With historically high levels of humanitarian need and enduring unresolved crisis in more countries, driven by the continued impacts of the Covid-19 pandemic and climate change, the imperative to deliver assistance more effectively and efficiently is stronger than ever. This chapter highlights where assistance is being targeted and the progress made to improve the funding of humanitarian response.

Most international humanitarian assistance was allocated to a small number of crises in 2021. The 10 largest recipients received 60% of country-allocable international humanitarian assistance, with Yemen receiving the largest volume of support, US$2.7 billion (12% of all funding). Most humanitarian assistance is targeted to countries experiencing protracted crisis, with these accounting for 86% (US$20.1 billion) of all country-allocable humanitarian assistance.

Efforts to reform the delivery of humanitarian assistance continued in 2021 but progress on Grand Bargain priorities remains uneven. Significantly less funding was provided directly to local and national actors in 2021. Following an increase in 2020, direct funding reduced by almost two thirds, to the lowest volume (US$302 million) and proportion (1.2%) of total international humanitarian assistance in the previous five years. Funding increases in 2020 to local and national actors (primarily national governments) for the health sector and Covid-19 response were not sustained in 2021.

UN-managed pooled funds have grown in importance within the humanitarian system, with funding increasing in 2021. Total funding to UN pooled funds rebounded from a sharp decline in 2020, growing by 10% to US$1.6 billion. Pooled funds accounted for 6.0% of all assistance, up from 4.2% in 2014. For the first time, country-based pooled funds received over US$1 billion, with funding increasing by 21% (US$184 million) from 2020.

Reaching a critical mass of quality funding is a key priority of Grand Bargain 2.0, with flexibility recognised as a central feature of quality funding. However, the proportion of unearmarked funding received by nine UN agencies declined to its lowest level in six years of tracking, falling to 13% of total funding received, following an increase in 2020.

More positively, funding provided as cash and voucher assistance (CVA), which can empower recipients and provide them with choice in how best to meet their needs, continued to grow. Preliminary data on global humanitarian CVA shows that the volume transferred to recipients rose to US$5.3 billion in 2021, an increase of 3.7% from 2020. When final accounts are complete, CVA is likely to have accounted for 21% of total international humanitarian assistance in 2021. Of this CVA assistance, most continued to be provided as cash (71%) rather than in-kind assistance.

In 2021, the number of countries receiving international humanitarian assistance decreased. The 10 largest recipients accounted for a greater share of total funding than in 2020. Most humanitarian assistance was allocated to countries experiencing protracted crisis.

• In 2021, 144 countries received some international humanitarian assistance, 20 fewer than in 2020. Of these countries, 108 received more than US$1 million (33 fewer than in 2020) and 84 received more than US$5 million (27 fewer than in 2020).
• Countries experiencing protracted crisis – with five or more years of consecutive UN-coordinated appeals – accounted for 86% (US$20.1 billion) of all country-allocable humanitarian assistance in 2021.

The make-up of the group of 10 largest recipients changed little in 2021, as has typically been the case in recent years. The proportion of total country-allocable humanitarian assistance per year channelled to the 10 largest recipients grew in 2021 but has varied relatively little over the past decade.

• In 2021, the 10 largest recipients received 60% of country-allocable international humanitarian assistance, a slight increase from 58% in 2020. However, this was below the average of 64% over the past five years.
• Two countries entered the group of 10 largest donors in 2021 – Afghanistan and Nigeria – displacing Turkey and Iraq (the first time since 2013 in which Iraq is not among the 10 largest recipients).
• Over time, the make-up of the group of 10 largest recipients has changed relatively little. Just 14 countries appeared in this group in the past five years (2017−2021); with seven countries – South Sudan, Somalia, Syria, Lebanon, Ethiopia, Yemen and DRC—present every year over this period.

Following two years of consecutive, large decreases in funding in 2019 and 2020, more assistance was channelled to Yemen, once again making it the largest recipient of financial support.

