REFORMS ARE NECESSARY TO MAKE A HUMANITARIAN FINANCIAL IMPACT

The most effective way to bring down the cost of humanitarian aid is to reduce the necessity to resort to it.

Everyday many people are being displaced by violence and conflict,while more people per day are forced from their homes by natural disasters, of which majority are because of weather related events. Today, with violent extremism and climate change those figures are get higher as will the costs to respond.  There is a need to scale up the humanitarian financing.

Humanitarian financing, in its current form, is not equipped to address the number and scale of prolonged emergencies that the world is facing. Reforms are crucial to maximise limited funds for field programs, to ensure funding for crucial early action and to tackle longer-term goals.

 The daunting scale of the humanitarian funding gap is because of the enormous challenges to sustain the impact under the changing environment. There is a need for new instruments of measure as well as understanding what success means. 

 While, the need for more finance is clear, there is an issue that is seldom discussed or often set aside as not part of the conversation or debate. These issues or concerns is commonly referred to as the “elephant in the room”. The issue to financial challenges will continue to perpetuity until and unless we adress what has not been spoken.  

 So the set the scene in perspective below are some of those issues/concern which do need serious discussion in make this a better place to live and eventually stop the perpetual issue off the lack of funds.

1.    There will always be an insufficient amount of funds– so the question to the Nongovernmental Organisation (NGO), Civil Society Organisations (CSO) and the nonprofit organisations (NPO) is how can they become financially independent and ensure they can raise their own income instead of depending on external sources. 

2.    The human population will only grow– If we collectively do not take any concerted effort to reduce the world human population we will only bring downfall to the next generation and the one after that. Climate change, enviromental disasters, food shortage, water shortage, job unemployment,  immigration control,  health and diseases, lack of education, poverty will continue to escalate with the rate og population growth and will only continue to bring great suffereing to the young.  A time can may come when the planet cannot cope anymore and we could find conflicts, invasions and war simply for for water, food and oxygen. This is when the human war for survival could start. Countries may regulate impose a fine or enforce criminal charges for families that have more than their actual stipulated number of children as per regulation. The days of the one child per family policy could happen again but globally just like what happened in China in 1979.

3.    Do we really care? Do our leaders who have been bestowed the role to make decisions for the benefit of society do really care. If they did and were serious about it then why are we still having such issues happening. The core universal values of  respect, honesty, trust and compassion does not seem to have been instilled to all leaders and yet many of them sit in the room to make decisions of what is best for mankind or for the benefit of people and planet. If we really are a society of great values, why do we need a budget to buy defence material and why do we need to invest so much into the 17 Sustainable Development Goals? 

 

To the pragmatist the elephant in the room brings little value to solving the present problem. It only raises more discusisons and more time and money wasting because there is an immediate urgency to act now and the general belief is that nothing will change.  But the point is can we not discuss the elephant in the room, it is important to also focus on the long term gain so that future efforts to raise capital and resources will be manageable. 

 

WE NEED REFORMS AT A WHOLISTIC LEVEL TO CLOSE THE GAP

Efforts to reform government are often dependent on a small group of actors, ranging from CSOs, professional associations, media, government institutions, and international donor agencies. We need reforms that will help tackle the Humanitarian Financing dilemma. 

Below are some examples of possible reforms necessary (this list is non-exhaustive).

  • Security Reform

  • Legislation Review

  • Maritime Patrol

  • Laws Against Marginalized Groups 

  • Media Reform

  • Investigative Journalism 

  • Access to Information 

  • Freedom of the Press 

  • Freedom of Expression 

  • Good Governance

  • Accountability Transparency

  • Check & Balances Mechanisms

  • Zero Tolerance on Corruption-Integrity Declaration of Assets

  • Investigate Criminal Breach of Trust Cases 

  • Institutional Reform

  • Separations of Power Independence of Judiciary

  • Fair Appointments (to Key Government Positions) 

  • Empowerment of Constitution

  • Consultative Policy-Making

  • Free & Fair Elections 

  • Reform of Environment and Climate Change

  • Sustainable Development

  • Access to Basic Utilities

 

To address these reforms effectively would require research. The Social Network Analysis (SNA) is a method that has been proven is a method that can provide a perspective to help determine the state of cooperation among organizations (Business, Nonprofits, and Foundations etc.) dedicated to government or nation reform issues in each country or as a globe. The SNA approach to research can examine both the content and pattern of relationships in order to identify the impact of these relationships on the functioning of individual actors and the entire network. 

