Multi-year Humanitarian Business Cases
01May 2014 to 26February2015
CHASE
26February2015
Executive Summary
The Humanitarian Emergency Response Review (HERR) of 2010 noted that DFID can use the way it funds to change the incentives facing players in the global humanitarian system. It recommended a “step change” in greater predictability of funding, particularly through multi-year arrangements, to create an incentive to tackle protracted crises. Following this, several DFID country offices (as well as two regional programmes managed from London) began to test multi-year humanitarian funding arrangements. CHASE carried out a review to identify the lessons learned from these early experiences ofdesigning and implementing multi-year humanitarian programming. The main lessons identified are below; the lessons can be used as links to the relevant discussion on them in the text.
Lessonsidentified
- Multi-year arrangements save time on ‘process’ over their full life (see 2. below though).Staff report using this time for strategic thinking, support to more complex partner arrangements (e.g. consortia or more strategic relationships), and enhanced monitoring & evaluation.
- A multi-year arrangement is more time intensive in the design phase with more DFID and partner resources needed at this stage.
- Alignment of relevant cycles – DFID’s planning and reporting cycle, partners’ planning and reporting cycle, and relevant seasonal cycles – should be factored in from the outset; mis-timing in business case approval can undermine longer-term programmes’ chances of demonstrating success.
- Extra DFID efforts will be needed to communicate to partners and other donors that a multi-year arrangement is in place /possible, and to continually advocate for higher-order (resilience) results on that basis.
- Providing multi-year funding does not automatically lead to multi-year programmes; the ‘cascading’ of funds from DFID to ‘downstream’ partners may continue to be handled on an annual basis.
- Partners need time to make organisational adjustments to reflect the ambition and innovation proposed in multi-year business cases. This should be taken into account, with options for a ‘transition period’ or bridge between activities to maximise the use of DFID funds.
- Multi-year arrangements can facilitate programmes that deliver ‘system strengthening’ for the humanitarian system in-country more easily than annual approaches.
- Existing standard monitoring tools – designed on an implicit assumption of annual programming – are flexible enough to monitor multi-year funding as long as the supporting documents explicitly determine multiyear targets, and review teams address multi-year issues in the process.
- Flexibility in multi-year design is essential. Although the optimal level of contingency funds is unclear, they are considered essential to respond to unexpected humanitarian need and unexpected humanitarian response system faults alike.
Figure 1: Map of countries where multi-year humanitarian programmes are running
Figure 2: Generic Theory of Change for multi-year humanitarian funding
Figure 3: Indicative timelines for developing the multi-year business case
Figure 4: Bottlenecks in funds transfer?
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Figure 1: Map of countries where multi-year humanitarian programmes are running (click to edit)
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A.The Theory of multi-year humanitarian funding
The theory behind multi-year humanitarian funding for protracted humanitarian settings is that a multi-year approach will “improve cost and administrative efficiency [and] improve the effectiveness [and] the timeliness of interventions”. These improvements will come through administrative and operational cost savings (e.g. through advance procurement), through creating time and space for trying and learning from new programmes, and through making investments in relationships and capacity to be able to implement more strategic long-term programmes.[1]
Many of the foreseen benefits of multi-year approaches are simply the removal of some of the absurdities of annualised (or even shorter) funding cycles in years/decades long humanitarian settings – yearly preparation of new proposals for similar activities, short and unpredictable contracts that lead to high staff turnover, procurement at short notice and high cost, etc.. There are also higher order potential benefits,related to strengthening the skills, relationships, and systems that are used to respond to humanitarian needs and so changing the nature of possible interventions.
There are several types of multi-year funding solutions within DFID. Some arrangements are managed centrally, such as Programme Partnership Arrangements (PPAs) with NGO partners or multilateral partnerships in disaster preparedness and climate adaptation. But much of the investment in multi-year funding has been at country and regional level, and this is what the practice discussed here focuses on.
The theory of this kind of country levelmulti-year humanitarian financing has beenoutlined in many places. The ‘generic’ Theory of Change in Figure 2 tries to unify these sources. It draws mostly on the Humanitarian Emergency Response Review (HERR), the Guidance on Multi-year Humanitarian funding, a study on the value for money of multi-year humanitarian funding, and from insights from interviews done for this review (you can see all the document sources in the Referencessection).
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B.Practice of multi-year humanitarian funding
Multi-year humanitarian funding was stepped up in DFID from 2011 on, although some multi-year funding (e.g. through pooled fund mechanisms) had been done before that. There are now ten country offices running 15 multi-year humanitarian programmes – Bangladesh, Burma, Democratic Republic of Congo, Ethiopia, Kenya, Mozambique, Pakistan, Somalia, Sudan, and Yemen. There are also two regions covered from London – the Sahel, and Syria region – with another three multi-year business cases active for a total of 18.[2] A multi-year business case is being developed for Afghanistan.