• In 2021, Yemen received US$2.7 billion, 23% more than in 2020, though still substantially less than peak funding to the country in 2018 of US$4.8 billion. The assistance provided to Yemen accounted for 12% of all country-allocable funding, slightly lower than the average for the past five years of 14%.
• Funding to Syria fell in 2021 to US$2.1 billion, a decrease of 20% (US$529 million) from 2020.
• The most notable increase in funding was to Afghanistan, as the Taliban take-over of the country caused the humanitarian situation to deteriorate drastically. In 2021, the volume of international humanitarian assistance provided to Afghanistan more than doubled from US$709 million in 2020 to US$1.8 billion.
• Assistance to Ethiopia also grew considerably in 2021, from US$967 million to US$1.6 billion.
• The most significant decrease in funding was to Lebanon, by 44% (US$708 million) to US$914 million.

Despite many years of rhetorical commitments to alter funding behaviour, the patterns of funding from public donors have not changed in the past decade, with only minor shifts evident year-on-year. Funding to multilateral organisations reduced as a proportion of total assistance in 2021 but still constitutes the majority of assistance from public donors. As in previous years, funding preferences differ between public and private donors (see Figure 3.4, Chapter 3 ).

• In 2021, funding to multilateral organisations accounted for 54% of total international humanitarian assistance, down from 60% in 2020. The average over the past 10 years is 56%.
• By volume, funding to multilateral organisations reduced to by US$2.0 billion to US$13.9 billion, returning to 2019 levels.
• Non-governmental organisations (NGOs) were the second-largest recipients of funding from public donors, receiving 19% of total contributions. This represented a slight fall by volume from 2020, from US$5.3 billion to US$5.1 billion. In 2020, NGOs’ receipt of 20% of all international humanitarian funding was the highest proportion of the past 10 years.

DAC donors continue to provide the vast majority of international humanitarian assistance (see Figure 3.1, Chapter 3 ). The volume of funding from non-DAC donors increased markedly in 2014 – driven primarily by increases in assistance from Saudi Arabia and the UAE – and has fluctuated by volume and as a proportion of total international humanitarian assistance from public donors. The funding preferences of non-DAC governments have varied more year-on-year than those of DAC donors. Reporting by non-DAC countries is voluntary and not reconciled as DAC member reporting is, so consistency of reporting may influence year-on-year variations to some degree.

• In 2021, DAC donors accounted for 94% of all assistance from public donors.
• The 6.5% of assistance from public donors contributed by non-DAC donors in 2021 is significantly below the 16% reported in 2018. Over this period, 2018 to 2021, funding from DAC donors grew by US$4.5 billion, while non-DAC funding reduced by US$2.3 billion.

The variation in total volumes and proportions of funding from non-DAC donors is mirrored in allocation patterns to different organisation types, with preferences differing from those of DAC donors.

• Multilaterals are consistently the largest recipients of funding from non-DAC donors, as they are for DAC donors. However, a smaller proportion of funding is provided by non-DAC donors, an average of 36% over the past 10 years.
• Proportions allocated vary year-on-year. For instance, they reduced from 54% in 2020 to 16% in 2021, in part driving the overall reduction in assistance to multilaterals noted above. Reported funding to a range of multilaterals reduced from a number of non-DAC donors, with decreased funding from Saudi Arabia (falling by 75%, from US$593 to US$150) the primary driver.
• The public sector has typically received a greater proportion of funding from non-DAC donors than from DAC donors, reaching a high of 42% of assistance in 2021.
• While only 2.6% of non-DAC funding was to the Red Cross Movement in 2021, allocations were as high as 35% in 2015.

Increasing the volume of direct, quality funding to local actors, as well as access to information, decision-making and coordination mechanisms, is critical to ensuring that crisis preparedness and response capacity lies with those most affected. This is a central priority of the Grand Bargain 2.0. ^[1] Despite the high profile of localisation, substantive progress against commitments has not been made. Gains seemingly achieved in 2020 during the Covid-19 response have been lost in 2021, as direct funding to local and national actors fell to the lowest levels since before 2016.

• From 2017 to 2021, direct international humanitarian funding to local and national actors, as reported to the UN Office for the Coordination of Humanitarian Affairs (OCHA) Financial Tracking Service (FTS), halved, from US$603 million to US$302 million. This represents a drop in the share of total direct funding to local and national actors from 2.8% in 2017 to 1.2% in 2021.
• Following a spike in 2020 in direct funding to local and national actors, during the Covid-19 response, 2021 saw a 63% decrease, from US$824 million to US$302 million, driven by a reduction in funding to national governments from US$654 million to US$157 million.
• The volatility in overall volumes of direct funding to local and national actors throughout the period 2017 to 2021 is primarily driven by a fluctuation in funding to national governments. In 2019, the significant drop in funding to national governments was largely driven by a 70% decrease in funding to the Government of Yemen from US$484 million in 2018 to US$146 million, all of which was reported and provided by the Government of Saudi Arabia. The recovery in 2020 was driven by the Covid-19 pandemic response, which saw a broader disbursement of humanitarian assistance directly to governments. In 2020, 41 national governments received more than US$5 million, compared to just 10 governments in 2018.

