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Funding arrangements

Funding arrangements. Executive Board retreat 21 March 2013. Outline. Key challenges in UNFPA’s funding arrangements The Resource Allocation System: Background The Resource Allocation System: Key issues The Resource Allocation System : Next steps

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Funding arrangements

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  1. Funding arrangements Executive Board retreat 21 March 2013

  2. Outline • Key challenges in UNFPA’s funding arrangements • The Resource Allocation System: Background • The Resource Allocation System: Key issues • The Resource Allocation System: Next steps • The Global and Regional Programme: Background and key issues • The Global and Regional Programme: Next steps

  3. 1. Key challenges in UNFPA’s funding arrangements

  4. Current budget architecture fragments resource allocation mechanisms The Resource Allocation System (RAS): used to fund country-level activities as per Country Programme Documents • Resources divided into distinct budget siloes and managed separately • Decisions about the allocation of thematic trust funds and other non-core resources are made according to donor agreements • Each budget silo has separate: • Allocation criteria • Governance structure • Process owner • Process for budget preparations and monitoring Regular Resources Global and Regional Programmes (GRP): used for programmatic purposes at the global and regional levels The Institutional Budget*: resources used for management and development effectiveness activities Other Resources Thematic funds: used for specific purposes, e.g. the Global Programme to Enhance Reproductive Health Commodity Security Other non-core resources: used for specific purposes as earmarked by donors, e.g. the Common Emergency Fund for humanitarian interventions * The Institutional Budget includes a small component financed from cost recovery for managing other resources

  5. Consequences of fragmentation • Precludes a globally coherent allocation of resources to strategic priorities, impeding UNFPA’s ability to make optimal use of total resources • Makes it considerably more difficult to track resources against results, thereby reducing accountability • Increases the transaction costs for country offices, which are forced to manage and report by budget silo • Combined effect: reduction of UNFPA’s overall impact

  6. The challenge of unifying UNFPA’s funding architecture • Integrated Budget represents progress but is not a panacea • Most importantly, it cannot provide extensive details about other resources because they are less predictable, shorter-term commitments from donors • Other resources made up 54% of total UNFPA funds in 2012 and are expected to continue to increase as a share of the total • To address fragmentation, UNFPA must move to a more unified funding architecture that optimizes resources across the institution, irrespective of funding sources

  7. Unifying the funding architecture will take time • Some steps can be taken in the short-term to improve resource alignment with strategic priorities, but it will take more time to: • Unify the decision-making processes while minimizing disruption • Align contractual agreements for non-core funding within an integrated resource allocation framework • Regular engagement with the Executive Board to determine how a unified framework can phased in over the course of 2014-2017, as per the proposed timeline: Changes that require Executive Board decisions would be introduced in the Mid-Term Review of the Strategic Plan Phased in implementation of unified budget architecture Design in consultation with Executive Board and key stakeholders 2017 2014 2013 2016 2015 Proposed timeline for unifying UNFPA funding architecture

  8. 2. The Resource Allocation System: Background

  9. Principles of UNFPA resource allocation system (DP/FPA/2007/18) • Adherence to the principles of the ICPD Programme of Action • Focused on countries with the lowest level of achievement with regard to the ICPD agenda (as reflected in the UNFPA strategic plan goals on population and development, reproductive health and gender) • Phasing out or limiting of financial assistance to countries that are close to attaining, or that have already surpassed the ICPD goals • Special attention to low-income countries, the LDCs, sub-Saharan Africa and countries in emergencies, transition and recovery • The promotion of national capacity-building through South-South cooperation • The provision of technical assistance to all countries requesting it

  10. RAS criteria

  11. Country groupings (Table 4, DP/FPA/2007/18) Actual country allocations made through Executive Board approval of Country Programme Documents

  12. 3. The Resource Allocation System: Key issues

  13. Key issues • Indicators out of sync with the current strategic direction • Current resource allocation not adequately focused on needs • Allocation of resources not aligned to UNFPA interventions • Current system not optimizing impact • Current system not well suited to humanitarian crises and other emerging threats and opportunities • Leaving the current system unchanged except for updating indicator data would result in a challenging situation

  14. 1. Indicators out of sync with the current strategic direction • Current approach treats all indicators identically • For example, maternal mortality ratio has same weight as under-five mortality rate or literacy rate among 15-24 year old females

  15. 2. Current resource allocation not adequately focused on needs (1/5) Per capita allocation of UNFPA’s RAS resources tends to be much higher in small countries, irrespective of Group category Per capita allocation of regular resources Population <5 million Population >50 million Group C country Group A country Group B country

  16. 2. Current resource allocation not adequately focused on needs (2/5) Population size plays a disproportionate role, even among relatively small countries

  17. 2. Current resource allocation not adequately focused on needs (3/5) Larger per capita RAS allocations for small countries result in very uneven distribution across total population of countries where UNFPA works

  18. 2. Current resource allocation not adequately focused on needs (4/5) As a result, UNFPA’s RAS resources are not being assigned where needs are greatest Five countries with largest number of unmet contraceptive needs (among 69 priority countries) Five countries with largest number of maternal deaths

