Unlike previous United Nations reforms, the current reform of the UN development system (UNDS) squarely addresses the imperative of changing how the UNDS is funded in order to ensure it can respond robustly and predictably to countries’ Sustainable Development Goal (SDG) priorities without compromising the multilateral nature of UN support.1 Through the Funding Compact welcomed in 2019, both Member States and the UNDS recognised the necessity of addressing the sharp imbalance between core and non-core resources. Moreover, there was clear acknowledgement of the need to change funding behaviour, and especially to improve the quality of funding, if the UN is to deliver better results against the ambitious 2030 Agenda.

Speed, flexibility and accountability lie at the heart of the humanitarian pooled funds managed by the Office for the Coordination of Humanitarian Affairs (OCHA). The creation of the funds – the Central Emergency Response Fund (CERF) and the country- based pooled funds (CBPFs) – date back to 2005, when the reform process aimed at improving humanitarian response effectiveness was initiated.1 Since then, the funds have become important lifelines for the most vulnerable, between them disbursing US$ 13.7 billion and supporting tens of millions of people.

In May 2022, the World Health Organization (WHO)’s Member States took the historic decision to increase the share of assessed contributions in the organisation’s regular budget from 16% to 50% by 2028. While future budget negotiations will show whether Member States honour their commitments, the political signal is clear. Member States want to provide a more sustainable financial footing for WHO which is currently overly dependent on voluntary earmarked funding, including from private actors. The pitfalls of (certain forms) of earmarked funding have been widely discussed, not least in previous editions of this report. Assessed contributions represent an important alternative route to sustainable financing for multilateralism as they cannot be arbitrarily withdrawn – they are membership fees that all states are obliged to contribute. Assessed contributions can also be re-purposed in line with an international organisation’s mandate and core organisational needs, thereby enabling the organisation to act more effectively, independently and with greater authority.

The global fragility landscape has worsened significantly in the last few years, impacting both low-income and middle-income countries. Violent conflicts have increased to the highest levels observed over the past three decades. In 2021, an estimated 44% of people below the poverty line were in countries on the World Bank’s fragile and conflict-affected situations (FCS) list.1 The world is also witnessing heightened geopolitical tensions – most notably the far-reaching impacts of the current conflict in Ukraine. Concurrently, the COVID-19 pandemic and its socioeconomic impacts are increasing poverty and aggravating existing fragility, conflict, and violence (FCV) risks, amid a context of rising food insecurity, natural hazards, and climate-related stresses.

These are uniquely unsettling times, with one of the most devastating consequences of the current moment being the erosion of hard-won development gains. The compounded crises of the COVID-19 pandemic, food and fuel insecurity, fiscal collapse, political upheaval, climate shocks and the war in Ukraine have stalled or reversed decades of progress. In such circumstances, the United Nations development system should not be subject to a stop–go edict that further contributes to this erosion while at the same time swelling the humanitarian caseload and costs.

In 1736, Benjamin Franklin proclaimed that an ounce of prevention is worth a pound of cure. If that statement was true in 1736, it is even more so today in our world of compounding and cascading risks. Despite all the evidence that prevention works, however, we still seem incapable of properly financing it. Why not?

As an international financial institution (IFI) and United Nations specialised agency dedicated solely to agriculture and rural development, the International Fund for Agricultural Development (IFAD) is uniquely positioned for resource mobilisation. Its primary role is supporting people living in poverty in rural areas through the provision of loans and grants to member countries.These are no-strings- attached loans with favourable financial terms, such as long lending periods (eg a 40-year repayment timeline) and concessional interest rates. Repayment terms depend on the borrower’s capacity to service the loan, while great care is taken to ensure loans are not taken by countries that are unable to repay the principal back. Moreover, borrowers must meet internationally recognised debt distress indicators and projections criteria.