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The Future of Foreign Aid Money

Posted: 02/ 1/2012 5:46 pm

Reuters is stepping up to provide more comprehensive coverage of humanitarian aid. Recently, they launched the 'Future of Aid' section that is filled with graphics, stories and videos about humanitarian aid. The present focus of the section is centered around aid spending.

In a survey of 41 relief agencies, Reuters asked aid experts to weigh in on how money is spent and advise what ways the humanitarian sector can be improved. Based on the feedback, Reuters came up with a list of ten ways that aid agencies can stay ahead:


1) Be better prepared for an increase in climate-related disasters
2) Devise new ways of operating in urban areas like city slums
3) Work more closely with local people to avert disasters and reduce their impact
4) Lobby governments to invest more in reducing the risk of disasters
5) Spread the word about why humanitarian aid must be provided impartially
6) Be more transparent about how aid is delivered, as well as its successes and failures
7) Train aid workers to be better leaders and learn from their mistakes
8) Cut red tape at the U.N. and improve coordination between U.N. agencies and NGOs
9) Operate more like a business, with a clear focus on results
10) Look for new sources of funding, including the private sector

When asked which factors are most likely to increase humanitarian need in the coming years, the respondents overwhelmingly pointed to climate-change related disasters. "The rising trend in the number of disasters over the past five years shows no sign of slowing down," said Gareth Owen, humanitarian director at Save the Children UK. "Year on year, we are responding more frequently and on a larger scale to increasing numbers of disasters."

The agencies surveyed seem slightly optimistic, but largely think that many things will be the same in the coming years when asked about changes in funding and the role of the UN. Advocating for disaster preparedness is not a new call from NGOs. Evidence overwhelming points to it being more cost effective and the best way to mitigate large scale disaster.

The Horn of Africa is a prime example where Kenya and Ethiopia, who were focusing on drought preparedness in arid regions, were able to better handle the drought that southern Somalia. The problem is getting donors behind the idea. "Funding for disaster risk reduction and disaster preparedness is not very 'sexy' for donors -- global, domestic and private," said Jouni Hemberg, director of international cooperation for FinnChurchAid.


In 2010, governments gave $12.4 billion in humanitarian aid, almost three times as much as private contributions, which amounted to $4.3 billion, according to estimates from Global Humanitarian Assistance, a British-based aid monitoring group.

But 22 agencies forecast a drop in government funding for humanitarian aid over the next five years.


One casualty of the recent economic downturn has been the Global Fund. It came under fire after an internal audit found rampant graft among recipients. As a result, countries pulled funds and the Fund announced that it would not offer new grants in the coming year. The good news is that Gates announced he will inject $750 million to help keep the fund afloat.

Although the scandal contributed to the loss of funding, it also provided an out for donor countries with cash-strapped economies. Foreign aid is one of the first cuts suggested when money is tight and there are plenty of calls across the G20 to make those cuts a reality. In the United States, a budget proposed by the House Republicans included a complete cut of USAID.

As seen in the video below, the status quo is ill equipped to adequately address disaster relief. The cause is not due to lack of ability; the relief sector is excellent given the many constraints under which it operates. Providing disaster relief is hard and complex. IFRC's Matthias Schmale, suggests that humanitarian organizations "provide more credible leadership through less marketing and spinning, and ensure actions match words."

The survey respondents, seemed to agree with Matthias with calls for greater transparency. What individual and large donors can do is hold NGOs accountable. Additionally, large donors can cut down the burden of red tape and individuals can make donations that are not earmarked so that agencies can properly respond to the disasters that are not splashed across the front page of the New York Times.

 
 
 

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06:07 PM on 02/01/2012
How to realize following goal:

6) Be more transparent about how aid is delivered, as well as its successes and failures

Produce in conjunction with media companies, documentaries and articles which describe aid projects form start to finish. Use paper documentation which arises at all stages. Let people see the truth.

Currently aid organisations are opaque.

Question.

Why are so many national aid organizations and NGO's offering their services globally rather than focussing upon regions whic hthey know well?

Answer: To offer career development paths for those in aid industry. To show they have global coverage. To show they are big-time players.

Aid organisations should rationalize and specialize by region. Too many present in one place can cause economic distortion and planning confusion.
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02:17 PM on 02/02/2012
Excellent points. What do you say to the argument of competition? I think there is something to the fact that competition can help eliminate ineffective NGOs. Transparency and admitting failure would be an important step towards weeding out the bad and supporting the good.

I could not agree with you more about discussing projects from start to finish to show warts and all the story of development. You may be interested in the work I am starting at dawnsdigest.com to find a solution to this storytelling gap. I would love to hear your feedback.
05:39 PM on 02/02/2012
Competition represents a free market approach which would be useful. Problmes may arise if tendering systems burden small NGO's with expenditure in putting bids together.

Bid systems have created a small number of consultancies that snap up sub-contracts from the national and supra-national agencies. They have teams putting bids together full-time.

Also a competitive process must allow the West to pay its aid workers Western salaries. British ODA is sub-contracting to China because local labor costs are lower.

The West will lose its capacity to manage complexity if they sub-contract to lowest bidder.

But I do agree that some kind of competition would be healthy.

Perhaps to balance that (and manage it?) we also need a more global dirigiste approach aimed at helping national aid agencies work with global organizations so that national programs can be depoliticized.

Finally let's not avoid the obvious. Excepting well-off enclaves, the developing world is a chaotic, untidy, unhygienic mess yet there are millions of young folk with no jobs who could clean it up. Never happens!

Sure enough it is great to be doing stuff which looks cool in a report but it is also good to build sidewalks which are flat, put drainage systems into streets and keep buildings in a decent state of repair. And that begins to meet the greatest need - to provide jobs and develop capacity to manage projects,.

I look forward to reading your web-site.