8 May 2015: As part of the UN Economic and Social Council (ECOSOC) dialogue on the longer-term positioning of the UN development system, participants in a one-day workshop discussed the funding of the UN development system in the context of the post-2015 development agenda.

The event took place on 8 May 2015, in New York, US, at the Permanent Mission of Indonesia to the UN.

Opening the dialogue on the ‘Evolution of funding practices of UN development system,’ Desra Percaya, Permanent Representative of Indonesia, said the transformation of development cooperation is leading to transformation of the role of the governments and the private sector, toward one of multi-stakeholder partnership. Noting that “business as usual” will cost the UN its relevance, he stressed the need for the UN development system to adapt to major shifts in the global environment.

María Emma Mejía Vélez, Permanent Representative of Colombia and ECOSOC Vice-President, said the architecture of the UN development funding has changed significantly in the last 20 years. Currently 75% of the total funding comes from non-core contributions, 90% of which are single-donor or single project contributions, which leads to fragmented funding. Romesh Muttukumaru, Resource Person, said that in 1980, 90% of UN Development Programme’s (UNDP) funding was comprised of core resources, while today, 90% of its resources are non-core. The change occurred in 2000, upon formulation of the Millennium Development Goals (MDGs), as donors started targeting their funds. He added that many of UNDP’s activities lost funding as the core funding shrunk, and expressed his concern that UNDP has started to lose its multilateral character, becoming more bilateral and focusing on those areas where funding is available. Fiona Ritchie, UK Permanent Mission, said choosing between core and non-core resources is not a binary decision.

Navid Hanif, Director, UN Office for ECOSOC Support and Coordination, underscored the need to better forecast the short, medium, and long-term funding needs for operational functions and increasing humanitarian assistance activities. Anne-Birgitte Albrectsen, UN Development Group (UNDG), underlined the importance of: core and un-earmarked funding for policy support, capacity building, and knowledge leveraging; funding’s flexibility, sustainability and predictability; innovative funding; and South-South and triangular cooperation. She noted that funding should enable the integration of the humanitarian and development dimensions. Yulia Kudasova, Permanent Mission of Russia, underlined the need for: funding to follow functions; the least developed countries (LDCs) to remain the priority; targeted funding for infrastructure and other key areas in middle income countries (MICs); and increasing the quality of earmarked contributions.

In the panel on ‘Innovative funding practices,’ Yannick Glemarec, UN Women, presented innovative funding instruments, such as pool financing mechanisms and leveraging private funds with public funds. He said using public funding to leverage private equity is usually equated with credit and assessment instruments, which is a misconception, adding that much more funding could leveraged through policy change. He stressed the need for the UN to professionalize its fund management practices. Magnus Lennartsson, Permanent Mission of Sweden, said the imbalance between core and non-core funding represents “a major concern.” Noting that vertical funds will become increasingly important in the funding of the Sustainable Development Goals (SDGs), he called for vertical funds to be seen only as complementary, and also cautioned that innovative financial instruments do not crowd out incentives for funding such as grants.

In the panel on ‘Expectations for funding practices of the UN development system in the post-2015 era,’ Olav Kjørven, UN Children’s Fund (UNICEF), called for ”breaking new ground” in thinking, practice and funding on humanitarian and development aid. He highlighted the recent earthquake in Nepal, and said the Resident Coordinator was under pressure due to the current separation of funding into climate, humanitarian and development funding. Remongar Dennis, Permanent Mission of Liberia, raised the issue of countries where the private sector is too weak to contribute to domestic resource mobilization, and mentioned the cases of Sierra Leone, Cote d’Ivoire and Liberia, all of which have experienced a 15-year setback in terms of economic development due to the Ebola crisis, according to the World Bank. Terri Robl, US Permanent Mission, called on emerging economies to share more of the Official Development Assistance (ODA) responsibility, and for the UN to increase transparency on funding expenditure. She welcomed the session’s focus on the relationship between humanitarian and development funding.

During the general discussion, Switzerland invited delegates to think about funding in three categories, for agencies, topics and UN system-wide efforts, further calling for the conceptual redefinition of “core” and “non-core” aspects. John Hendra, UN Fit for Purpose for the Post-2015 Development Agenda, supported the call to modernize the categorization in the UN Quadrennial Comprehensive Policy Review (QCPR) language. Canada called for addressing the divide between “aid darlings and aid orphans.”

A representative of the UN Development Group noted that 17 divided funding strategies for the 17 SDGs would be “a tremendous mistake,” continuing the “silo thinking” of the past. She suggested helping national governments to create a funding strategy that takes all 17 SDGs into account. The UK expressed concern about the SDGs’ potential to generate further fragmentation of the UN system.

The ECOSOC dialogue on longer-term positioning of the UN Development System will inform the outcome of the next UN General Assembly (UNGA) resolution on QCPR – the mechanism through which the UNGA assesses the effectiveness, efficiency, coherence and impact of the UN development system.

The next workshop, on 13 May 2015, considers the governance issues of the UN Development System. [Dialogue and Workshop Webpage] [Workshop Programme] [Workshop Background Notes] [IISD RS Story on ECOSOC Workshop on Functions] [IISD RS Sources]