget financed

Level of funding

16.6

Transparency, accountability and risk management

50.4

29.2

58%

Underfunded

3.b; 3.4

Non-communicable diseases

192.1

134.1

70%

2.2; 3.9; 6.1; 6.2; 7.1; 11.6

Social determinants of health

30.3

21.2

70%

2.1

Food safety

32.5

22.9

70%

3.9; 6.1; 6.2; 7.1; 11.6

Health and the environment

102

80.3

79%

3.7; 3.8

Integrated people-centred services

151.5

120.7

80%

3.b; 3.8

Vaccine preventable diseases

346.8

287

83%

Averagely funded

3.8

Ageing and Health

9.5

8.1

86%

3.a; 3.4; 3.5

Mental health and substance abuse

39.2

34.1

87%

5.2; 16.1

Gender, equity and human rights mainstreaming

13.9

12.1

87%

3.a; 3.b; 3.c; 3.d; 3.4

Leadership and governance

227.7

199.7

88%

3.5

Alert and response capacities

98

86.4

88%

3.3

Tuberculosis

130.9

117.7

90%

Not relevant

Strategic planning, resource co-ordination and reporting

34.5

31.6

92%

3.b; 3.3

Research in tropical diseases

48.7

45.7

94%

2.2; 3.1; 3.2; 3.7

Reproductive, maternal, new-born and child health

189.9

178.5

94%

3.c; 3.d; 3.7; 3.8

National health policies, strategies and plans

125.7

123.5

98%

5.2; 16.1

Violence and injuries

31.1

30.8

99%

3.d

Emergency risk and crisis management

88

89.8

102%

Overfunded

Not relevant

Management and administration

334.3

353.4

106%

3.b; 3.8

Access to medicines and technologies and regulatory capacity

145.5

155

107%

Not relevant

Strategic Communications

37.1

39.7

107%

3.3

Malaria

91.6

98.7

108%

3.3; 3.7

HIV and hepatitis

131.5

142.2

108%

2.1; 2.2

Nutrition

40

43.6

109%

3.8

Disability and rehabilitation

15.5

17.1

110%

3.d; 3.7

Health systems Information and evidence

108.4

120.7

111%

1.5; 3.3

Epidemic and pandemic- prone diseases

68.5

80.2

117%

3.3

Neglected tropical diseases

91.3

110.2

121%

3.b; 3.3; 3.8

Polio eradication

700.4

1 153

165%

3.7

Research in human reproduction

42.9

77.6

181%

3.d; 3.3

Outbreak and crisis response

227.5

780

343%

Total

3 977.2

4 825

121%

Overfunded

Source: Analysis by the authors using data from the WHO Secretariat.

 StatLink https://doi.org/10.1787/888933875245

Figure 6.7. WHO’s funding is increasingly hard-earmarked, 2010-2015
WHO financing inflows by type of contribution (2010-2015)
picture

Note: Revenues.

Source: Authors based on data from the WHO Secretariat.

 StatLink https://doi.org/10.1787/888933875264

Donors experience different trade-offs in funding WHO, but large misalignment and hard earmarking of funds is an increasing challenge for most of them

Through the OECD metrics on good multilateral funding, the individual funding profiles of 12 of WHO’s largest contributors were examined. These contributors were selected in a dialogue with the WHO Secretariat to serve the outreach needs of the organisation. They largely coincide with the top 12 providers to the organisation (Figure 6.8). The 12 contributors comprise 11 DAC members, including the European Union, and a private philanthropic organisation: the Bill and Melinda Gates Foundation (BMGF). This analysis allows a comparison of the overall financing situation of WHO, resulting from the behaviour of all contributors, with the behaviour of some of its top providers. The profiles measure the quality of funding provided by the contributors in the 2014-2015 biennium by comparing the best and worst performances among the contributors. This ground-breaking analysis provides a comparative assessment of the quality of financing from different contributors along quantifiable dimensions of effectiveness.

  • Large variations exist in the quality of funding provided by different contributors. Most strikingly, almost every contributor exhibits a different profile. Effectiveness dimensions on which scores are high and others for which it is low, suggesting that the challenges and trade-offs experienced by contributors differ greatly (Figure 6.8). For instance, Norway contributes largely to the full implementation of the programme budget, providing assessed contributions as well as considerable additional amounts of voluntary contributions. While this is positive, its financing could benefit from better alignment to programme budget priorities, as currently most of its voluntary contributions target projects in overfunded or averagely funded areas. The United States provides another type of trade-off. It performs well on predictability, largely owing to long time frame agreements. However, it could further reduce fragmentation of its financing, which largely comes in small, piecemeal contributions. Among the 12 contributors considered, Australia and Sweden are the only two with a funding performance that is average or above average for all the quality dimensions examined.