The business cases range from two to five years, although the most common length is three years. The total amount programmed is almost £1.7 billion, or £947 million if Syria is excluded, with an average size of £63 million (excluding Syria). During the 2012-2013 DFID financial year, multi-year humanitarian funding made up an estimated12 percent of all bilateral humanitarian funding.
A majority of the business cases are written for contexts that face both natural and conflict hazards. These range from conflicts that are very dynamic (Syria) to currently less visible (Burma), and from highly predictable natural hazards (monsoon in Bangladesh) to chronic underlying natural risks that are less easily predicted (drought risk in Horn of Africa).
DFID has partnered with a wide range of organisations to implement the overall design of each business case. The most frequent partners are ICRC, UNICEF, WFP, and UNHCR from the multilateral side; a wide range of NGOs are partners with Save the Children, CARE, and Oxfam most frequent. This range of partners expands when downstream partners are considered though it hasn’t been possible to map these in the context of this review.
In practice, three ways of doing multi-year funding have emerged in DFID. The first is a kind of ‘umbrella’ arrangement, that covers many sectors and many partners, and in the case of regional approaches, many countries. A second is a ‘thematic’ arrangement that covers many partners, but a single, often cross-sectoral,‘theme’. Finally, there are ‘partner-specific’ arrangements where a single partner may cover one or many sectors. For example, both DFID Ethiopia and DFID Kenya fund nutrition-focused multi-year programmes. DFID Ethiopia has a single partner (WFP), DFID Kenya works through both UNICEF and NGOs; the first is a partner-specific approach, the second ‘thematic’. This paper tries to separate lessons related to each of these specific arrangements, though this isn’t often possible. A grid showing suggested advantages and disadvantages of each approach is at Annex 1.
This is a snapshot of where multi-year humanitarian programming is at the end of 2014; the next section goes into more detail on the process of developing the business cases, their content and the programming that’s come from them, and the lessons learned from the early experiences of implementation. The methodology used to identify lessons is at Annex 2.
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C.Lessons Identified
i.Time saving and timing
One of the major anticipated benefits of multi-year funding was that it would shift time and money away from the ‘transaction costs’ of requesting, approving, and managing funds to implementation tasks such as planning, monitoring, and learning. This benefit was widely, though not universally reported among DFID advisers. Feedback was that the "admin burden is a lot less" with multi-year arrangements.
Part of this is attributable to a business case process that was considered “onerous” anyway, and that may improve with introduction of the ‘Smart Rules’. However, the multi-year nature of the business case itself was reported by most to still save time just from “not having to do same thing every year”. One adviser estimated the time saving was equivalent to about two months in each year subsequent to approval. There was a strong feeling that these admin time-savingsalone meant that multi-year funding “just makes sense" and that cutting down business case writing time has “got to be a good benefit”. Expected time savings weren’t always realised – the complexity of some business cases, with many partners, sectors, and areas to cover (‘umbrella’ business cases) resulted in heavier design and, later, review processes than normal.For the Syria business case, the largest that DFID has worked with, this was a considerable challenge.
What did advisers do with the time saved in subsequent years? It was reported that this went into planning (including strategic planning) and monitoring. It also seems that a lot of saved time was diverted to partner relationships.[3]Many countries have quarterly meetings with partners, additional to the agreed reporting as a kind of governance forum and to discuss progress (see below under Partner and Government relationships). In these, Advisers reported the feeling that they are still ‘selling’ the multi-year approach to some partners.
1)Multi-year arrangements save time on ‘process’ over their full life (see 2) below though). Staff report using this time for strategic thinking, support to more complex partner arrangements (e.g. consortia or more strategic relationships), and enhanced monitoring & evaluation.
That said, it was clear that multi-year funding was found to become time-saving only after the first year. Doing the business cases in the first place was at least as, but often moretime consuming than for an annual programme.This extra time mostly came from more complex design. Deeper analysis for complex design means “slowing [the] whole process down”, new arrangements with partners such as consortia added complexity, and it was pointed out that as multi-year business cases are also likely to be larger in funding they will meet with more compulsory scrutiny processes such as needing review by the Quality Assurance Unit. For this reason, some Advisers felt that requesting a longer timeframe – or an option to easily extend the business case for more years – would have been a good idea.
