Humanitarian funding review: our future response to global humanitarian crises

7. Recommendations and options for future Scottish Government humanitarian funding

This section provides evidence against the framing question:

(C) What practical alternative modalities exist, and could be introduced, modified, or adapted to meet Scottish Government humanitarian funding objectives?

It is worth reflecting on current levels of humanitarian spend in the Scottish Government – as a proportion of all its ODA funding. The Scottish Government spent £21M of ODA in 2024, an increase from £16M in 2023.^[65] The baseline level of humanitarian funding has remained at £1M per year since the HEF was launched in 2016. Specific annual budgets for the Scottish Government wider international development portfolio are not publicly available in advance but (multiyear) fund totals include:

• Humanitarian Emergency Fund (£1 million per annum)
• International Development Fund (£10-15 million) per annum (£10.9 million in 2023-2024) – note that from financial year 2024/25 the International Development Fund was one single budget, to cover both any international development spend and the £1 million HEF (£12.5 million in 2024-25, and £12.8 million in 2025-26);
• Climate Justice Fund (£36 million allocated over the course of the current parliament, from 2023-2026; in 2023, the last year for which annual expenditure is publicly available, the fund spent £2.6 million). Committed to increase the fund to £36M by mid-2026.

Table 2 below estimates humanitarian spend as a proportion of all Scottish Government ODA spend in 2024 and also by population in Scotland.

Table 2 Humanitarian spend by population and by total international development spend

A secure annual commitment of 4% of ODA spend for humanitarian funding is a strikingly small allocation. Even 13% is proportionally small. The review team recommend Scottish Government review the allocation of total ODA funding to humanitarian action and strongly recommend that this is set at 20% of ODA – circa £5M based on the previous year’s ODA.^[67]

The review team are conscious of the challenges related to making substantial changes to the existing ways of working. Scottish Government staff time is limited and there is a general consensus to ‘simplify’ where possible whilst continuing to seek best value and impact for public funds.

The review team have identified a preferred alternative to the existing disbursement of humanitarian funds. A range of alternatives were considered and discounted as they did not offer significant additional value, these are summarised in brief in Annex H.

Recommended future humanitarian funding approach (see section below for further details):

Action, Value Addition, and Potential Trade-offs/Risks

1. Review level of humanitarian funding with a view to increasing the proportion of the International Development budget spend on humanitarian to at least 20% of ODA. Value addition: Humanitarian funding needs increasing and current levels of investment are very low. The Scottish Government has ambitions to support system change in the sector and influence others – more significant funding supports this ambition. Potential trade-offs/risks: May take time to make real if IDF is already committed in future financial years.

2. Invest in pooled funds – (Year 1, post review) Support the DEC with Stream 1 funding (suggested 10% of annual secure budget). Investigate and carry out a comparative analysis on potential impacts of investing in DEC or START network on an ongoing basis with a view to making an informed decision in future on which channel best aligns with Scottish Government needs. Value addition: (As per current context), this funding ensures Scottish public funds are contributing to DEC appeals in response to large-scale emergencies. Ensures Scottish Ministers are able to assure Scottish citizens in Parliament that the Scottish Government is supporting the responses. START has a wider membership with stronger focus on localisation and a broader geographical coverage and may be a stronger fit than DEC with the Scottish Government localisation agenda. Potential trade-offs/risks: Potential duplication of investment if HEF 2.0 responds to same request. Mitigation – track responses in first 2 years and take appropriate action. Highly unlikely that both funding instruments fund exactly the same intervention.

3. Launch HEF 2.0 (suggested 85% of annual secure budget in first instance) Value addition: A simplified fund delivered by a third-party agent with clear funding parameters, eligibility and management. Less transaction heavy for all actors. Wider access for a diverse range of implementing actors. Direct line of sight between Scottish Government and the fund. Options to create ‘bolt’ on funding windows and scale as needed. Potential for fund manager to act on aid matching options and invest in models to raise private sector funding. Greater transparency and lower administrative burdens. Potential trade-offs/risks: Current HEF panel members may feel disenfranchised. It will take time to establish and procure a new fund manager (unless this is viewed as an amendment to one of the existing suppliers to Scottish Government).