  • Funding trends of the 12 contributors largely shape overall funding patterns of the organisation, since funding from the 12 contributors accounts for the bulk of total resources to WHO. In line with the overall financing situation of WHO described above, the 12 contributors provide fairly predictable funding to the organisation. This does not mean that the 12 contributors “tick all dimensions” of funding predictability. The resources they provide do display some degree of year-on-year volatility and the length of funding agreements could be higher. However, the 12 contributors do tend to avoid providing funding with short-term notice, which means that they tend to avoid extending voluntary contributions in the last four months of the year with a time frame shorter than six months. In other words, contributors refrain from the “end of year rush”, a rush to spend unallocated resources at the end of the year, which often results in supply-driven allocations with lower impact. In this respect, the 12 contributors display good practice on predictability.

  • Most of the 12 contributors provide funding with a low degree of alignment. Scores on alignment were low for all 12 contributors. This highlights the need to better match resources to financing priority area, as identified in the programme budget. All but 3 of the 12 contributors have a low alignment score. Funding from France marks good practice in terms of providing the highest alignment with the programme budget priorities. Among the 12 contributors, just as in the overall financing situation of WHO, the most overfunded areas were outbreak and crisis response and areas related to infectious disease control, particularly polio.

  • The degree of flexibility of the funding provided by the 12 contributors is modest. Half of the 12 contributors have a flexibility score below average. The situation appears particularly critical due to the hard earmarking imposed with the funding. This is because most voluntary contributions are designated for specific projects, rather than provided for broader thematic areas or as voluntary core contributions with no strings attached. The only positive note is the high compliance rate of earmarked funding with the standard 13% rate of programme support cost, i.e. a recovery-cost charge to cover WHO’s indirect costs of implementing an agreement.

  • Widespread hard earmarking results in highly fragmented funding, since most voluntary funds that are designated for specific purposes are provided as small, piecemeal amounts, increasing the overall level of fragmentation. For some contributors, fragmentation of funding is a direct consequence of a complex internal architecture of ministries and entities extending voluntary contributions to WHO. Each entity exclusively targets priorities and projects that are specifically relevant to its remit (this was suggested by one of the responses to the 2018 OECD Survey). Fragmentation, which is measured as the total USD volume of voluntary contributions divided by the number of agreements, is above average for all but five contributors (i.e. Australia, Bill and Melinda Gates Foundation, Canada, Sweden and Japan).

  • While the funding practices of the 12 contributors largely shape WHO’s overall funding picture, they also depart from it in some interesting ways. In particular, while WHO has been able to fully finance its programme budget, (i.e. programme budget financing indicator) half of the 12 WHO contributors considered in this exercise have low scores. This suggests that they top up assessed contributions with voluntary funding to a limited extent to allow the organisation to fully implement the programme budget. Of course, there are some notable exceptions, such as Norway, as already mentioned, and Sweden. As the metrics measures performance of each donor in relative term (i.e. compared to the “best performer”) this result stems in part from the fact that Norway provides earmarked funding that is several times larger than its assessed contributions. Yet, overall, the results suggest that access to resources from a wider range of partners and to the broader membership are critical to effectively fill the funding gap that arises from an agreed programme budget that is systematically larger than the sum of assessed contributions. An agreed budget in excess of assessed contributions reflects, in part, the implementation of UN and WHO reforms on the adoption of a budget framework. This framework integrates both core and earmarked resources to limit the ability of individual donors to define activities and priorities bilaterally through earmarked funds.

  • This exercise provides a basis for comparing DAC members’ funding practices with those of other contributors. Financing from the Bill and Melinda Gates Foundation presents several advantages. It comprises voluntary funds that top up the overall level of assessed contributions. It is provided in large amounts that limit transaction costs and reduce fragmentation. It is also fairly predictable, as financing displays, in general, only limited year-on-year volatility. It is extended on longer than average time frames, and tends to exclude contributions in the last 4 months of the year with a time frame shorter than 6 months. These are interesting findings as they show, inter alia, that earmarked funding is not necessarily unpredictable or fragmented. However, on a less positive note, more so than the average 12 contributors, the Bill and Melinda Gates Foundation provides funding that largely targets overfunded areas and that is hard earmarked. This limits the flexibility of WHO to allocate financing where is needed, within the remit of the programme budget agreed with the full membership.

Figure 6.8. Contributors experience different trade-offs and challenges in funding the WHO
OECD metrics on good multilateral funding for 12 selected WHO contributors in the 2014-2015 biennium
picture

Note: Since there are no assessed contributions for the European Commission and the Bill and Melinda Gates Foundation, it was not possible to compute the “PB financing” indicator for these two providers. This is why, for these two providers, the metrics comprises four indicators rather than five, and the chart illustrating it is thus a quadrangle and not a pentagon.

