Donors want it faster, humanitarian organizations get it cheaper

Abstract

Donors provide yearly over 20 billion USD for international assistance to humanitarian organizations who transfer up to 23% of these funds to local implementing partners. Each transfer of funds seeks the maximum effectiveness through the compliance with the rules of the donor. The question of how aligned are donor policies with the ones of the recipients of funds, and what is the impact of this gap remains open. This study has gathered a unique dataset of the procurement policies from 42 institutional donors and 41 local and international humanitarian organizations. The research provides qualitative and statistical analysis on the diversity of procurement policies, and a cost model for deeper understanding of the effectiveness of humanitarian aid when implemented from institutional donors. The study shows that donors provide guidelines aiming at faster procurement, while humanitarian organizations employ more restricted processes focused on lower procurement costs and more competitive spending. The results show a statistically significant gap in the procurement thresholds of donors versus humanitarian organizations, and the existence of an efficient frontier that relates lead time and cost of the implemented projects. The results provide a unique overview of the humanitarian ecosystem and the benefits of international collaborating bodies such as the Grand Bargain in the standardization and convergence of policies.