UNDP to re-engineer funding strategy

Abstract

Filling the space beyond humanitarian relief and with a broad focus on international development, the UN Development Programme (UNDP) helps countries to build resilience to extreme crisis from war, confl ict, or natural disaster. The agency has aimed to raise around US$1 billion per year in baseline funding, but in the wake of the global fi nancial crisis, it is experiencing shortfalls precipitating a re-engineering of its business model. Leading UNDP, former Prime Minister of New Zealand, Helen Clark, is resolved to ensure that despite a funding shortfall of $129 million in 2012, anticipated to continue this year, UNDP’s most important projects will not suff er. The agency’s funding consists of both core funding and funding tied to specifi c projects. It is the core funding that has seen the drop. Core funding levels peaked at $1·1 billion in 2008 just before the global recession struck, after which it started to drift downwards. Currency movements have also had a substantial eff ect. In 2011, total contributions to UNDP’s regular resources amounted to $975 million, 2·5% below the target of $1 billion. The shortfall experienced in 2012 brought total core contributions to their lowest level since 2004. In response, UNDP is rethinking its strategy to develop a carefully balanced mix of core and tied budget projects that ensures the latter carries its appropriate share of costs in the future. Speaking to The Lancet, Clark explains that the process of re-engineering their spending strategy means that the UNDP will need to adjust to being an overwhelmingly non-core funded organisation. “Cost-recovery rates need to be right. Every cost that should be attributed to a particular tied budget must be attributed there and not to the core budget.” However, she added that it was essential that the non-core funding streams remained strong. “When times were good it was easy for that line [between core and non-core] to blur but now we must ruthlessly ensure that all costs related to the tied project money are linked to that, to preserve core funds for very important programme work in poor countries.”