Source: Authors based on statistical data from WHO for the 2014-2015 biennium. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875283

WHO Secretariat could enhance transparency and accountability, while its ability to align funds to priorities remains constrained by contributors’ behaviour

The innovation and power of the good multilateral funding metrics presented in this chapter also lie in the ability to quantify actions taken by both contributors and the multilateral organisation itself. This is a critical feature, as the responsibility for good multilateral funding, and thus development results, needs to be understood as a shared one among providers and multilateral organisations.

At the same time, findings from this analysis suggest that multilateral organisations face both endogenous and exogenous factors in the pursuit of better quality funding and greater development results. In other words, there are several aspects that the multilateral organisation can influence and have an impact on, or are “endogenous”. In the case of the WHO Secretariat these concern actions to enhance predictability of funds, which the WHO Secretariat succeeded to improve upon through, for example, the adoption of an integrated budget. Transparency is another area where the WHO Secretariat can influence and needs to further improve.

Some other factors, however, are largely outside the full control of the organisation. For instance, the WHO Secretariat’s ability to use funds with enough flexibility to allocate them where needs arise or to chronically underfunded areas, and thus its ability to fully achieve results, is constrained by hard-earmarked resources from contributors.

The behaviour of the WHO Secretariat is assessed by comparing performance in 2014-2015 against performance in the two previous biennia, i.e. 2010-2011 and 2012-2013. Key findings include:

  • WHO has successfully taken action to improve predictability. The adoption of an integrated budget framework, consistent with the 2013 QCPR resolution, is paying off. WHO adopted an integrated budget framework in 2014-15. It provides a holistic picture of all resources – core and earmarked – needed during a biennium to implement the programme of work. The integrated budget framework made it easier to examine the global situation of the budget, to understand where funding gaps lied and where available resources could be used most strategically. It also facilitated results-based management.

Figure 6.9. WHO Secretariat funding performance (2014-2015)
OECD metrics on good multilateral funding, 0=worse performance, 1=best performance
picture

Source: Authors based on statistical data from the WHO for the 2014-2015 biennium. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875302

  • The Secretariat will need to continue to improve on other areas, especially with respect to transparency of funding and accountability for results. WHO has made significant improvements to increase the transparency of its spending flows and development results. These include establishing Financing Dialogues with member states and key non-state contributors, where it engages with them in a discussion informed by an innovative use of real-time data and effective visual tools. However, the WHO score on transparency and accountability is only satisfactory compared to previous years. Transparency was assessed using the transparency indicators in the Global Partnership for Effective Development Co-operation monitoring assessments (Global Partnership for Effective Development , 2018[11]). These consider the scope and quality of the financing data made publicly available through the OECD CRS and the International Aid Transparency Initiative. However, the WHO overall transparency score was lowered by poorer performance against another sub-indicator of transparency. This indicator was accountability as measured as the ability to meet specific reporting requirements attached to voluntary contributions, calculated as the shares of reports due.

  • Because of contributors’ hard earmarking, the WHO Secretariat’s ability to allocate funds towards emerging needs or chronically underfunded areas is considerably constrained. In fact, contributors earmarked voluntary resources for specific projects and purposes, leaving limited room for the WHO Secretariat to allocating them flexibly according to needs. This situation is exacerbated by the fact that earmarked resources often target already-overfunded programme areas. These constraints largely explain why the WHO Secretariat scores poorly on flexibility and alignment. Moreover, the lack of enough flexibility and alignment of funds stemming from the hard earmarking restricts the ability of the WHO Secretariat to fully implement the programme budget. The ability of the WHO Secretariat to ensure the implementation of the programme budget in 2014-15 was average compared to previous biennia, as many outputs were not fully achieved.

6.4. Lessons for good multilateral donorship in the era of the 2030 Agenda: good multilateral funding

For much too long, ensuring adequate resources to the multilateral system and good practices in its delivery has not advanced fast enough. Discourse is strongly polarised between proponents of core funding and its detractors; caught up in a dichotomous contraposition between calls for core resources as essential to preserve the multilateral character of the multilateral system, and appeals for the freedom to earmark funds. The analysis presented in this chapter contributes to these discussions by injecting facts and figures that shed new light onto the black box of these matters. This evidence is at the core of the recommendations for good multilateral funding summarised in Figure 6.10.

The evidence in this chapter unpacked the cumulative results of individual donors’ funding practices and highlights some of their implications for the recipient multilateral organisations. It clearly shows that contributors and multilateral organisations hold a mutual responsibility for achieving good multilateral funding and thus better development results. Contributors and multilateral organisations both have a role in advancing the quality of multilateral funding along its defining dimensions of predictability, flexibility and alignment. To increase the predictability of funding, for instance, contributors can make multi-annual financial commitments and reduce year-on-year volatility. In turn, the multilateral organisation can adopt integrated budget frameworks that provide a comprehensive view of the entire funding needs for the biannual programme implementation.

