In recent years, global attention has increasingly turned to the shrinking pool of official development assistance.¹ As the primary source of international development finance, official development assistance plays a critical role in the economic development and welfare of developing countries. Yet, growing fiscal pressures, shifting political priorities, and rising inward-focused national agendas have led to a steady decline in both the volume and predictability of official development assistance. As a result, the United Nations Development System (UNDS) is being called upon to deliver more ambitious results with fewer and less flexible resources, exposing severe vulnerabilities in how the system is financed and sustained.

Compounding this challenge is the UN’s continued dependence on a relatively small number of major donors. This over reliance creates a fragile financial foundation, leaving the multilateral system vulnerable to political shifts and budgetary volatility in donor capitals. As highlighted in chapter one of this report, and confirmed by forward-looking projections, the overall trend points to a stagnation or even further decline in development assistance.²

Amid this constrained landscape, much of the debate centres on the quantity of funding available. Yet in times of austerity, the funding quality, predictability, flexibility, and alignment with system-wide priorities are just as critical. In this context, the UN Funding Compact, an agreement focused on making funding for UN development activities predictable and flexible, becomes increasingly important.

As stated in General Assembly Resolution 71/243, the Funding Compact was launched in 2019 and revitalised in 2024.³ It represents commitment to a shared responsibility between Member States and the UN with the primary aim of securing predictable and flexible financing for UN development initiatives in support of the 17 Sustainable Development Goals (SDGs).⁴

To this end, the Foundation has been conducting a qualitative assessment to explore the effectiveness of the Funding Compact implementation at the country level. The process included carrying out over 70 interviews with government representatives, UN agencies, international financial institutions and Member States in 19 countries across Africa, Europe, Pacific region and South America between February 2024 and March 2025.⁵

Due to the complexity of the Funding Compact implementation at the country level, a qualitative research design was chosen to accommodate its multidimensionality and context-specific nature.

The qualitative assessment took the form of semi-structured interviews with respondents working with the Funding Compact at UN Country Team and Member State level. To maintain ethical integrity and encourage candid feedback all study participants were offered anonymity, and the results were scrubbed of all personal attributions.

Similar to research in other policy domains, data on institutional practices and reform dynamics is difficult to quantify and often constrained by availability. A qualitative approach allows for deeper insight into the underlying drivers, barriers, and perceptions. While this method provides a more nuanced understanding of stakeholder experiences, it also limits the opportunity to generalise the findings.⁶

The selection of the country cases for this study was carried out in close collaboration with the UN Development Coordination Office, using selective sampling to ensure diversity across key dimensions.

The countries were identified based on geographic balance, the income level according to World Bank classification, the humanitarian versus development contexts, and the size of the UN presence.⁷ The UN Regional Development Coordination Office, in turn, made the initial selection and  connected the Dag Hammarskjöld Foundation to the relevant UN Country Teams. Within each country, the Resident Coordinator’s Office facilitated the selection of interview participants from three key stakeholder groups: large and small UN entities and agencies, government counterparts responsible for development or humanitarian funding, and  donors or international financial institutions where applicable.

While this selective sampling strategy allows for rich, context-specific insights, it does introduce potential selection bias, as the sample is not statistically representative of all UNCTs globally.⁹

As Collier and Mahoney (1996) highlight, selection bias is a common concern in qualitative research, particularly when drawing broader conclusions from a non-random sample.¹⁰ To mitigate this, the researchers are transparent about the logic and limitations of the approach and refrained from overgeneralising findings.

The value of this study lies in the depth and diversity of  perspectives gathered through semi-structured interviews, which offer important qualitative insights into the implementation of the Funding Compact in varied contexts.

The findings of the assessment are grouped in the following five sections: awareness of the Funding Compact; implementation of mutual commitments; joint funding instruments; transparency and visibility; and private sector partnerships.

The concluding section contains a few recommendations that might be useful for the UNDS and for Member States to consider for improving the quality of development funding available.

