How earmarking has become self‐perpetuating in United Nations development co‐operation

Abstract

Motivation The share of earmarked funding to the development pillar of the United Nations (UN) has risen to a record level of 79% (2018) of its total revenue/spending. This poses severe implications for the organizational efficiency, aid effectiveness and multilateralism of the UN. Reforms have not been able to stem the trend towards earmarked funding, raising the question of what explains the continued rise of earmarking in the United Nations Development System (UNDS). Purpose This article aims to add a new perspective on earmarking, specifically in the UN. It tries to explain not the root causes of earmarking, but the dynamics of the significant rise over the last decade. The argument is that earmarking has been driven by three vicious circles: by the rational factors associated with a collective action breakdown, a change in norms of appropriateness, and institutional fragmentation. Approach and methods The article draws on funding data from the UN, on 65 interviews with UN staff and donor representatives conducted in the context of a recent research project, and on document analysis. Special attention is given to two donors, Sweden and Germany, dedicated multilateralists that have increased their earmarked resources in recent years. Findings Conventional explanations of earmarking in the UN—dissatisfaction with the performance of UN organizations, the desire for more accountability, policy differences with organizations—cannot fully explain the significant rise in earmarking over the last decade. Empirical evidence supports the hypothesis that the UN system has reached a tipping point, so that earmarking has become self‐perpetuating. Policy implications The findings put a question mark after the premises that have so far guided practical efforts by the UN and member states to reduce the share of earmarked funding. They suggest that more fundamental changes to rules and incentives are required to rebalance the UN’s funding towards core contributions. Four specific recommendations are derived from the analysis.

Flexibly funding WHO? An analysis of its donors’ voluntary contributions

“…However, as Baumann argues: ‘Rather than ensuring a minimum level of core [funding], it might be more important to avoid a toxic level of non-core that triggers systemic change’. [Baumann, 9 p356] Unfortunately, the WGSF did exactly what Baumann warned against: it focused on securing core funding from additional ACs when the more important challenge is ‘the need to address the incentives that come with earmarked funding’. [Baumann, 9 p356] With the adoption at WHA75 of the recommendations of the WGSF, the Task Group will continue the work of the WGSF by providing ‘long-term improvements…within the mandate identified by the recommendations of (WGSF)’.…”

“…[Baumann, 9 p356] Unfortunately, the WGSF did exactly what Baumann warned against: it focused on securing core funding from additional ACs when the more important challenge is ‘the need to address the incentives that come with earmarked funding’. [Baumann, 9 p356] With the adoption at WHA75 of the recommendations of the WGSF, the Task Group will continue the work of the WGSF by providing ‘long-term improvements…within the mandate identified by the recommendations of (WGSF)’. [WHO, 41 p2] The Task Group presented a report to the Executive Board in February 2023, which describes only the ‘management’ of VCs expressed in terms of ‘efficiency gains’[WHO, 41 p6].…”

“…Another worry relates to the dominant role that VCs now play in funding UN Organisations. 9 Earmarking transfers power from WHO to donors because it allows donors to specify how their contributions are spent. It therefore has the potential to divert WHO’s focus away from its core priorities, undermine the ostensibly democratic structures of the WHA and make coordination and attaining coherence more difficult.…”

Measuring the impact of donations at the Bottom of the Pyramid (BoP) amid the COVID-19 pandemic

“…Different aspects can influence the donor’s decision about the fund allocation, such as the cultural interest in the disaster region and the trust in the local government (Aruga & Bolt, 2020 ). If on the one hand, earmarked donations play a key role in humanitarian operations (Tortora & Steensen, 2014 ), as it attracts more donations (Aflaki & Pedraza‐Martinez, 2016 ) and encourages short-term projects focused on tangible results that can be measurable (Baumann, 2021 ). On the other hand, when only unearmarked is allowed, the expected donation volume is smaller.…”

Partner country selection between development narratives and self‐interests: A new method for analysing complex donor approaches

“…To address these limitations, we first single out share of core contributions to the UN, which is the only actor that receives contribution from all donors we selected, and core contributions implicitly require donors to delegate authority of PC selection to the decision-making of UN funds and programmes (which is different than earmarked contributions, in which donors control funding decisions on PCs and/or specific thematic topics or other allocation aspects). A high share of earmarked funding to the UN development actors, in contrast, poses severe negative implications for the organizational efficiency, aid effectiveness, and the UN's multilateralism (Baumann, 2020). The category of GPG in UN spending is not clearly demarcated.…”