The findings from the SNA research is useful in determining many issues of importance ranging from levels of engagement, shared interest and obstacles to collaboration. SNA can also offer on what could be most influential for government reforms. This is what is needed in today’s governance especially when most humanitarian matters do have a strong interconnectedness between countries and do not recognize political borders.  If this can be addressed, we could reduce our need for financials.

FINANCIAL INTERVENTIONS

So, what do we do to fill the gap right now? Although the global philanthropic funds, when combined with the development or aid budgets of governments, add up to billions of dollars, it is still not enough as the cost of solving the world’s most critical problems run into the trillions. 

To attract more private capital, Foundations/Organisations/Individuals must pursue innovative financial solutions that will use financing mechanisms to mobilize private sector capital in a new and more efficient and scalable way to solve social, economic, and environmental problems globally. 

 To make this happen:

a.              The Return of Investment (ROI) must be even more attractive

b.             Risk management to the untap investments must be mitigated effectively and proactively

c.              The investor confidence must be built by offering the financial analyst a know-how of how to assess or rank social, environment, and governance matters.

 Thus it is so vital to have better forms of measurement in order to satisfy the investor or donor.

 

The Roberts Enterprise Development Fund (REDF,) which measures social value through a process of six stages developed a modal that can help bring a form of measure through assessment. It is called SROI. SROI is the acronym for Social Return of Investment. 

SROI = Value of Social Benefits – Value Social Costs / Value Social Investment

The above formulae is based on the cost-benefit analysis modal. From the data calculated we can obtain a SROI ratio. The data will be expressed in financial figures. This ratio can form the basis of what will trigger or indicate if there is a need for further investment or to track if things are moving. 

 

Supposing we replace this formula to a Humanitarian ROI by calling it HROI.  Would this work? See below:

 

HROI = Value of Humanitarian Benefits – Value Humanitarian Costs/ Value Humanitarian Investment

The challenge now would in knowing how do we measure or calculate humanitarian benefits? How does one put a score or value in terms of monetary currency to benefits such as dignity, security, safety, reduction of suffering, or alleviation of poverty. Until we can measure the humanitarian benefits the constant challenge is to convince the investors/funders and to innovate. 

As Peter Druker once said “if we cannot measure it, we cannot improve it.” In other words, it is hard to define success if one cannot define and track.

 

BIBLIOGRAPHY

  1. Innovative Finance for Development Solutions initiatives of the World Bank group. Pp1-30.

  2. High-Level Panel on Humanitarian Financing Report to the Secretary-General -Too important to Fail—addressing the humanitarian financing gap. Jan 2016.  Pp1-31.

  3. Innovative Financing For Development: Scalable Business models that produce economic, Social, and environmental outcomes. September 2014. Pp1-31.

  4. Human rights Impact Assessment Guidance and Toolbox. Nora Götzmann, Tulika Bansal, Elin Wrzoncki, Cathrine Poulsen-Hansen, Jacqueline Tedaldi and Roya Høvsgaard. 2016 The Danish Institute for Human Rights Denmark’s National Human Rights Institution. Pp1-30

  5. Malaysian Reform Initiative (MARI). Networks of Government Reform by Erich Sommerfeldt, PhD. IMAN Research. July 2019.

  6. From promise to delivery: Overcoming the strategy problem in the public sector. Daniel Cramer, Johanna Hirscher, Gundbert Scherf, and Sven Smit. McKinsey & Company. July 2019.

  7. Strategy Beyond the Hockey Stick: People, Probabilities and the Big Moves to Beat the Odds. McKinsey and Company. Wiley, February 2018.

  8. Social Ventures Australia Consulting, 2012. Social Return on Investment:’ Lessons learned in Australia’ [pdf] Social Ventures Australia Consulting. Available at:  <https://www.socialventures.com.au/assets/SROI-Lessons-learned-in-Australia.pdf>[Accessed 8 August 2019]. 

 

PURPOSE OF THIS ARTICLE

It is intended that the reader receives some benefit from understanding the issues associated with Humanitarian Financing. The other purpose is to provide an avenue for the nonprofit sector to debate and challenge this article with arguments based on critical thinking thereby elevating the conversation and making change for the better.

 

AUTHOR

Dr. Sudeep Mohandas is the Co-Founder and Managing Director of I First International, a company that provides professional management consultancy to the Nonprofits (NGO, Social Enterprise and Cause based organisations). He is the author of two books on nonprofit management and has written many articles and shared management tips over videos related to the sector. He can be reached at sudeep@ifirstinternational.com. Visit www.ifirstinternational.com