Awareness of the Funding Compact 
The interviewees generally demonstrated limited awareness of the Funding Compact. However, most acknowledged that they had been working on various aspects of the Funding Compact, often without explicitly connecting their efforts to the Compact itself.

Several respondents noted that the Funding Compact was formulated and signed at headquarters level, which contributed to limited familiarity with its specifics among field staff. All interviewees emphasised the key role of Resident Coordinator’s Offices in increasing awareness — particularly by highlighting Funding Compact issues during UN country-level events.

Implementation of mutual commitments
The Funding Compact outlines mutual commitments by Member States and the UNDS, yet several challenges remain in realising these obligations. Interviewees highlighted that specific internal regulations often constrain participation of the donors in pooled funding. In addition, the lack of transparency, reporting difficulties and donor visibility were cited as a key reason why some donors prefer bilateral, earmarked funding or even turn to international financial institutions instead of the UN system.

Some respondents referenced that donors sometimes find bilateral earmarked funding easier to manage in terms of reporting and coordination. Bilateral earmarked funding has been mentioned as a way to bypass the sometimes-complex Resident Coordinator’s Office function in charge of joint programming, as well as getting exclusive visibility and clear understanding of the donors’ contributions to development work.

Most of the interviewees noted that showcasing the impact  of joint programming and pooled funding as well as improvement of coordination between UN agencies and improvement of donor visibility may make the donor community much more inclined to participate in pooled funding initiatives.¹¹

It has been noted by some interviewees that demonstrating a high degree of effectiveness and efficiency by the UNDS can greatly encourage donors to provide more funding and diversify its quality.

A well-coordinated, joint UN resource mobilisation strategy was identified by a few interviewees as a potential tool to enhance funding advocacy and donor engagement.

Joint funding instruments
Joint funding instruments, such as pooled funding, were repeatedly mentioned as a great way to make reporting and coordination for donors easier and ensure that the work on development leads to great sustainable results. Particularly when pooled funding consists of softly earmarked funding and is organised in a well-coordinated and transparent way with the focus on collective results rather than individual agency achievements.

In this case, the respondents also said that it helps to avoid donor fatigue due to multiple requests from UN agencies, especially in situations when there are slightly overlapping mandates.

Some interviewees noted that donors may get discouraged from participating in pooled funding initiatives if there is a lack of coordination between participating UN agencies.

They also lifted that larger UN agencies reported being reluctant to engage in pooled funding processes, particularly when the funding amounts were low or rigidly earmarked. In such cases, agencies often preferred bilateral channels that promised more substantial and direct funding with fewer coordination challenges.

The inclusion of host governments by the Resident Coordinator and the UNDS in funding advocacy and capacity development efforts was emphasised as essential. However, respondents stressed that government involvement should be context sensitive, particularly in situations where the weak capacity of governments create risks of fund mismanagement, potentially jeopardising future donor collaboration.

It was noted that participating in pooled funding initiatives sometimes is seen as a resource- and time-consuming activity for UN agencies that may not result in large enough amounts of funding comparatively to bilateral earmarked funding.

Pooled funding was occasionally perceived by UN agencies as resource- and time-intensive, especially when the  expected financial returns were limited compared to bilateral earmarked funding. In this context, the Resident Coordinators’ role is critical – not only in advocating for pooled funding but also in ensuring a transparent, inclusive process that builds trust among all stakeholders. Clear and consistent communication from the Resident Coordinator was seen as crucial to reduce donor preference for bilateral routes due to perceived inefficiencies or inter-agency competition with slightly overlapping mandates.

Some respondents also noted that UN agencies may need to sometimes accept the coordinating role of the Resident Coordinator and actively support their coordination efforts with other agencies in such a way that it can contribute to the overall effectiveness of the development work.

While broad themes such as peacebuilding and humanitarian support were commonly used to anchor pooled funding efforts, some interviewees expressed a need for more targeted and specific funding instruments.