Actions from both contributors and multilateral organisation are not just an option. They are a necessity. These actions are intrinsically linked. For instance, the analysis suggests that without contributors providing more flexible and well-aligned funding, the ability of a multilateral organisation to employ funding as needs arise or to specific programme areas that remain underfunded is critically undermined. Further, the overall ability of the organisation to deliver on all outputs, including those that remain underfunded, is compromised.

The analysis shows that while not all funding is equally “good”, earmarked funding is not necessarily bad. Even if earmarked, funding can help reduce overall fragmentation when it comes through large and strategic contributions. It can also provide predictable funding stream if it is committed on a multi-year basis. This is, for instance, the case with voluntary contributions from the Bill and Melinda Gates Foundation to WHO, which represent fairly large and predictable allocations.

In the case of WHO, however, hard earmarking tends to be strongly associated with a misalignment of resources. Earmarked resources have largely targeted overfunded areas, restricting the multilateral organisations ability to shift resources to respond to needs and to fully achieve results.

The analysis of WHO’s funding situation reveals that, to some extent, earmarked funding did help to respond to the emerging needs of the Ebola outbreak. As an unforeseen event not reflected in the programme budget, earmarked funding for the Ebola crisis appears in the data as a source of misalignment, although it was necessary and useful. The creation of a contingency fund, and of buffer trust funds, could make this kind of earmarking superfluous.

Most of the remaining hard-earmarked funding seem to derive from the individual priorities and objectives of contributors, as well as from an internal donor architecture characterised by a plurality of not-so-well-coordinated national entities extending voluntary funds in support of specific projects aligned to their own mandates and objectives.

Overall, different contributors face a different range of challenges to improving the quality of the multilateral funding they provide. Contributors are highly heterogeneous, displaying large variations in their overall co-operation budget, the share of resources they channel through the multilateral system, and the way they are organised internally. This results in different contributors facing different trade-offs and challenges in providing good multilateral funding. Indeed, the evidence in this chapter highlights that contributors have particular funding profiles and their funding presents different strengths and weaknesses. Therefore, each one of them needs to tailor a reform package to their own specific challenges.

It is positive that several donors are taking steps to improve specific elements that prevent them from providing more effective funding. For instance, in the responses to the 2018 Survey, Germany acknowledges the need for more sustainable multi-year funding to WHO. It is working on identifying solutions together with the Federal Ministry of Finance. France recognises the issue of fragmentation. It is now working to better co-ordinate the voluntary contributions of different French entities. It also aims to improve predictability, by announcing the volume and repartition of France’s voluntary contributions earlier, when possible. Finally, Canada highlights that the outcomes of the World Humanitarian Summit and the Grand Bargain commitments pushed it to increase its multi-year funding for humanitarian assistance. While these are encouraging steps, more needs to be done collectively to ensure that multilateral funding trends support effective multilateralism.

Both ODA funding and new sources of financing to the multilateral system are increasingly scattered and piecemeal, creating a tension towards the delivery of project-based interventions and jeopardising the ability of the multilateral system to provide the transformative, holistic and integrated solutions that are needed to achieve the 2030 Agenda. Therefore, using the evidence from this chapter, building blocks on good multilateral funding are presented below (Figure 6.10). These building blocks provide a basis for the principles of good multilateral donorship needed as part of a new pact between sovereign states and multilateral organisations for the 2030 Agenda.

Figure 6.10. Summary of recommendations
picture

Note: Numbers in the puzzle pieces indicate the recommendations outlined in section 1.4.

Source: Authors

Annex 6.A. The OECD metrics on good multilateral funding: profiles of 12 selected contributors to the WHO

Australia

The quality of Australia’s financing to WHO is fairly in line with that of other providers but Australia performed better than other donors to WHO in terms of alignment, flexibility and reduced fragmentation of its financing. In regard to alignment, Australia provided higher shares of voluntary contributions to WHO’s underfunded programme areas compared to other donors, particularly on health and environment, integrated people-centred services and non-communicable diseases. Overall, Australia provided one-fifth of its voluntary contributions to underfunded areas against an average 6% by the other 12 contributors. Moreover, Australia’s financing was more flexible than that of other donors. It provided high volumes of core voluntary contributions (40% of total voluntary contributions) and it complied to a high extent with the 13%programme support fee.

Areas where Australia could improve are predictability, by providing agreements with longer time frames, and reduced volatility of revenue, particularly on polio, which showed high levels of revenue variation. This analysis, based on the WHO 2014-15 budget, suggests that Australia could also increase support to the Contingency Fund. It is positive that, in May 2018, the then Minister for Foreign Affairs of Australia announced funding for the WHO Contingency Fund for Emergencies of AUD 4 million). It is also positive that, in May 2018, Australia signed a new Strategic Partnership Framework with WHO. This sets Australia’s core voluntary contributions to USD 12.36 million annually over 5 years. This further improves the predictability and flexibility of Australia’s contributions to WHO.

