Financing the UN Development System: Resourcing the Future, is the 10th edition of this report providing an in-depth overview of the United Nations Development System. The marketplace of ideas brings expert insights on improving quality funding for development, call for an urgent need to protect global public goods and share examples of how Member States are engaging in the peace, development and climate nexus.

This report continues to be a core source of information and advice for policy development and practice aimed at strengthening the United Nations Development System and its contributions to the Sustainable Development Goals. Member States are encouraged to reaffirm commitments, particularly to the enhanced UN Funding Compact during the 2024 Summit of the Future, and show global leadership for future generations.

Part One is about the United Nations resource flows with an in-depth analysis of how the UN is funded, by whom, and through which modalities, based on the most up-to-date official data sources. The data and analysis encompass evidence and insights into the volume and characteristics of the full funding flows range of the UN development system. Namely assessed contributions; voluntary core contributions; earmarked funding; and revenue from other activities.

How the United Nations is funded is presented in Chapter 1 with the focus on UN revenue allocation and purpose. The UN system’s total revenue continued to grow to US$ 74.3 billion in 2022, – an increase of US$ 8.4 billion, or 12.8%, compared to 2021, with most of the growth accounted for by increasing earmarked contributions. Despite increased Official Development Assistance (ODA) in recent years, quality funding for UN development activities fell significantly short of targets, jeopardising the UN’s effectiveness in SDG progress.

Where UN funding is allocated is shown in Chapter 2 with the spotlight on resource distribution among different UN functions and geographies and to what purposes humanitarian expenditure, consuming a large share of the ODA, increase year by year. UN reporting towards the Sustainable Development Goals has expanded significantly, making it possible to link the vast majority of United Nations expenditure to them.

Year ‘two’ of the Data Cube strategy: Some successes and challenges makes up Chapter 3 with the United Nations System Chief Executives Board for Coordination Secretariat giving an overview of the implementation of the ‘Data Cube’ initiative. Its overall objectives are to maximise transparency, minimise efforts and reduce the UN entity reporting burden. This year marks progress with the agreement on a minimum UN CEB dataset, resulting in greater comprehensiveness and quality reporting by UN entities since the introduction of the UN Data Standards in 2018.

Part Two, the marketplace of ideas, frames the bigger picture, emphasising the need for better funding quality to achieve quality results. Financing global public goods, such as climate change mitigation, is essential for addressing interconnected global challenges and promoting equity, complementing rather than competing with official development assistance.

Financing global public goods: Threat or opportunity for sustainable and inclusive development?

By Pedro Conceição

The imperative of why providing global public goods is perceived as competing with other associated development priorities like eliminating poverty and promoting the convergence of living standards of low- and middle-income countries with those with higher levels of income is discussed. Multilateral institutions can articulate more clearly their potential role in channelling these resources by building and expanding their track record of pooling and allocating international financial resources to meet country needs. Concluding with the example of humanitarian support where the UN allocate assistance based on actual needs. The expansion needs to consider supporting low- and middle-income countries to contribute to global public goods.

Perspectives on financial reform to bridge the North-South divide
By Donald Kaberuka

The International Finance Institution (IFI) reform has been discussed for almost a decade now with no shortage of ideas on how it can be changed and what is preventing the uptake of these proposals. Focus needs to shift to what we should do for the reforms to be applied as there is no mechanism to intermediate the savings of the global North for better and increase social returns in the South, which is considered risky. Perhaps the global North fund managers can find a third party to help with de-risking global South investments and increase capital flows from North to South. One example is the performance of South Korea, Vietnam and Rwanda, who all fared well during the COVID-19 pandemic with their vaccine response. They managed to create safety nets and preserving livelihoods, in contrast to places like northern Italy, and parts of the US, with more resources and capacities, but did badly. The forementioned countries generated social capital around a problem, were open to learn irrespective their status ‘on the food chain’ or level of wealth. Donald Kaberuka leaves us with the question: ‘Are we there yet? I am not sure, but I hope we get there soon.’

Reductions, reallocations and replenishments – Will this be the year of the big squeeze on the UN Development System?

By John Hendra

Today’s world continues to suffer multiple crises like the wars in Ukraine and Gaza, higher cost-of-living and a debt and climate crisis for many countries. Agenda 2030 remains the roadmap forward, but significant upscaling is needed to achieve the Sustainable Development Goals. The contribution shows preliminary 2023 ODA figures, questions the near-term quality of the UNDS funding, follows the UNDS funding flows by type of activity for 2012 to 2022, and looks at the trends in core and non-core funding flows over the same period.