  19. 2. Current resource allocation not adequately focused on needs (5/5) • Problematic from human rights perspective for an organization with a universal mandate: • Women in large countries receive much less UNFPA assistance compared to those in small countries, simply because they happen to live in more populous countries • A number of rationales for skew toward small countries are possible: • Different costs of delivering services, diseconomies of scale • Clear theory of change that UNFPA can have more impact in smaller countries • However, currently no rationale underlines the large skew toward small countries

  20. 3. Allocation of resources not aligned to UNFPA interventions • UNFPA interventions differ based on country setting: • Countries with high needs and low ability to finance programmes from domestic resources require greater range of interventions (e.g., from advocacy/policy to capacity development to service delivery) • In countries with low needs and high ability to finance domestically, UNFPA is more focused on advocacy/policy • In theory, RAS should be a mechanism to allocate resources in order to deliver a set of interventions • Currently, no connection between RAS and types of interventions to be delivered • Business model could guide resource allocation based on the types of interventions UNFPA undertakes in different settings

  21. 4. Current system not optimizing impact • Currently no systematic way to assess programmatic performance at country level • No performance-based component of resource allocation that rewards especially effective and/or efficient programming • As a result, UNFPA does not channel increased resources to country offices that are able to make the best use of them

  22. 5. Current system not well suited to emerging threats and opportunities • RAS is a framework for committing resources to country programmes on a multi-year basis → not well suited to fluid situations such as humanitarian crises or opportunities presented by political change or technological breakthroughs • UNFPA has only a nominal $3 million allocation from regular resources for humanitarian crises, so it must rely on other, less predictable resources in such situations • In contrast, both UNDP and UNICEF set aside a portion of programmatic resources for emergencies and to respond quickly to emerging opportunities before they assign the remainder to country programmes

  23. 6. Leaving the current system unchanged except for updating indicator data would be challenging • Updating classifications according to the current RAS would result in 22 countries moving groups: • A → B: 5 B → C: 14 C → B: 3 • Being categorized into one Group versus another has major implications on the amount of resources a country receives, though shifts between categories may not be the result of significant changes in needs • Jordan’s youth population increased by 0.4% percentage points between 2008 and 2013, so it would change from Group C to B

  24. 4. The Resource Allocation System:Next steps

  25. Proposed approach • Update the RAS based on a common-sense responses to challenges: • Any changes to the indicators must bring these criteria into closer alignment with Executive Board-approved strategic direction • New RAS should be more clearly tied to the interventions that UNFPA intends to deliver in different settings, as articulated in the organization’s business model • Resource allocation should be based on a clearly described rationale, to avoid a situation in which allocations are skewed toward any particular set of countries without a clear rationale • Lessons learned from UNDP and UNICEF in how to handle the financing of humanitarian programming and other emerging threats and opportunities should be built upon • Changes should be introduced in a manner that does not jeopardize the ultimate beneficiaries of UNFPA’s work

  26. Next steps • The details of the proposed approach will be discussed with the Executive Board at an informal in late April/early May • Following refinements based on Executive Board feedback, the updated RAS should be presented as part of the Strategic Plan and Integrated Budget at the September 2013 Executive Board session • Phased in implementation: • Changes would affect only new Country Programme Documents being approved in 2014, rather than those currently being implemented • Transition plans would be developed for the first set of countries affected

  27. 5. Global and Regional Programme: Background and key issues

  28. Background • The scope of GRP as set out in DP/FPA/2007/19: • Global programme: • State-of-the-art technical knowledge • Standards and norms for programme quality assurance • Capacity development • Advocacy, communications and resource mobilization • Regional programmes: • Strengthen national capacity to incorporate ICPD and MDGs priorities in national development frameworks • Mobilize the potential of United Nations reform • Develop national capacity through South-South cooperation • Mobilize global and regional technical resources and networks to provide integrated technical and programme support • Has supported a number of key activities: • UNFPA’s regionalization process • Global efforts to improve the quality of UNFPA’s work • Responding to key global events (e.g., the London Family Planning Summit, the 7 Billion Campaign)

  29. Key issues • Lack of clarity about nature of GRP: • Coherent programme that has a clear scope, criteria, objectives, and set of intended results, or • Funding mechanism to support all of UNFPA’s key activities at the global and regional levels • From the GRP audit: “Management should consider the most appropriate model for the Global and Regional Programme or any other programme that may replace it beyond 2013 to help UNFPA achieve the goals of its Strategic Plan.” • As with other funding channels, GRP is managed separately: • No system to coordinate GRP allocations with other funding channels (including thematic fund operating at the global level)

  30. 6. Global and Regional Programme: Next steps

  31. Next steps • Several options are being considered for streamlining • Funding to be based on set of core principles: • Based on needs • Integrated, such that the global and regional activities support the broader implementation of the Strategic Plan rather than being separated from it • Based on results on an ongoing basis • Balanced between global and regional levels, and between the different regions • A proposed approach will be discussed with the Executive Board at an informal in late April/early May

  32. Thank you!

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