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Private funding of humanitarian aid grows, emerging markets eyed

Source: Thomson Reuters Foundation - Tue, 29 Apr 2014 17:26 GMT
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Women and children, displaced by fighting between rebels and government troops, wait to collect food rations in Mingkaman refugee camp in South Sudan in this handout picture released to Reuters March 24, 2014. REUTERS/Kate Holt/UNICEF/Handout
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LONDON (Thomson Reuters Foundation) - More than a quarter of international humanitarian aid came from private donors between 2008 and 2012, as governments struggled to keep pace with the rising needs of people caught up in disasters and conflicts, new research showed on Tuesday.

report from the UK-based Global Humanitarian Assistance (GHA) programme said private giving - by individuals, foundations and businesses - is a growing source of funding for humanitarian aid. Private donations totalled an estimated $23.5 billion in the five-year period. 

U.N.-led aid appeals had the lowest level of response in over a decade last year, the report said. "Humanitarian response agencies are looking beyond donor governments to other sources to fill the gap," it said.

"As humanitarian needs grow and the budgets of many traditional donor governments shrink, many agencies are now looking to diversify their funding sources, both in established markets and in emerging markets," Saleh Saeed, CEO of the UK's Disasters Emergency Committee (DEC), told the report launch in London.

Some agencies are expanding their fundraising efforts beyond Europe and North America, their traditional areas, to Asia, the Middle East and Latin America, the report noted.

There is also significant potential for aid donated through "zakat", the Muslim practice of charitable giving based on accumulated wealth, facilitated by the emergence of more Islamic international development charities, it added.

Aid charities still rely heavily on individuals, who accounted for 88 percent of their private funds in 2012, an increase from 78 percent in 2010.

Between non-governmental aid groups there is a big difference in the proportion of funding that comes from the private sector. Medecins Sans Frontieres (MSF), which prefers not to take government money, raised close to 25 percent of all private humanitarian assistance in 2012 - almost three times as much as the 23 other agencies the report tracked together.

Private funding allows an agency to be "more independent, and to react based on need" rather than political agendas, improving the efficiency of the aid system, said Jordi Passola, fundraising coordinator for MSF.

U.N. agencies, and especially the U.N. refugee agency, UNHCR, meanwhile, have ramped up their share of private funding from companies. In 2008, they received less than 1 percent of humanitarian funding from the business sector, but in 2012, this had increased to 15 percent.

MORE SUPPORT FOR NATURAL DISASTERS

GHA said humanitarian agencies value the flexibility and reliability of private funds "because they come with less earmarking and a longer time frame than funding from institutional or state donors".

But private donors don't respond equally to different kinds of crisis. "While the public can be relied upon to respond generously to rapid-onset, natural disasters ... slower-onset, chronic crises such as those relating to internal conflict tend to attract less support," the report said.

The Indian Ocean tsunami received record levels of private funding in 2005, as did the Haiti earthquake in 2010. Private support for Haiti has continued – in 2012 it was the top recipient of private funds, but only the 15th highest recipient of bilateral government funding.

Figures from the DEC, an umbrella group of 13 UK charities, show that the amount raised by appeals for natural disasters is on average more than three times higher than for conflict-related crises.

Jane Smallman, international programme manager for disaster relief with Business in the Community, a British charity, said companies tended to focus on "less complicated natural disasters", staying away from places with high political instability or corruption risks.

Only two of the top five recipients of bilateral government aid in 2012 – South Sudan and Somalia – were also among the top five recipients of private funds. Syria, for example, was a high funding priority for governments but less so for private funds, the GHA report noted.

NEED FOR TRANSPARENCY

Overall, donations from individuals still make up the vast majority of all private humanitarian assistance, totalling an estimated $3 billion or 82 percent in 2012, dwarfing contributions from foundations (7 percent), private companies (5 percent) and national Red Cross and Red Crescent societies (5 percent).

The report said corporate support is particularly difficult to measure as it often goes beyond a donation of cash or goods. More businesses are giving their skills, staff time or technology in disasters - to move aid supplies, for example - and others have entered longer-term partnerships with aid agencies.

"However, the relationship between humanitarian actors and the private sector is complex, as it presents potential conflicts of interest and ethical questions, as well as practical ones of timescale and coordination," the report noted.

In general, it emphasised the lack of "systematic reporting of private funds", which makes it "impossible to gauge accurately how much there is, or where and how it is spent".  

"If we are truly to harness the humanitarian potential of these non-state sources of funding, and in an ideal world, help find complementarity and inter-operability...we need to know for starters what numbers we are dealing with," said GHA programme leader Sophia Swithern.

The report called for greater transparency, urging all donors to publish their humanitarian funding to the International Aid Transparency Initiative (IATI).

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