Annex Figure 6.A.1. Australia’s profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875321

Bill and Melinda Gates Foundation (BMGF)

BMGF received high scores on predictability, particularly on short-term notice and length of time of agreements. Its performance is low, however, on alignment and flexibility. On alignment, the low score is due to a high share of financing provided for polio eradication, which is an overfunded programme area. Moreover, BMGF does not provide financing for any underfunded programme areas. On flexibility, all the financing provided is strictly earmarked and no resources are provided to the Contingency Fund. However, the compliance with the programme support cost of 13% for voluntary contributions is high. It is important to note that, as BMGF is not a member of WHO, some indicators that integrate assessed contributions in the computations were affected. This is because non-members do not provide assessed contributions. Indicators affected were voluntary contributions over assessed contributions, which could not be computed, and core over total, which only used voluntary core resources.

Annex Figure 6.A.2. Bill and Melinda Gates Foundation’s profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875340

Canada

Canada’s financing to WHO is in line with that of other providers in terms of programme budget financing and predictability. However, it contributed more than other donors to reduce fragmentation of WHO’s financing, by providing larger and thus less transaction-heavy and fragmented funding. In regard to flexibility, Canada has a high score on complying with the 13% programme support fee for voluntary contributions. However, all voluntary contributions are strictly earmarked, which negatively affects the indicators on softness of voluntary contributions and the share of core finance over total revenues. Canada could improve the alignment of its financing to WHO by channelling more of its resources to underfunded programme areas.

Annex Figure 6.A.3. Canada’s profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875359

European Commission (EC)

Like the BMGF, the EC is not a member of WHO and for this reason some indicators are affected by the lack of assessed contributions. This is the case for voluntary contributions over assessed contributions, which could not be computed, and share core over total revenues, which only used voluntary core resources. The EC’s performance on predictability was strong due to high scores on short-term notice and duration of agreements compared to the other contributors examined. The score on alignment was l in the average range of the other contributors examined, although more efforts could be made to specifically support underfunded programme areas. The score on flexibility is significantly low as all resources provided were strictly earmarked and did not comply with the 13% programme support cost for voluntary contributions. Furthermore, the EC did not provide contributions to the Contingency Fund. Finally, improvements can be made on providing less fragmented financing.

Annex Figure 6.A.4. European Commission's profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875378

France

France’s performance was robust in terms of alignment of financing. Only one-quarter of voluntary contributions were provided for overfunded areas (against 74% average for the other 11 contributors considered) and two-thirds for averagely funded programme areas. France’s financing to WHO was also highly flexible, due to high shares of core funding provided and high levels of compliance with the 13% programme support cost for voluntary contributions. However, improvements on flexibility could be made by supporting the Contingency Fund and improving the softness of voluntary contributions. France contributed, less than other providers, to the financing of the overall programme budget of WHO, due to little additional voluntary funding on top of core resources (with a ratio of 0.4 of voluntary contributions over assessed contributions, compared to an average ratio of 4.5 for the other WHO member contributors considered). However, France is the 4th largest contributor to WHO and this result reflects that France’s ratio of voluntary contributions over assessed contributions is low compared to the other WHO contributors examined. France could further contribute to reducing fragmentation of WHO’s financing by providing larger awards of voluntary contributions.

Annex Figure 6.A.5. France’s profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875397

Germany

Germany’s financing to WHO is in line with that of other providers. In terms of alignment of funding, performance was around the average for other donors, mainly because Germany contributes to financing underfunded programme areas. Germany’s financing was predictable, as Germany generally refrained from providing funding against short spending time frames. However, Germany could further improve the predictability of its financing by extending the duration of funding agreements (i.e. multi-year). While Germany provides a large volume of core financing (both assessed contributions and voluntary core), it could enhance the softness of its voluntary contributions. Furthermore, Germany has high levels of compliance with programme support costs of 13% but could increase its support to the WHO Contingency Fund. Germany contributed less than other providers considered in this study to WHO’s programme budget financing, as it extended low volumes of voluntary contributions in addition to its assessed contributions (Germany has a 0.8:1 ratio of voluntary contributions over assessed contributions against an average ratio of 4.5:1 for the other WHO government contributors examined).

In its responses to the OECD/DAC “2018 Survey on Policies and Practices vis-à-vis the Multilateral Development System”, Germany stated that since the time frame of the metrics (2014-2015), its funding practices vis-à-vis WHO have significantly changed, as the Federal Ministry of Health has overhauled its funding policy. Germany stated that it is now the largest donor to the Contingency Fund and that it has changed its earmarking practice, moving from project-specific allocations to earmarking at the programme area level.