Following an increase in funding in 2019, direct funding to local and national NGOs also fell in 2021, from US$140 million to US$129 million.

Most funding that reaches local and national actors passes through one or more intermediaries. However, the availability of data to monitor indirect funding flows remains limited. For 94% of direct funding reported to FTS (excluding data for country-based pooled funds), there is no further information to show where resources may have been passed from one organisation to another. Improved reporting of financing to final responders would help improve analysis of progress on localisation. The limited available data shows that most funding to local and national NGOs (L/NNGOs) is indirect.

► How can the visibility of local and national actors in humanitarian aid data be improved? Read more about a pilot project combining IATI and 3W data from Somalia.

• Total reported direct and indirect international humanitarian assistance to local and national NGOs has slowly increased year on year since 2017, from US$341 million to US$497 million in 2021, although growth has slowed in the past two years.
• While volumes reaching L/NNGOs directly and indirectly have increased, the share of overall funding to NGOs channelled to L/NNGOs has fallen. In 2019, the volume of total reported funding to L/NNGOs of all NGO funding was 9.6%, falling to 8.0% in 2021.
• The available data suggests that, of the total funding reaching L/NNGOs, the proportion provided directly has fallen in the period 2017 to 2021. In 2021, L/NNGOs received 75% (US$368 million) of funding indirectly, although this proportion is likely to be much higher.

In 2020 there was a spike in funding for specific sectors to local and national actors (L/NAs), highlighting the critical role they played in the Covid-19 response. However, gains in 2020 were not sustained in 2021, when overall funding reported against a cluster to L/NAs fell to below 2019 levels.

• Total funding to L/NAs across all sectors peaked in 2020, reaching US$1.0 billion, a 52% increase from 2019 (US$685 million). In 2021, this funding dropped to US$569 million.
• Driven largely by an increase in funding to national governments in 2020, funding to L/NAs for the health cluster more than tripled, from US$108 million in 2019, to US$330 million in 2020. The proportion of health sector funding channelled to L/NAs increased from 10% in 2019, to 23% in 2020, then fell to 13% (US$170 million) in 2021.
• US$329 million was dispersed to L/NAs for programming within the Covid-19 cluster. Nearly all of this (99.8%) was passed to national government actors.
• The volume of funding to L/NAs for the food security sector has steadily grown between 2019 (US$120 million) and 2021 (US$153 million). As a proportion of all cluster funding to L/NAs, food security has increased, from 18% of total funding to L/NAs in 2019 to 27% in 2021. However, as a proportion of overall funding to the food security cluster, funding to L/NAs remains minimal, at around 3% per year, with the majority being channelled through UN agencies.
• The coordination and support services cluster accounts for only 5.1% of funding to L/NAs in the period 2019–2021. The large spike in 2019 was caused by large volumes of funding from the Saudi Government to Yemen.

The UN’s country-based pooled funds (CBPFs) and Central Emergency Response Fund (CERF) pool funding from multiple donors, targeting funds for priority interventions at country level or where there are gaps (geographic or temporal) in the wider international response. CBPFs are recognised as an established channel for funding to local and national actors (see Figure 4.3 ). Despite an apparent spike in funding in 2019, and fall the following year, the overall trend for the past decade has been one of steady growth in funding to UN pooled funds, primarily driven by increases to CBPFs.

• In 2021, total funding to UN pooled funds rebounded from a sharp decline in 2020 (primarily driven by an uneven release of funding across financial years in 2019 and 2020 by one donor), to grow by 10%, an increase of US$145 million.
• Growth in 2021 is consistent with the average year-on-year increase in total funding to UN pooled funds across the last decade, which is also 10%.
• This growth in the volume of funding has, since 2014, also resulted in a steady increase in the proportion of total international humanitarian assistance channelled through UN pooled funds (notwithstanding the spike in funding in 2019), with pooled funds accounting for 6.0% of all assistance, up from 4.2% in 2014.

