The Grand Bargain is key to increasing humanitarian funding to Southern NGOs – but there’s a risk it will fail to deliver

The World Humanitarian Summit in Istanbul is fast approaching, and we’re preparing to participate in what could be the most important conversation about humanitarian funding yet. But there’s still a high risk that the summit will fail to address key drivers for change laid out in the High Level Panel on Humanitarian Financing report, Too important to fail: addressing the humanitarian financing gap.

Despite its innovative format, it is possible that the summit will fail to produce concrete enough outcomes, and that the accountability and follow-up around implementation will be too weak.

As explained in our last blog post, Mango has made significant strides in the creation of internationally recognised NPO financial management standards, which will be a key enabler in building the confidence of donors to direct more money to national NGOs. In January we partnered with the African Academy of Sciences to help them develop the first ever pan-African standard in Good Financial Grant Practice (GFGP), to be piloted in 2016/17. We are also a member of the ICVA humanitarian financing steering group that is feeding into high-level discussions with the UN ahead of the Summit.

Mango has been calling for greater local and national participation for years, and we fully support the aid localisation target carved out by Charter4Change, seeking commitment from INGOs to channelling 20% of funding to local partners by 2020. This movement could pave the way for even higher levels of local funding – but only if donors, INGOs, local NGOs and global standards institutions work together to address the key drivers behind making that a reality.

Unless key strands of the Grand Bargain are properly addressed, we won’t see an increase in the proportion of humanitarian funding channelled to local NGOs.

We are particularly concerned about the lack of clarity and consensus there has been on the following points:

1. Targets for funding levels for national and local responders, both for donors and aid organisations
   There has been a fierce debate about whether the Grand Bargain will set an ambitious measurable target for both INGOs and donors to increase the proportion of LNGO funding from the meagre 2% or less that it has been up to 2015.  We now believe there will be a firm target of 25%, but until the key donors sign up to this and confirm how it will be measured then NGOs will need to continue to watch this very closely.
    
2. Targets (or something more concrete) about the ambition to increase cash programming
   The high level report underscored that ‘only 6% of all humanitarian aid is currently provided through cash or vouchers’ despite recognising that ‘cash consistently emerges as more efficient than in-kind aid’ and can cost 25-30% less to implement than the latter. It is deeply concerning that, in stark contrast with the clarity of the high level report, pre-Summit communication from the UN on this issue is so vague. This looks like it will be a massive missed opportunity at the summit, which will reduce value for money and more importantly restrict the flexibility of implementers to help affected populations help themselves.
    
3. What ensuring transparent cost structures means in practice
   Does the emerging commitment around transparent cost structures signal a shift towards standardising cost recovery? If so, how will that work? Mango and Bond recently published the results of Phase 1 of a joint cost benchmarking survey of UK and European NGOs, which revealed that the UN currently awards the lowest rate of cost recovery compared with other donors. It also confirmed that there is no ‘one size fits all’ approach, and that better understanding of costs coupled with improved dialogue with donors will be key to improving efficiency. We therefore welcome wider and deeper engagement on this issue.  It must not be used to squeeze implementing agencies even harder when they need indirect costs to deliver quality programmes and cover essential support activities, like ensuring the safety and security of their courageous staff.
    
4. Will the Grand Bargain endorse/mandate IATI or not?
   This is still unclear. A clear commitment to a common global transparency standard, based on IATI, is essential. As long as there remain large gaps in the transparency in the funding chain, transparency will be of limited use to either the original donor or affected populations. Wider adoption would also create the conditions needed for advancement of real-time reporting using digital and mobile technology to increase speed and agility.
    
5. Finally what might be said concretely about donor harmonising, possibly of financial reporting and pre award assessments?
   If donors cannot agree on some concrete action on harmonisation, this will be a big missed opportunity, given that a primary objective of the Grand Bargain is reduce the massive waste and administrative burden caused by current donor practices. Financial reporting is the lowest hanging fruit, as this could be simplified easily and has most potential to be standardised internationally. This would save millions of hours of time and dollars.
   
   The new GFGP initiative also offers the opportunity to standardise another highly fragmented and costly donor practice which is the multiplicity of donor pre-award assessments and project audits that currently exist.  The GFGP is due to be piloted across Africa in 2016/2017, and is being designed to provide assurance to donors that an organisation is fit for funding, thereby removing the need for donors to carry out their own pre-award or due diligence assessments.  This would this also save millions of hours and dollars.  Even more importantly, it would reduce the barriers to entry to national and local responders and enable donors and INGOs to have more confidence and lower costs in funding them.

I'll be attending the summit, and am keen to hear from other NGOs on this topic. Let us know your thoughts on the above by tweeting us at @Tim4Mango @Mango4NGOs.

You can also learn more about our campaign for standards and add your support here.