Annex Figure 6.A.6. Germany’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875416

Japan

Japan’s financing to WHO is in line with that of other providers considered here in terms of flexibility and contribution to reducing fragmentation. Japan’s financing is largely flexible as a large share of it is provided as core resources. However, Japan could further improve the flexibility of its financing by providing softly earmarked voluntary contributions and by channelling more resources to “soft windows”, such as the Contingency Fund. Japan could also improve its contribution to ensuring the full financing of the agreed programme budget. It could enhance the predictability of its financing by not providing funding against short spending time frames and by extending the time length of its funding agreements (e.g. multi-year financing). Japan could also provide more aligned financing, as it has directed large shares of voluntary contributions to overfunded programme areas instead of supporting underfunded and averagely funded programme areas.

Annex Figure 6.A.7. Japan’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875435

Norway

Norway greatly contributed to the full financing of the agreed programme budget of WHO, by providing considerable additional resources on top of its assessed contributions (voluntary contributions were 12 times the volume of its assessed contributions). On other quality dimensions, Norway’s financing is in line with that of other providers considered in this study. Norway’s funding was predictable and it did not provide funding with short spending notice. Its funding was also flexible, as while it did not support the Contingency Fund, it mostly complied with the programme support cost of 13% and provided one-fifth of its voluntary contributions as core. Finally, Norway could improve on alignment by shifting resources from overfunded programme areas to underfunded and averagely funded programme areas. Norway could also improve its contribution to reducing fragmentation of voluntary resources by providing fewer small, piecemeal grants.

Annex Figure 6.A.8. Norway’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875454

Sweden

Sweden provided high-quality financing to WHO. It greatly contributed to financing WHO’s agreed programme budget in full, providing considerable resources on top of its assessed contributions (with a 9:1 ratio of voluntary contributions to assessed contributions). Moreover, its voluntary resources were not fragmented in many agreements, compared with financing from the other providers considered in the study. Sweden’s financing to WHO was highly predictable, mainly as Sweden refrained from providing funding to be spent on short timeframes. Sweden could further increase the predictability of its financing by providing agreements with longer timeframes (e.g. multi-year financing). Sweden’s financing was also flexible, as it provided two-thirds of its financing as core contributions (both assessed and voluntary core) against an average 42% for the other contributors examined. Furthermore, Sweden has high levels of compliance with the programme support cost of 13% for voluntary contributions. Sweden could further improve the flexibility of its financing by supporting more “soft windows”, such as the Contingency Fund. Sweden’s financing presented a degree of alignment similar to that of other providers, but could be further improved by channelling more of its financing towards underfunded programme areas.

Annex Figure 6.A.9. Sweden’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875473

Switzerland

Switzerland is a long-standing contributor of core resources to WHO. Its financing is highly aligned to the priorities decided in the organisation’s programme budget, including because Switzerland contributed to underfunded or averagely funded programme areas. It channelled more than half of its voluntary contributions to these (compared to 28% on average for the other 10 providers considered in this study). Switzerland contributed to financing the full programme budget of WHO in line with other providers as reflected in its medium-range score on programme budget financing. Switzerland could further improve the flexibility of its financing by reducing its strictly earmarked funding and by increasing the share of its core funding. Besides improving the softness of voluntary contributions, further improvements could be made in reducing fragmentation by providing fewer small or piecemeal awards of voluntary contributions.

Annex Figure 6.A.10. Switzerland’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875492

United Kingdom

The United Kingdom performed well compared to other donors, except on alignment of voluntary funding. The United Kingdom contributed, more than other donors, to the full financing of the agreed programme budget by providing considerable voluntary contributions in addition to its assessed contributions (with a ratio of 7:1). The United Kingdom also helped reduce fragmentation of WHO financing by avoiding small and piecemeal financing and providing agreements that were larger than those of other contributors. The United Kingdom’s financing to WHO was fairly predictable, as it displayed little volatility and the United Kingdom also largely avoided financing that needed to be spent at short notice in short time frames. The United Kingdom could further improve the predictability of its financing to WHO by providing financing agreements with longer spending time frames (e.g. multi-year funding). In terms of flexibility of its financing, the United Kingdom performs exceptionally well in supporting the Contingency Fund and complying with the programme support cost of 13% for voluntary contributions. However, the softness of its voluntary contributions is low (only 13% was core voluntary), although not dissimilar to the average range compared with other providers. The United Kingdom could also further improve the alignment of its financing by channelling more of its financing towards underfunded programme areas.

