Objective 3.1

Funding and Financial Management 

  • Enhanced financial management through clearing dormant accounts, classification and consolidating project accounts, and systematic and timely financial reporting to programme managers at headquarters and in the field.
     
  • Developing a more predictable and flexible funding base through a higher level of overall contributions received earlier in the year, and containing a greater share of unearmarked funds with several additional multi-year agreements concluded.
     
  • Improved programme implementation in the field by introducing SOPs to expedite funding.
     
  • Streamlined cash management and reconciliation processes to ensure timely availability of funding for project implementation.

In 2010 and 2011, OCHA continued working towards better funding and financial management, which underpin the efficient delivery of coordination services in the field. As before, OCHA has strived to be on a stable financial footing, while also demonstrating financial accountability in its use and management of existing resources. OCHA’s solid progress in both areas is due to a strong collective effort from administrative sections and field offices over a two-year period.

OCHA’s resource mobilization strategy in 2010 and 2011 aimed for a higher and more predictable level of income from a broader range of donors. To achieve this, programme managers received guidance from headquarters on global outreach and country-based fund-raising. A combination of expanding donor support and tighter budgetary discipline enabled OCHA to cover over 90 per cent of its extra-budgetary requirements in 2011, fully covering its expenditure for the year and allowing it to replenish its cash reserves. Seven new donors contributed to OCHA in 2011 and four new donors from the previous year were retained. Existing donors responded positively to OCHA’s emphasis on early disbursements of their regular funding, which aimed to improve cash flow and achieve a more flexible and balanced distribution of funds across the organization. Unearmarked contributions exceeded earmarked ones for the first time in 2011, meaning that cash could be more strategically directed to underfunded activities. Unearmarked contributions financed underfunded field activities by 24 per cent in 2009, 17 per cent in 2010 and 55 per cent in 2011 (SEE BOX).

Looking to the long term, OCHA continued developing multi-year funding agreements with key donors. This should help preserve and enhance financial predictability in OCHA’s operations.

The financial management of existing resources was further improved in 2010 and 2011. Regular expenditure reporting to programme managers at the field and headquarters levels enabled better monitoring of budgets, income, expenditure and fund-raising. For decision makers, there was now a sounder basis for financial planning and resource mobilization.

OCHA’s existing contributions and cash management tracking system was upgraded and tailored to meet programme managers’ data needs. The system now allows for monitoring of loans and reporting requirements, and provides access to donor profiles and income information across the organization.

Regarding liquidity management, the systematic clearing of dormant accounts liberated $11.3 million from inactive accounts into OCHA’s cash flow during 2010 and 2011.

All inactive accounts were finally cleared by late 2011, marking the end of a four-year process during which 281 accounts were cleared. Seventy-three per cent of the balances available was re-injected into OCHA’s overall cash flow, with 13 per cent returned to donors, 9 per cent to PPF and 5 per cent to CERF.

There was a significant improvement of cash-allocation mechanisms during 2011, with a codification of cash management and related procedures. A more systematic review and analysis of expenditure trends and stronger cash forecasting ensured resources were made available in a timely manner. This had major benefits for programme implementation at headquarters and in the field. In a further effort to rationalize and streamline financial management, cash reserve accounts were reduced from 17 to two, and all other project accounts were classified and consolidated.

Performance Framework 2011
OUTPUT Flexibility of OCHA funding increased.
INDICATOR

Unearmarked funding increased from $70 million to $75 million.

ACHIEVEMENTS

Unearmarked funding (paid and pledged) by December 2011 reached 54 per cent ($114.8 million compared to $82.5 million in 2010) of all contributions. Exceeded earmarked contributions for the first time. 

OUTPUT Donor base for OCHA broadened.
INDICATOR

Five new donors in 2010 retained as regular contributors in 2011.

ACHIEVEMENTS

Retained four new donors from 2010 in 2011 (Afghanistan, Republic of Congo, Russian Federation and Poland), but also obtained seven new donors in 2011.

OUTPUT Country-level donor engagement addressing OCHA priorities and funding needs increased.
INDICATOR

All regional and country offices provide local donor briefings once per quarter.

ACHIEVEMENTS

All field presences hold donor consultations at least every two months.

OUTPUT Resource management and allocation systems strengthened.
INDICATOR

Priority recommendations of external review implemented by Q2.

ACHIEVEMENTS

Consolidation and classification of all project accounts, coupled with clearing of inactive accounts, led to significantly strengthened resource management and better use of available cash within the system. Enhancements to expenditure monitoring led to more effective assessment of cash requirements and more effective use of OCHA’s cash reserves. Cash-management functions were transferred to ASB at year end.

OUTPUT Programme managers in receipt of timely income-and-expenditure reporting for better financial planning and more effective fundraising.
INDICATOR

Monthly financial reports generated using integrated OCT-FAS data by end of 2011.

ACHIEVEMENTS

Monthly financial reports including budget requirements, income and expenditure generated and disseminated to programme managers.

OUTPUT Timely disbursement for OCHA-managed pooled funds (ERF and CHF).
INDICATOR

Disbursements made within 15 days of receipt of signed agreement (implemented starting June 2011).

ACHIEVEMENTS

Average disbursement time reduced to 10 working days.