CBPFs have come to account for an increasing share of total funding for UN pooled funds, with the increase in total funding in 2021 driven by growth in funding to CBPFs.

• CBPFs received over US$1 billion for the first time in 2021, with funding increasing by 21% (US$184 million) in the past year and almost threefold (178%) in the last decade (since 2012).
• Following the very rapid growth in funding to the CERF in 2019, levels of funding declined for the second consecutive year, down US$39 million from 2020 and by almost a third (32% or US$276 million) from 2019 to US$585 million.
• CBPFs accounted for almost two thirds (64%) of total funding to UN pooled funds UN pooled funds in 2021, the highest share of total funding so far.

As with total international humanitarian assistance, a small number of donors provide the bulk of funding to UN-managed pooled funds.

• Over two thirds (69%) of total funding to UN pooled funds came from just five donors (Germany, the UK, the Netherlands, Sweden and Norway) in 2021.
• Germany was by far the single largest donor, alone accounting for almost a third (31% or US$511 million) of total funding to UN pooled funds in 2021. Contributions from Germany almost doubled between 2020 and 2021, up 46%. The additional US$161 million this provided drove the overall increase in funding to UN pooled funds. In 2021, 72% of Germany’s assistance was directed to CBPFs.
• The UK remained the second-largest donor to UN pooled funds, despite a second consecutive year of reductions in support from the UK, contributing US$236 million to CBPFs and the CERF in 2021, US$35 million less than in 2020, and US$521 million less than in 2019.

Quality funding refers to a range of funding characteristics that separately and in combination can enable more effective and efficient humanitarian responses. It includes the duration (e.g. multi-year), extent of earmarking, contractual quality and flexibility of grants (for instance, in terms of light reporting requirements and ease of agreeing no-cost extensions). Quality funding is one of the core priorities of the Grand Bargain 2.0, with a caucus, launched in March 2022, focusing on increasing the volume of multi-year funding provided by donors. ^[7]

► Read more from DI about examples of good practice in providing quality funding to enhance the efficiency and effectiveness of programming.

In some areas, progress is evident. Analysis in the Global Humanitarian Assistance Report 2021 indicated that the volume of multi-year funding provided by donors has increased. ^[8] Responses to the Covid-19 pandemic drove change, with the Inter-Agency Standing Committee developing guidance in the Covid-19 response on the flexibility of funding passed to implementing partners, along with key messages on funding flexibility. ^[9] Yet, the desired critical mass of quality funding has not yet been realised, with very little of quality funding reported to be reaching local and national actors (see Box 4.2, Overhead cost allocation in the humanitarian sector ).

Despite commitments within the Grand Bargain to a global target of 30% of donor funding to be provided unearmarked or softly earmarked, little progress has been made. ^[10] In 2021, the volume and proportion of funding provided unearmarked to UN agencies decreased, with the proportion of unearmarked funding falling to its lowest level since the signing of the Grand Bargain.

• In 2021, unearmarked funding to nine UN agencies accounted for 13% of total funding received, the lowest percentage reported in six years. This reduction marks a return, following the rise in 2020 to 16%, to a steady trend of falling proportions of unearmarked funding since 2016.
• The volume of funding that was unearmarked also reduced in 2021 to US$2.7 billion, a fall of US$715 million from 2020. This is the second-smallest volume of unearmarked funding provided in the last six years (volumes fell to US$2.6 billion in 2019) and lower than levels in 2016 (US$2.9 billion).
• The decrease in the proportion of unearmarked funding in 2021 was primarily driven by a reduction in allocations to the World Health Organization, following a rapid increase in 2020 during the initial response to the Covid-19 pandemic. Unearmarked funding grew by US$615 million in 2020, and then fell in 2021 by US$630 million, returning to US$83 million, similar to levels pre-2020.
• Unearmarked funding to the UN Relief and Works Agency for Palestine Refugees in the Near East also fell sharply in 2021, from US$568 million in 2020 to US$118 million in 2021. Levels in 2021 are far below the yearly average of US$726 million received between 2016 and 2020.

The distinct variation between agencies in the proportion of unearmarked funding received, evident in previous years, continued in 2021.