What can be done going forward? Reinforcing political and policy actions to help start rebuilding more quality UNDS funding can support mitigating the risk of a ‘force majeure’ funding crisis in key UN parts and strengthen much needed coordination, complementarity and collaboration across the multilateral system. What are the opportunities of raising UNDS funding quality, the new Funding Compact, the next Quadrennial Comprehensive Policy Review and the upcoming UN Financing for Development Conference? Leaders should look across the whole system for relative comparative advantage such as incentivising greater complementarity, ensuring adequate funding to the normative role of the multilateral system. The new era of polycrisis shows that less money for sustainable development today, often translates greater spending on humanitarian crises tomorrow.

Multifaceted approaches to financing of sustainable environmental action
By Elizabeth Maruma Mrema

The United Nations Environment Programme (UNEP) is the leading environmental authority supporting the global environmental agenda, promoting coherent implementation of the environmental dimension of sustainable development within the United Nations system while serving as an authoritative advocate for the global environment. UNEP convenes the UN Environment Assembly (UNEA) comprising 193 Member States who meet to discuss UNEP’s major decisions, global environmental issues and required financial commitments. Currently 90% of its funding comes from 15 donor countries, earmarked funds for environmental action designated for specific projects, themes, or countries, determined by funding partners. This category forms around 80% of UNEP’s funding and includes contributions from various global funds like the Global Environment Facility and the Green Climate Fund. Through innovative transactions, UNEP’s Finance Initiative (FI) has established critical sustainable frameworks within the finance industry, including the Principles for Responsible Investment, Principles for Sustainable Insurance, and Principles for Responsible Banking. The entity brings a stronger science voice, evidence of common denominators to the debate and decision making, since environmental crises do not know borders. International financial institutions and donors can better support these efforts by including environmental sustainability aspects in their financial support decision making.

Financing the triple nexus in Somalia
Interview with George Conway

The Somalia humanitarian context has been volatile coming out of the worst drought in over 60 years during 2023, despite its minimal contribution to global climate change and being one of the most affected by the climate crisis without adequate climate financing. Decision making by traditional Official Development Assistance (ODA) partners is often affected by domestic political dynamics and recipient countries. In the Somali context humanitarian aid tends to dominate donor country engagement, guided by humanitarian principles with some immediate results. By reconstructing its financial management infrastructure, the Government of Somalia achieved a fourfold domestic revenue increase since 2012 and rising by 25% in 2023. Another positive outcome was integrating the UN Mission, strengthening collaboration and incentivising collective action between the UN political mission, UN Country Team, and Humanitarian Country Team in 2014. Somalia has several pooled financing mechanisms for the humanitarian, development and peace nexus. The Somalia Humanitarian Fund was established in 2010 and the first Multi Partner Trust Fund launched in 2014 aligning with the UN Cooperation Framework and the ‘New Deal for Somalia’. The country is moving beyond its history of fragility and conflict to provide justice, security, economic opportunities as well investments in human capital for its most vulnerable populations, transforming Somalia towards a middle-income country at peace with itself and the world.

Funding Compact 2.0 holds potential for improving development outcomes
By Annelies Hickendorff and Marijana Markotić Andrić

As part of an ongoing collaboration between the Dag Hammarskjöld Foundation and the United Nations Development Coordination Office (DCO) a qualitative research initiative was started with the goal to understand the impact of the United Nations’ systematic engagement to build financial frameworks and infrastructure to support Member States towards the successful implementation of the 2030 Agenda for Sustainable Development. Fifty interviews were conducted with government representatives, UN agencies and Member States in 15 countries across Africa, South America and Europe between November 2023 and May 2024 to identify key factors driving country-level progress of the Funding Compact commitments. The UN Funding Compact was launched in 2019 and revitalised in 2024 representing a pledge to the shared responsibility between Member States and the UN. The initial research findings are summarised into five knowledge categories: awareness; the interplay between Member State dynamics and funding decisions; funding instruments and the transformational potential of pooled funding; transparency and visibility; and leveraging private sector partnerships. The interviews also showed that the re-energised Funding Compact 2.0 holds significant potential for improving development outcomes by emphasising strategic country-level engagement, enhancing funding flexibility, and promoting transparency. Overall, the effective implementation of the Funding Compact 2.0 requires improved communication, coordinated efforts, and innovative approaches to ensure comprehensive understanding and stable financial support.