Annex Figure 6.A.11. The United Kingdom’s profile: good multilateral funding (2014-2015)
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Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875511

United States

The United States’ funding to WHO was highly predictable as it was provided over long time frames and funding agreements with appropriate spending time frames. The United States could further improve the predictability of its financing by reducing the volatility of resources provided (or variations among biennia). The flexibility of United States’ financing is in line with other providers overall, although it strictly earmarks all of its voluntary resources and does not support “soft windows”, such as the Contingency Fund. On a positive note, a high share of the United States’ funding is compliant with the programme support cost of 13%. The United States could further improve the quality of its financing to WHO by helping to reduce fragmentation, for example, through larger financing agreements. It could also improve the alignment of its financing by channelling more resources to underfunded programme areas, such as non-communicable diseases.

Annex Figure 6.A.12. The United States’ profile: good multilateral funding (2014-2015)
picture

Source: Authors’ calculation using data provided by the WHO Secretariat. Data were kindly provided by the WHO for this report and are not publicly available.

 StatLink https://doi.org/10.1787/888933875530

Annex 6.B. Methodology for developing the OECD metrics on good multilateral funding

The metrics are organised in a hierarchical structure with broader quality dimensions (see III above) at the highest level, main indicators at the middle level, and sub-indicators at the lowest level (see Annex 1 for list of indicators). The choice of the list of the sub-indicators and the related formulas was made using the following criteria: relevance, comprehensiveness, data availability and simplicity. The main steps taken to compute, aggregate and visualise the indicators are outlined below.

Computation

Computation followed the selection of the indicators. The computation of the indicators involved calculating figures at different ranges, including absolute numbers, percentages, ratios, Yes/No types of values and other qualitative ratings. Therefore, the first step was to turn qualitative data into numerical data, e.g. Yes = 1 and No = 0, and then compute the raw figures of all the other indicators using appropriate formulas (see Annex 1). These formulas were developed to make sure that the direction of the computed value follows the direction of the quality dimension, i.e. the higher the computed values of the indicators, the higher the quality of financing. For instance, to calculate the share of reports provided on time by the Secretariat, the calculation was: 1 – the share of reports overdue.

Sometimes the computation revealed practical issues that could not be anticipated theoretically, particularly data gaps and statistical anomalies. For instance, to calculate variation of revenue for two biennia when amounts provided in one of the two biennia is 0 required attributing theoretical assignments of 0% or 100% to allow meaningful computations. For example, if a donor provided USD 0 in 2010 and USD 100 in 2011 variation was theoretically assigned to be 100% otherwise the actual result would be immeasurable (hence not meaningful analytically).

Normalisation

After the computation of the sub-indicators, the computed raw figures were normalised – which means rescaled – to convert them to the same unit and range. For example, “voluntary contributions specified as share of total voluntary contributions” is in the range of 0-1 whereas “voluntary contributions / assessed contributions ratio” can take any absolute number. By re-scaling, sub-indicators were put in the same range and could then be compared and visualised. In particular, sub-indicators were normalised into the range of 0-1. However, due to lack of data for multiple biennia, some indicators that were already in shares were not normalised. To normalise, the metrics uses the following formula:

(x – xmin)/(xmax – xmin)

To calculate the sub-indicators related to contributors, xmax and xmin were derived from the best/worst performer for that specific sub-indicator. For instance, if country A is the best performer in terms of volatility of funding, its score will set the standard for computing the same sub-indicator for all other contributors. For the set of indicators related to the Secretariat of the multilateral organisation and for the set related to the overall picture of the multilateral organisation, where only one actor/perspective can be used, xmax and xmin were derived from best/worst performance among biennia. For instance, to calculate the performance of the WHO Secretariat in the biennium 2014-2015 for implementation rate, the performances in 2010-2011 and 2012-2013 was compared to derive best/worst performance.

Aggregation

After normalisation, the sub-indicators were aggregated into main indicators through simple averages. For instance, sub-indicators for 1) totally flexible, 2) partly flexible, and 3) inflexible voluntary contributions were aggregated into the indicator “softness of voluntary contributions”. Aggregation was performed twice, as aggregated indicators were in turn aggregated around the quality dimension they belonged to. For instance, indicators “volatility”, “long-term predictability” and “short-term notice” under quality dimension predictability were aggregated into one macro-indicator that represents quality dimension 2 in its entirety for that contributor. The same statistical method was used to aggregate sub-indicators and indicators for the Secretariat of the multilateral organisation and the multilateral organisation overall.

Sensitivity test

After the computation, normalisation and aggregation of results, a number of sensitivity tests were performed to ensure the robustness of the formulas used (including weighting) and determine the relationships between indicators and quality dimensions. For the formulas, weights were chosen to reward/penalise specific behaviours. In order to find the appropriate weight, several sensitivity tests were undertaken and compared against each other. For instance, providing voluntary contributions to overfunded programme areas, being against good practice, was ultimately converted into a negative value.