4. Invest in a Global South pooled fund – Carry out due diligence and invest in NEAR Change fund (suggested 5% of annual secure budget in first instance) Value addition: The Scottish Government is one of the few donors investing in a pooled fund entirely managed in the global south – a strong message on prioritising localisation. Offers an informed approach to supporting “hidden crises” as it shifts the formal gaze on what is prominent or hidden away from the global north. Potential trade-offs/risks: NEAR is at an early stage and is the only global south pooled fund the review team were able to identify. If other similar funds emerge, Scottish Government may need to consider a wider range of funds and ensure fair procurement.

5. Establish a fully independent humanitarian advisory body Value addition: Provides Scottish civil servants with unbiased, relevant advice on a fast-changing humanitarian sector. The body would serve as a critical friend across all Scottish Government humanitarian action – including increased diplomacy, HEF 2.0 and potential future investments in Global South led pooled funds. Potential trade-offs/risks: None known.

The review team have identified alternative funding models which would initially be resource intensive but over time would add value and be able to scale and adapt.

DEC and START

The review team note the need for a channel of funding to a pooled fund which allows Ministers to acknowledge that the Scottish Government is responding to crises which are profiled in the media. This is currently managed through HEF investments in DEC Stream 1. The review team recommend that the Scottish Government investigate and compare what START would offer. It is likely that START has stronger alignment with the shifting power south and localisation agendas. Whilst this analysis is under way, the review team suggest that Scottish Government continues funding for DEC Stream 1 to allow for continuity.

HEF 2.0 (simplified fund delivered by third party)

The current model is overcomplicated and transaction heavy. The review team recommend that HEF 2.0 be managed by a third party with clear criteria for funding allocations and decisions.^[68] The set up of a new architecture would initially be resource intensive but over time would add value and be able to scale and adapt.

Scope: On behalf of Scottish Government, disburse funding to provide immediate and effective assistance to reduce the threat to life and wellbeing for a large number of a population faced with a humanitarian emergency -in line with Scottish Government International Development Principles. This would include fund management of an agreed proportion of funds for emergency activations and also manage dedicated funding windows should additional funding be secured.^[69] The fund manager would develop the ability to ‘aid match’ funds – raising the impact and profile of Scottish Government humanitarian fund. They would also advance ideas on creating a brand for the HEF and lead on regular communications.

Fund manager: Independent third party with experience of grant management. Ideally based in the global south or in an equitable partnership with a grant management stakeholder based in the global south.

Fund disbursement: Fund manager will agree funding triggers/thresholds with Scottish Government and generate a data driven approach to funding windows, pooling data from credible sources.^[70] Once a trigger is met (probably country based), the fund manager will open a funding window to all stakeholders (members) who have pre-approved the due diligence process. Funds would be disbursed within agreed timeframes. Funds would have a high threshold of percentage of funds being spent directly by local or national organisations based in the global south. Where more than one proposal is received from actors working in the same geography the fund manager would support pooling of resources.

Governance and decision making: Fund manager reports to Scottish civil servant and provides quarterly updates on:

• Humanitarian context (from data sources noted above)
• Due diligence/ members engagement
• Funds disbursed
• Impact of funds

The fund manager will have delegated authority to review and prioritise funding applications without additional inputs from Scottish Government. The fund manager would be flexible and make provision for potential activations in response to Minister’s wishes. A clear risk management system would be put in place.

Due diligence/ Eligibility: Members must be committed to the Core Humanitarian Standards, demonstrate financial sustainability and good governance.^[71] The fund manager will design and manage a due diligence process which encourages smaller national and local delivery partners to participate and build their track record of receiving public funds.

Applications, Monitoring, Evaluation and Reporting: The fund manager will design an efficient, online application portal which will also serve as a monitoring and reporting platform. Fund level evaluations would be designed to aggregate evidence of higher-level outcomes.

Financial management: Scottish Government would allocate 20% of ODA annually to the fund manager with delegated authority to disburse funding according to a clear set of agreed criteria. This would require one decision point with the Minister. Funding would be able to roll over between financial years and fund manager would be able to receive any end of financial year funding for disbursement in slower time.

First actions:

• Scottish Government civil servants raise with Minister and seek a view
• Discuss options with procurement/commercial teams (extend an existing arrangement with a current service provider or go to market for design-build-delivery of a new fund).

Pooled Fund - NEAR Change Fund

Investing in a pooled fund based in the global south would be advantageous in terms of being a first mover – so far Switzerland is the only other donor, other funders are philanthropic. The NEAR Change Fund has disbursed over $6M through 62 grants across 25 countries since 2022 including Yemen, Bangladesh, Afghanistan, Kenya and the Philippines.