Another important insight lifted related to the influence of performance metrics for agency heads – who are often evaluated based on the amount of funding mobilised – there by incentivising a preference for hard earmarked contributions.

Partnerships with international financial institutions were reported to be seen as an underutilised opportunity where the UN could increase both the volume and quality of development funding by engaging in joint planning efforts. Similarly, non-Organisation for Economic Cooperation and Development (non-OECD) donors – particularly China – were identified as key actors offering less conditional, more flexible funding in some regions.

Transparency and visibility
Most of the interviewees mentioned that Resident Coordinators have the capacity to play an important role and often do so in organising effective, inclusive and transparent coordination between UN agencies and the donor community to jointly advocate for as well as implement flexible funding opportunities.

Further prioritising of open and transparent coordination by the Resident Coordinator might be one of the next steps required to improve effectiveness of funding availability and quality. It can also contribute to the effectiveness of development work and may lead to an increase in funding.

It was also noted that sharing some information on Resident Coordinator expenses can help improve interagency understanding of the Resident Coordinators’ funding needs for effective work.

Well-implemented donor visibility and inclusivity has been repeatedly named by the interviewees among the most important factors encouraging donors to provide more flexible funding. Thus, ensuring that donors feel visible and included in programming was seen as a key enabler for increased support of pooled funding initiatives.

Private sector partnerships
Partnerships with the private sector were repeatedly mentioned as a potential area for diversifying funding for development as well as for increasing its flexibility. Currently more efforts are necessary to increase the share of private sector funding available for the UNDS and joint work and cooperation are extremely important for this.

It was also noted that private sector engagement is context dependent and that the type of business often defines the level of engagement with the development-related actors. These types of partnerships tend to work better with socially responsible companies.

The implementation of the UN Funding Compact at the  country level reveals both promise and persistent challenges. While its principles are widely supported in theory, awareness gaps, operational barriers, and competing interests often hinder full realisation on the ground.

Insights from this qualitative assessment across the diverse country contexts pointed to several recurring themes. This included the need for improved awareness, stronger mutual accountability, more effective coordination including on joint funding instruments, greater transparency, and the strategic engagement of non-traditional funding partners.

To strengthen the Funding Compact implementation and enhance the quality and availability of development funding, the following recommendations are proposed:

Strengthen the role of the Resident Coordinator

• Ensuring that Resident Coordinator Offices operate transparently and inclusively, distributing funding fairly and advocating effectively for joint initiatives.
• Building the Resident Coordinators’ capacity to mediate between agencies, donors, and governments, especially in fragile or low-capacity contexts.
• Supporting the Resident Coordinators’ efforts to invest in training at the country level to raise awareness of the Funding Compact among UN field staff, host governments, and local development partners.
• Resident Coordinator Offices to serve as a coordination mechanism, avoiding the creation of an additional layer of competition within the UN Country Team. Its primary role should be to enable coherence, alignment, and joint delivery across agencies.
• Resident Coordinators should not replace the leadership roles of individual agency heads, who play a critical part in sectoral dialogue and programmatic leadership at the country level. Instead, a well-functioning Resident Coordinator complements agency leadership.

Improve coordination and incentives

• The UNDS should develop and implement joint UN resource mobilisation strategies at country level to streamline donor engagement and reduce fragmentation.
• The UNDS should revisit the performance metrics for agency leadership to reward collaboration and support for pooled funding, not just total funds mobilised.

Broaden the funding base

• The UNDS should engage non-OECD donors and international financial institutions through structured dialogue and co-creation of programming to tap into more diversified and less conditional funding.
• The UNDS should invest in private sector partnerships, particularly with socially responsible enter prises, by identifying shared goals and piloting joint initiatives.

Improve transparency and donor visibility

• Resident Coordinators should publicly communicate results and resource flows, including pooled and core funding impacts and Resident Coordinator Office expenditures, to build trust among stakeholders.
• The UNDS should ensure that donors are acknowledged and have meaningful involvement throughout the program cycle to maintain their engagement in flexible funding mechanisms.