Gaudenz Silberschmidt is Director a.i. for Coordinated Resource Mobilization at the World Health Organization.
Guitelle Baghdadi-Sabeti is Technical Officer at the World Health Organization.
WHO's primary role is to direct international health within the United Nations' system and to lead partners in global health responses.
The authors are staff members of the World Health Organization. The authors alone are responsible for the views expressed in this article and they do not necessarily represent the decisions, policy or views of the World Health Organization.
The former Secretary-General of the United Nations, Ban Ki-Moon, referred to the World Health Organi-zation’s (WHO) financing reform as a model for other agencies1. What are the key features of this model compared to other United Nations (UN) agencies that makes it a good example to follow? What have been the key achievements? What are its limitations or challenges, and what can we learn from it? While the reform process initiated in 2011, following the financial crisis, contin-ues to be implemented some of these qcontin-uestions can be addressed and help promote a culture of learning and ensure lasting change for the organisation.
‘WHO began an extensive reform with the aim to improve the alignment, flexibility, predictability and transparency of its financing. An important part of this reform was a financ-ing dialogue... The WHO structured dialogue process is one that other United Nations entities could adopt, that is, by adjusting their current practices in order to improve the level and predictability of core funding. Learning from the struc-tured dialogues of WHO, for the 2014-2016 period, the Executive Boards of UNDP, UNICEF and UN-Women adopted decisions to hold annual structured funding dia-logues. Such dialogues could also provide an opportunity to make a stronger case for funding for those areas of work that are essential to the mandates of the entities but for which adequate levels of funding are difficult to achieve.’
- Ban Ki-Moon,UN Secretary-General (2007-2016)
WHO’s financing model
While the organisation-wide reform WHO embarked on in 2011 encompassed programmatic, governance and management components, the reform was triggered by the 2008 financial crisis and exchange rate losses.
The organisation’s financial situation was hampering its ability to deliver the expected outputs and to respond
rapidly to emerging health issues. It eventually led to the loss of 1,000 positions. Even though the reform has been comprehensive, the financial reform and the develop-ment of a new financing model have been at the centre of the process.
The features of WHO’s new financing model have already been described in the two previous reports on Financing the UN development system, but there are three essential features that garner further attention. First, WHO is currently one of the few UN organisations ap-proving the entirety of its Programme Budget, integrat-ing the Assessed Contributions (AC) as well as the Vol-untary Contributions (VC) into one single budget. Since the Programme Budget 2014 – 2015 was approved in May 2013, there is no distinction between core and non-core, nor appropriation of the AC. There are no longer any projects financed and implemented outside of the approved programme budget. Thus, any activity needs to fall within the approved programme budget, with the exception of outbreak and crisis responses which cannot be planned in advance as they are event driven.
A second important new measure is the strategic use of pooled flexible resources, comprising AC, flexible volun-tary contributions and Programme Support Cost (PSC).
In line with the reforms endorsed by Member States and starting with the Programme Budget 2014 – 2015, the
Financing of the UNDS
Director-General adopted a strategic approach to the allocation of flexible resources in several tranches during the biennium, based on systematic analyses of financ-ing shortfalls, which ensured that all programmes were financed to sustain operations.
Lastly, the World Health Assembly (WHA) launched the Financing Dialogue process in 2013 aimed at ensuring a fully funded programme budget. The Financing Dia-logue not only focuses on the volume of the funding, but also on its quality by promoting a set of principles.
These principles include (i) increasing the predictability of the funding at the start of each biennium; (ii) improv-ing the alignment of contributions to the programme budget; (iii) increasing the flexibility of financial resourc-es to fill the funding gaps faced by some programme ar-eas; (iv) improving the transparency of financial revenues and flows; and (v) broadening the base of its contributors in order to reduce its vulnerability by being reliant on a limited number of contributors for the large proportion of its resources. The promotion of these principles has had significant impact on the funding of the programme budget, leading also to improved planning and imple-mentation. Progress on each of the financing dialogue principles is detailed below.
What has been achieved?
With the introduction of the financial reform and a real-istic level of budgeting, the overall income trends are now proportional to the budget levels. More specifically, the main results of the financial reform include an increased level of financial predictability at the start of the biennium, an overall solid level of funding across the organisation and an improved transparency on funding and results.
The level of predictability in the financing of the programme budget in advance of implementation has improved since the introduction of the financing reform.
At the start of the biennium 2012–2013, 62% of the financing of the budget segment for base programmes was assured. This figure increased to 77% for the bienni-um 2014–2015 and 83% for the biennibienni-um 2016–2017 putting WHO on a stronger financial footing over the years. Nevertheless predictability in the current bienni-um remains insufficient.
with a staff/activity split including details on the types of activities. Moreover, the web portal has been enhanced to ensure that WHO is in compliance with the Interna-tional Aid Transparency Initiative standard.