Fully independent humanitarian advisory body

Scottish Government should advertise and appoint a small independent advisory body (potentially 4-5 members, more than half should be based in the global south – all would be renumerated for their time). They would be experts who provide tailored advice only – they hold no decision-making power and are not linked to the operations of HEF 2.0. They would advise across all Scottish Government humanitarian funding. The body would hold 6 monthly online meetings and would ideally be formed as a subcommittee of the (future) Global South panel. The role of the body would be to provide independent advice to Scottish Government e.g. on future strategies related to humanitarian work, horizon scanning on the shape of the humanitarian sector in a declining ODA context. As Scottish Government transitions how it supports humanitarian work, the body can provide a ‘critical friend’ role and help shape ideas on future adaptations.

7.1 Review recommendations

In addition to the action plan shared in Table 3, the review team make the following recommendations.

Recommendations

1. Review level of humanitarian funding with a view to increasing the proportion of the International Development budget spend on humanitarian to at least 20% of Scottish Government ODA per year, i.e., increasing from the current £1M to around £5M per year.
2. Take action on creating HEF 2.0 – initially seeking approval of Ministers – delivering on ambitions for localisation.
3. Strongly consider mechanisms that offer more opportunities for Shifting Power South and localisation such as the funds run through the START network and the NEAR Change Fund. Initiate due diligence on both which are delivering on ambitions for localisation.
4. Advertise and appoint an independent humanitarian advisory body.
5. Refine the objectives of the HEF to add messaging on Shifting Power South for the launch of HEF 2.0. The revised primary objective would become – ‘provide immediate and effective assistance to reduce the threat to life and wellbeing for a large number of a population faced with a humanitarian emergency – maximising opportunities for Shifting Power South’ and use this as the core message on the purpose of the HEF. Consider presenting secondary objectives in ‘tighter’ terms e.g. as ‘co-benefits’ - building public awareness in Scotland of humanitarian crises; raising additional funding.
6. Linked to recommendation #5 the review team recommends that the Scottish Government share their existing plans and actions on citizen engagement and awareness raising with the humanitarian stakeholders so that they can help shape this work.
7. Take a higher-level approach to communications and the whole International Development portfolio. With Scottish Government communications team in the lead (and HEF 2.0 branding coming onstream later) – create a realistic communications framework for all of Scottish Government investment in ODA. Channel media material through the Scottish Government communications team as part of a much broader communications approach.
8. In order to deliver on Scottish Government ambitions to support system change - take a more visible and active role in donor advocacy e.g.
• Take action on becoming a signatory of the Grand Bargain
• Consider joining the Good Humanitarian Donorship Initiative Good Humanitarian Donorship (GHD) – Official Homepage
• Via networking with other subnational actors on one prioritised theme e.g. FAIR or localisation. At a minimum – build professional networks with other subnational leaders – e.g. Jersey and/or through existing engagements with Regions4 and Under 2 coalition.
• Become a member of relevant humanitarian networks, e.g. ALNAP
• Consider becoming a supporter of the Climate and Environment Charter for Humanitarian Organisations.
• Advance action on operationalising the FAIR principles in humanitarian settings (potentially as a specialist window in HEF 2.0).
9. At an appropriate time in the political cycle update the Global Citizenship: Scotland’s International Development Strategy (2016) making humanitarian objectives explicit.

Concluding remarks

The review of the Scottish Government's humanitarian investments triangulates the strong impact delivered to date – within modest budgets. It highlights the complexity of fund disbursement and recommends HEF 2.0 as a more efficient financing instrument. The review team believe that HEF 2.0 would bring greater transparency, flexibility, stronger communications and greater access of global south actors to Scottish Government funding.

There are opportunities for the Scottish Government to adapt its humanitarian funding strategies to effectively respond to changing global contexts while being realistic about what can be achieved within the current budget. Ideally additional funding would be allocated to humanitarian action – in line with comparable small donors.

A range of recommendations have been made to further improve the impact of humanitarian investment. There is potential for the Scottish Government to leverage the values-based work it has created, under the International Development Principles and the potential for targeted work on integrating feminist approaches to humanitarian action and play a role in the donor landscape – shaping other donor approaches. At a time when other donors are retreating from humanitarian work, the Scottish Government remains committed and arguably – this is the perfect moment to increase funds and increase the visibility of Scottish Governments’ actions.