For the sensitivity test for the relationships between indicators and quality dimensions, correlation between indicators and quality dimensions was used to measure the extent to which a change of one indicator/quality dimension affected the rest of indicators/quality dimensions. As a general rule, a robust correlation between indicators within the same quality dimension is proof of soundness, as the indicators show theoretical and empirical consistency. In contrast, a low correlation between indicators of different quality dimensions shows robustness because this means that these indicators are not related to quality dimensions that they do not measure. The risk is that one or several indicators have an impact on several quality dimensions, which would attribute an implicit higher weight to these indicators.

Results show that correlations between indicators within the same quality dimensions are generally high, in turn demonstrating that the composition of the quality dimensions are appropriate. However, correlations between indicators of different quality dimensions are not all low. In particular, the indicators “length of time of agreements”, “reduced fragmentation” and “flexibility of contributions”. This is because non-core finance, which is the main form of financing has longer time frames and is less fragmented.

Visualisation

The results of the computed indicators and quality dimensions were visualised through spider charts and wheel charts. Spider charts are used to visualise the overall score of each actor/perspective (i.e. individual contributors, WHO Secretariat and WHO overall) for each quality dimension and compared the score with the score for the best and average performer for each quality dimension. As with the normalisation technique mentioned above (see IV.b above), best and average scores from contributors were selected among all contributors observed.

References

[12] Birdsall, N. and H. Kharas (2010), THE QUALITY OF OFFICIAL DEVELOPMENT ASSISTANCE (QuODA), Center for Global Development.

[11] Global Partnership for Effective Development (2018), Monitoring data, http://effectivecooperation.org/monitoring-country-progress/explore-monitoring-data/.

[2] Good Humanitarian Donorship (GHD) Initiative (2003), Principles and Good Practice of Humanitarian Donorship, https://www.ghdinitiative.org/assets/files/GHD%20Principles%20and%20Good%20Practice/79.%2023%20Principles%20and%20Good%20Practice%20of%20Humanitarian%20Donorship.pdf.

[6] Government Offices of Sweden (2007), Sweden’s Strategy for Multilateral Development Co-operation, https://www.government.se/49b74f/contentassets/5cb28fe3233b4f228bc063f91a5e6b73/swedish-strategy-for-multilateral-development-cooperation.

[10] OECD (2018), Creditor Reporting Sytem, OECD, Paris, https://stats.oecd.org/Index.aspx?DataSetCode=crs1.

[4] OECD (2015), Multilateral Aid 2015: Better Partnerships for a Post-2015 World, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264235212-en.

[13] OECD (2013), Multilateral Aid Report, OECD, Paris, http://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/2013-Multilateral-Aid-Report.pdf.

[9] OECD (2012), Aid effectiveness in the health sector, http://www.oecd.org/dac/effectiveness/progress-and-challenges-in-aid-effectiveness-9789264178014-en.htm.

[7] Reinsberg, B. (2017), Five steps to smarter multi-bi aid, Overseas Development Institute, https://www.odi.org/sites/odi.org.uk/files/resource-documents/11497.pdf.

[8] Thalwitz, M. (2013), Fragmentation and Proliferation in the Multilateral System: The Role of Trust Funds. A Study of Incentives.

[3] The Grand Bargain (2016), The Grand Bargain - A Shared Commitment to Better Serve People in Need, https://www.agendaforhumanity.org/sites/default/files/resources/2018/Jan/Grand_Bargain_final_22_May_FINAL-2.pdf.

[1] United Nations (2018), Draft resolution submitted by the President of the UNGA: Repositioning of the United Nations development system in the context of the quadrennial comprehensive policy review of operational activities for development of the United Nations system, https://www.un.org/pga/72/wp-content/uploads/sites/51/2018/05/Adoption-of-UNDS-repositioning-resolution.pdf.

[5] World Health Organization (2013), WHO’s financing dialogue: guiding principles, http://www.who.int/about/finances-accountability/funding/financing-dialogue/guiding-principles/en/.

Notes

← 1. While the OECD metrics presented here constitute the first attempt to use a multi-dimensional approach to measure the quality of funding provided to multilateral organisations, different multi-dimensional metrics were developed by Nancy Birdsall and Homi Kharas [ (Birdsall and Kharas, 2010[12]), Quality of Official Development Assistance Assessment] to measure the quality of ODA: QuODA. This measure provides an assessment of the quality of concessional finance provided by 35 donor countries and more than 100 aid agencies using 31 indicators grouped in four dimensions that reflected what was, at the time, the international consensus of what constitutes high-quality aid: 1) maximizing efficiency; 2) fostering institutions; 3) reducing burden; 4) transparency and learning. Other multi-dimensional metrics were developed by Piera Tortora to measure delegation of authority of development aid agencies (OECD, 2013[13]).

← 2. http://open.who.int/2018-19/home.

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