UN agencies have fed back that multi-year commitments are felt to bring more flexibility overall, even if monies are still programmed on an annual basis UNHCR HQ). Further than that, the confidence of having multi-year funding allows an increased risk-appetite for and confidence in working in some difficult contexts (ICRC HQ).[4]
Not just time, but cost savings are part of the rationale for many multi-year arrangements. Efficiency savings, security to negotiate longer-term agreements, and greater flexibility in procurement are the main anticipated drivers of such savings. A general calculation of the rate of cost savings realised couldn’t be made in the course of this lessons review, although there is a long-term evaluation that will be able to look into more detail on ‘value for money’ questions. Early indications from the Ethiopia multi-year programme with WFP however, are that savings of up to a third of the standard cost have been possible through advance planning for local procurement of food relief at the lowest prices (immediately after local harvests). This saving has been translated not just into more of the same general relief, but was also used to flexibly target specific groups such as pregnant and lactating women.[5]
2)A multi-year arrangement is more time intensive in the design phase with more DFID and partner resources needed at this stage.
There are other interesting aspects of timing distinct from time-saving that affect multi-year business cases. The actual date of the launch of the business case, the inception phase, and the start of full implementation emerged as an important element in interviews. Many Advisers reported that one of the things they would do differently in the business case was to time it better in relation to three other cycles – DFID’s planning and reporting cycle; partners’ planning and reporting cycle; and to a lesser extent the seasonal cycle (some countries don’t have strong seasonal effects).
For some, misalignment with these cycles caused minor “awkwardness” e.g. necessitating an ‘extra’ Annual Review to make sure future Annual Reviews could be done once partner reporting had been received and yearly from then on. In other cases, having a number of activities under a single business caseled to a heavy process to complete manyAnnual Reviews simultaneously. But it might have larger effects. One Adviser mentioned that a late release of funds “undermined [the] evidence base from the outset” because a baseline survey could not be carried out at the appropriate time. Unlike with annual funding, this second example could have knock-on effects for the life of the business case and make some work – multi-year livelihoods work is a good example – harder to achieve or to demonstrate achievement even with multiple years to invest in working on it.
The inception phase of multi-year business cases has varied though it’s reported that the inception period is often hurried with agreements part-finished before it closes.This is not least because the multi-year funding is in contexts where agencies typically have established systems, and to some extent a mind-set, for delivering response programming. For example, it is clear By the nature and ambition of multi-year financing, the inception phase may need to include an emphasis on DFID joint policy planning. This would facilitate more of a common vision on the aims of the business case and policy collaboration.
A single appropriate timeframe for developing a business case can’t be identified but Figure 3 below contains some examples that might provide orientation for time management.
3)Alignment of cycles –DFID’s planning and reporting cycle, partners’ planning and reporting cycle, and relevant seasonal cycles–should be factored in from the outset;mis-timing in business case approval, for example, can undermine longer-term programmes’ chances of demonstrating success.
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ii.‘Cascading’ funds
One lesson was neatly summed up by an Adviser as “just because you give people multi-year money doesn’t mean you get multi-year strategies”.It might be expected that there will be a certain lag-time between the approval of multi-year funds and adaptation of strategies and programmes to take full advantage of it. However, the feedback from advisers is that the rate of adaptation is slower than expected and needed.
This was attributed partly to just being something that needs more time to emerge as “It’s very new, a learning process”. Some partners may even have overlooked that there wouldn’t be an annual chance to apply for funding in the same way as with repeated annual processes.Even in the earlier business cases approved in 2011 which are now nearing the end of their term, Advisers reported that some partners have still not “got it”. A Bangladesh partner reported that there is a “shift in the mindset” involved. In one case, a partner returned funds when the humanitarian space contracted and they were unable to utilise it – this was a large amount of funding as it was intended for multi-year use, and caused “a heap of headaches internally”. However, feedback from this partner was that the flexibility to use funding as needed rather than multi-year funding per se was required (see more on the need for flexibility under Monitoring, evaluation, and learning below).
This review did not include discussions with funded agencies at the country level, though feedback from DFID country offices suggests that agencies have a stronger opportunity to reap benefits from multi-year funds if it is well communicated, jointly planned, and comes with sufficient pre-agreed contingency measures should the operational situation deteriorate.
There is still a sense in which "it's not clear what [implementers] are going to do differently". Many Advisers stressed that the ‘big wins’ of multi-year funding in terms of changed, resilient programming are not demonstrated (although uncertainty about what resilience means in a given context confuses this). Nevertheless, this applies very unevenly across partners, with some responding well to the multi-year arrangement. At least in some cases there have been proposals that are “a lot smarter, a lot more ambitious”.