• Three UN agencies report receiving 30% or more of their humanitarian funding as unearmarked or softly earmarked in 2021, in line with the Grand Bargain target: UN OCHA (51%, US$139 million), the UN High Commissioner for Refugees (36%, US$1.6 billion) and the UN Relief and Works Agency for Palestine Refugees in the Near East (30%, US$118 million).
• Among agencies receiving a small proportion of their funding unearmarked in 2021, the World Health Organization received 6.3%, the World Food Programme 3.6%, and the Food and Agriculture Organization 2.0%.

Providing cash or vouchers, rather than in-kind goods, can provide choice and empower recipients of humanitarian assistance. The clearest success story of the Grand Bargain has been the growth in the use of cash and voucher assistance (CVA). With the rapid increase in CVA, the Grand Bargain process has sought to address the attendant challenges of accountability and coordination in the delivery of assistance that have accompanied this growth. The first caucus of the Grand Bargain 2.0 focused on addressing these challenges and concluded in February 2022 with the agreement of the cash coordination model. ^[13]

In 2021, humanitarian assistance provided in the form of cash or vouchers increased for the sixth consecutive year.

• Preliminary data on global humanitarian CVA shows that the volume transferred to recipients rose to US$5.3 billion in 2021, an increase of 3.7% from 2020. Since 2017, the global volume of CVA transferred to recipients has grown by at least 62%. ^[14]
• Including associated programming costs, the global volume of humanitarian CVA reached an estimated US$6.7 billion in 2021.
• According to self-reported information by implementing organisations of CVA, which provided the data underlying this analysis, the majority of implementing agencies managed to consolidate or even increase their respective volumes of CVA transferred to recipients following growth in CVA operations in 2020 as part of the response to the Covid-19 pandemic.
• Data for 2021 is preliminary, with figures from a few NGOs yet to be captured. Assuming similar levels of CVA programming in 2021 as 2020 for these missing NGOs, the transfer value of global CVA would be an estimated US$5.7 billion, with total programming costs of US$7.1 billion.
• With more complete data for 2021, the likely level of yearly growth would be 12%, still some way below the increases of 19% in 2019 and 2020, but similar to the rise seen in 2018.
• In 2021, CVA made up 19% of total international humanitarian assistance. Accounting for missing data, CVA is likely to account for a slightly higher proportion of total assistance in 2021, at 21%.

In 2021, UN agencies provided the most CVA, with growth in CVA from these agencies driving the overall global rise.

• UN agencies account for the largest proportion of CVA, 61% of preliminary data for 2021.
• In 2020, for the first time, CVA provided by NGOs increased by a greater volume than that provided by UN agencies; growing by US$469 million, compared with an increase of just US240 million from UN agencies.
• In 2021, accounting for gaps in the preliminary data, CVA from NGOs and UN agencies will have grown by similar amounts from 2020 values.
• The UN agency with the largest percentage increase in its humanitarian CVA operations in 2021 was the UN International Children’s Emergency Fund at US$351 million transferred to recipients, 43% more than in 2020. Of that amount, 99.4% of the transfers were in cash and 0.6% in vouchers.
• When final accounting is completed, the International Red Cross and Red Crescent Movement (RCRC) expects to have transferred to recipients a similar volume of humanitarian CVA in 2021 as in 2020, at around US$1.0 billion.

Cash remains the preferred delivery modality.

• In 2021, 71% of total CVA was provided as cash and 29% as vouchers.
• This represents the same split between cash and vouchers reported in 2019 and 2020.

The growth in volumes of humanitarian CVA globally is now reflected in the existence of multipurpose cash (MPC) clusters in some response plans.

• In 2021, total funding requirements for MPC clusters reached US$339 million across response plans tracked by FTS. This is almost five times the requirements for MPC clusters in 2016. However, it represents only 0.9% of total financial requirements for response plans tracked by FTS in 2021.
• At the time of writing, MPC cluster requirements have significantly increased once more for 2022. This rise is driven by the US$600 million requirements of the Ukraine 2022 flash appeal for MPC, meaning total requirements tracked by FTS for MPC clusters have reached US$903 million for 2022.

Despite the increased profile and significant growth in CVA programming in recent years, publicly available data on CVA remains sparse. It is still not possible to comprehensively trace how much international humanitarian assistance is implemented as CVA from publicly reported data.