Remaining challenges
and the way forward in addressing them While significant progress has been achieved with in-come doubling from 2000 to 2015, numerous challenges still need to be addressed. For instance, WHO still relies heavily on voluntary contributions compared to assessed contributions (AC). Since 2010, only about 20% of the programme budget is funded by AC, compared to close to 50% in 1990. Moreover, the level of fully flexible voluntary contributions has been declining significantly since 2012 – 2013. In 2016, the total flexible voluntary contributions received amounted to US$ 81 million which represents close to a 40% reduction to the contri-bution levels in 2012 to 2014.
This is an important concern as the total level of flexible funds (AC, flexible voluntary contributions and PSC) have not kept pace with the increase in voluntary ear-marked contributions. This has caused an over-reliance on voluntary earmarked contributions which has skewed the financing compared to the prioritisation of the programme budget. This trend is continuing into 2016-2017 and the balance between the two is predicted to be the same as 2014-2015 (see figure below). To address this worrying trend WHO is working on several fronts including a 3% AC increase request which was approved by the 2017 WHA as well as exploring the introduction of various levels of flexible funding aligned with our results structure (eg by category or programme area).
While these efforts will not be sufficient to solve the issue of reduced flexible funds, reversing these trends will be important for securing the future of the organisation.
Since the introduction of the reform, alignment of funding has slightly improved mainly due to the strategic use of pooled flexible resources described above. Un-fortunately, this has not been sufficient to fill all funding gaps and some priority areas such as noncommunicable diseases and the health emergencies programme face sig-nificant funding shortfalls. Mid-way through the current 2016 – 2017 biennium, the noncommunicable disease
Financing of the UNDS
tance (ODA) funding decisions. The latter are not always in line with the former, leading to significant disparities.
A deeper dialogue with donors on their priorities and needs, as well as bringing the various players within one member state around the table brings light on these issues and helps rationalise the decisions.
The broadening of the contributors’ base has been slow and WHO continues to rely heavily on a limited number of contributors for the majority of its funding. In the last bi-enniums, only five contributors provided almost half of the total VC and a total of 20 contributors account for close to 80% of the total VC. It is hoped that the new Framework of Engagement with non-State Actors, adopted in May 2016, will help attract new contributors, as it provides clarity on a set of policies and operational procedures on engagement with non-governmental organisations, private sector enti-ties, philanthropic foundations and academic institutions.
Conclusion
All these efforts need to be embedded in a compre-hensive and organisation-wide resource mobilisation
approach which is continuously improved to respond to evolving challenges. The immediate resource mobil-isation priorities will focus on exploiting the growing funding potential at the country level by developing and implementing targeted local resource mobilisation in countries; taking the Financing Dialogue (FD) to the next level by enhancing the process of engagement with contributors in the lead-up towards the FD meeting, and articulating an investment case which demonstrates returns within the SDGs context and positioning WHO in the complex global health architecture.
Finally, this reform is a joint journey between WHO, its Member States and its contributors. It can neither endure nor advance without trust. Trust is built and maintained by many small actions over time and some of the initial efforts planned include the development and implementation of a value-for-money plan, meaning that efforts and resources are optimally deployed and that results achieved in terms of health impact and contribu-tions to the SDGs are better articulated and reported.
Figure 27: Level of flexible funds and Voluntary Contributions Specified, 2000-2015
0 1,000 2,000 3,000 4,000 5,000
Voluntary Contributions Specified Flexible funds
2014-2015 2012-2013
2010-2011 2008-2009
2006-2007 2004-2005
2002-2003 2000-2001
US$ millions
46%
54% 49%
61%
60%
62% 63%
68% 71%
51% 40% 39% 38% 37% 32% 29%
Footnotes
1Implementation of General Assembly resolution 67/226 on the quadrennial comprehensive policy review of operational activities for development of the United Nations system: report of the Secretary-General, (New York: United Nations; 2015), A/71/63–E/2016/8.
2WHO, ‘WHO mid-term programmatic and financial report for 2016–2017, including audited financial statements for 2016’, (financial report, World Health Organization, 2017)
Sven Grimm is a Senior Researcher at The German Development Institute (Deutsches Institut für Entwicklungspolitik), which is one of the leading think tanks for global development and international cooperation worldwide. The institute’s work is based on the interplay between research, policy advice and training.
Zhang Chun is a Senior Researcher and Director of the Institute for Foreign Policy Studies at the Shanghai Institutes for International Studies. The institute is dedicated to advancing China's knowledge of inter- national affairs, improving its foreign policy- making, and facilitating Shanghai's opening-up and modernisation.