Private funding in humanitarian aid: is this trend here to stay?

Major humanitarian crises in the past decade have prompted unprecedented amounts of private donations: the tsunami that caused widespread devastation across the Indian Ocean in December 2004 saw US$3.9 billion raised in private aid; the response to the January 2010 earthquake in Haiti generated at least US$1.2 billion in contributions from the general public; US$450 million was channelled in response to the 2010 floods in Pakistan; and at least US$578 million went to Japan following the March 2011 earthquake and tsunami. While global private support to specific large-scale emergencies is relatively easy to gauge, it remains unclear how much private money overall is out there in any given year.

GHA has released a new report today: Private funding: An emerging trend in humanitarian donorship. The report examines the upward trend in private donorship during the period 2006-2010 and the crucial role that delivery agencies play in mobilising and implementing private support to humanitarian crises. At a time when many government donor budgets are feeling the squeeze from the economic crisis, the levels of private voluntary contributions in humanitarian donorship are showing no such signs.

Nearly a quarter (24%) of the international humanitarian response for the period 2006 to 2010 came from private voluntary contributions, amounting to at least US$18 billion. US$5.8 billion was donated in 2010 alone, largely prompted by the emergency operations in Haiti and Pakistan. Private money as a share of the total humanitarian response grew from 17% in 2006 to 32% in 2010. Furthermore, importantly, private funding has remained consistent, even without the driver of mega-disasters and despite a severe global economic crisis. This trend has not escaped aid agencies, which are paying special attention to private donors. For many organisations, private money is the answer to the dilemma of how to keep responding to the growing number of aid challenges when there are limited government resources available.

Financial tracking aside, the inclusion of private voluntary contributions in the analysis of global humanitarian assistance has a significant effect on our view of the humanitarian delivery system. Non-governmental organisations (NGOs) have replaced United Nations (UN) agencies (collectively) as the largest players. Nevertheless, the World Food Programme (WFP) remains the largest humanitarian organisation, with related income of US$3.2 billion in 2010, representing 45% of all humanitarian income to the five UN agencies analysed in the report.

The report estimates that non-governmental organisations (NGOs) collectively raised US$8.7 billion in 2010; of this, US$4.9 billion came from private sources, an average of 57% of NGOs’ income over the period. NGOs have been the main channel for private support, experiencing a 70% increase in private funding from 2009-2010.

Certainly, some big NGOs also manage huge humanitarian budgets. Médecins Sans Frontières’ (MSF) total humanitarian income has fluctuated between US$0.7 billion and US$1.2 billion in the years between 2006 and 2010. Yet MSF is also the organisation that receives the largest proportion of its income as private money: on average 90% in that period. In 2010 the NGO raised US$1.1 billion in private money. If it were a country, MSF would have been the second largest humanitarian donor after the United States and ahead of the United Kingdom, based on preliminary data for government donors.

The scale and weight of the Red Cross Movement’s role is also worthy of close attention: the report estimates a global budget of at least US$3.2 billion in 2010. Of this, US$1 billion was channelled through the International Committee of the Red Cross alone and 31% came from private sources.

If tracking total private voluntary contributions for humanitarian aid is a challenging task, gauging where this private money goes is an even more difficult undertaking. Very few organisations report their private country or sector expenditure for humanitarian aid separately from their overall funding allocations. Nevertheless, this new report shows some remarkable differences between the key recipients of private voluntary contributions and those of overall humanitarian aid channelled through delivery agencies. For instance, while Palestine is the third largest recipient of humanitarian aid (second in terms of donor governments’ allocations) for the past decade, private expenditure in the country was negligible. Afghanistan, Iraq and Pakistan – three of the key countries of interest for total official humanitarian assistance – are also very low priorities when it comes to private expenditure. However, conversely, Niger and Central African Republic, which suffer from severe funding shortfalls, are key areas for allocating private contributions.

If private support to humanitarian aid is here to stay and the system is becoming increasingly reliant on this source of funding, it is imperative that we are able to gain as clear a picture as possible of its volume, and more importantly, its use. The current lack of a dedicated tracking system for this type of funding creates an information black hole both in coordinating global humanitarian aid and evaluating the impact of private funding. The volume of funding is only one part of the picture. Not every dollar of humanitarian aid can be used in the same way, nor will each dollar have the same impact on the ground. Thus, it is critical that we are able to start systematically assessing the effectiveness of private contributions in responding to humanitarian needs and tackling vulnerability.

You can view, download, or print the report from the GHA website. If you would like to receive a hard copy of the report please do get in touch with the author: Velina.Stoianova@devinit.org.