Info Service on UN Sustainable Development (Mar18/05)
16 March 2018
Third World Network
Ways to improve donor reporting across UN system
Published in SUNS #8643 dated 16 March 2018
Geneva, 15 Mar (Kanaga Raja) - The United Nations and system organizations
should engage with donors in a dialogue at the strategic level for
the adoption of donor reporting templates and accommodating the common
information needs, demands and requirements of donors and the regulatory
frameworks and capacities of the organizations.
This is one of the main recommendations highlighted in a new report
by the Joint Inspection Unit (JIU), an independent external oversight
body of the United Nations system, reviewing donor reporting requirements
across the UN system.
The JIU review focused on the United Nations system organizations
that have the highest number of donor reports and on the 16 major
donors to the United Nations system, including the European Commission.
According to the report (JIU/REP/2017/7) prepared by Inspectors Mr
A. Gopinathan and Mr Gennady Tarasov, the rise in voluntary contributions,
most of which have been specified (or earmarked) contributions over
the past two decades, has been dramatic, while core contributions
have been stagnant or declining in real terms.
The proportion of voluntary contributions to United Nations system
organizations amounted to about 70 per cent of all contributions in
2015 (and about 85 per cent exclusive of resources allocated to peacekeeping
United Nations funds and programmes rely solely on voluntary sources.
Similarly, some secretariat bodies and other entities such as the
Office for the Coordination of Humanitarian Affairs (OCHA) and the
Office of the United Nations High Commissioner for Refugees (UNHCR)
rely on voluntary sources for more than 90 per cent of their funding.
The report noted that when transferring funds to the United Nations
system, donors are increasingly calling on organizations to strengthen
their capacity and performance with regard to reporting the results
to the governing bodies and sharing with them the evidence compiled
by their management, internal oversight offices and other accountability
and oversight mechanisms.
Donors desire greater transparency and accountability and information
on how these resources are used and on measures being taken to ensure
effective and efficient use of their contributions.
They demand more detailed financial and programmatic reporting, in
addition to regular assessments of organizations. Often, these reporting
requirements vary significantly regarding format, detail and periodicity.
According to the JIU report, the number of individual donor reports
prepared and submitted annually varies from one organization to another
and depends on a variety of factors, including the volume of earmarked
contributions received by the organization, the number and duration
of projects, the funding models used (including pooled funding mechanisms,
jointly funded programmes and projects, multi-year funding and the
bunching of several projects under one programme for funding) and
the agreed frequency and periodicity.
The numbers of reports produced by organizations often run into the
hundreds and even thousands.
"Many United Nations system organizations are of the view that
such voluminous donor reporting requirements pose challenges that
demand significant amounts of their management and operational time
and other resources, including human and financial resources,"
the Inspectors noted.
According to the JIU report, as set out by the Charter of the United
Nations and the statutes of the United Nations system organizations,
reporting to member States and donors is principally done through
the organizations' governing bodies. This includes reporting on regular
or core contributions and non-core contributions.
The increase in voluntary contributions and earmarking has contributed
to substantive changes in the funding structure of organizations and
the ways organizations report back on the funds received. It has resulted
in a significant rise in individual donor reports, which are submitted
directly to the donors on activities funded by them.
In the United Nations system, voluntary contributions in 2015 amounted
to $29.9 billion (of which $25.4 billion were specified) out of a
total of $47.9 billion, which corresponds to about 62 per cent of
the total revenue (53 per cent for voluntary contributions specified).
The proportion of the voluntary contributions exclusive of assessed
resources allocated to peacekeeping operations was higher, standing
at about 76 per cent in 2015, with the specified contributions reaching
64 per cent of the total revenue.
Eleven United Nations entities, including OCHA, the United Nations
Office on Drugs and Crime (UNODC) and UNHCR rely on voluntary sources
for more than 90 per cent of their funding needs, some of which, such
as the United Nations funds and programmes, rely solely on voluntary
Contributions to United Nations system organizations from non-member
State donors, such as the European Commission, the World Bank and
other multilateral institutions, global vertical funds, and United
Nations inter-agency contributions, including those from United Nations
pooled funds, foundations and corporations, have become significant.
They come with specific reporting formats and requirements.
In 2015, the United Nations system entities received more than $8
billion specified contributions from non- member State donors: the
European Commission ($1.72 billion), United Nations inter-agency pooled
funds ($2.01 billion), the World Bank and other international financial
institutions ($0.25 billion), and global vertical funds, foundations,
corporations and civil society ($4.09 billion).
According to the report, the majority of the organizations provide
significant numbers of individual donor reports annually. Three of
them provided about 3,000 reports, and seven submitted 1,000 to 3,000
donor reports in 2016, including final reports, annual, semi-annual
and quarterly reports.
Some organizations had difficulty in providing an exact estimate,
said the Inspectors.
The Inspectors noted that there is a correlation between the number
of reports and the proportion of voluntary contributions specified,
with specialized agencies having on average a lower number than United
Nations funds and programmes.
There is also a correlation with the total revenue; that is, higher
numbers of reports are seen with increasing revenue. UN-Habitat appears
to be an outlier, with a rather high number of reports in comparison
to its total funding.
"The situation is exacerbated by organizations having to submit
their reports in multiple, often significantly differing, templates
responding to specific needs of the donors. Most donors have their
own requirements with regard to frequency, format, level of detail
and financial or budget structure."
Furthermore, non-government donors such as the European Commission
and multilateral development banks have their own reporting modalities
(in respect of EC, requirements differ depending on the funding source
within EC or the EU Delegation in-country).
The same applies to global vertical funds - GAVI, the Global Fund,
the Green Climate Fund (GCF) and the Global Environment Facility (GEF),
and United Nations inter-agency pooled funds such as multi-partner
trust funds (MPTF) and Central Emergency Response Fund (CERF).
Running systems to support a project-based, earmarked contribution
model is cost-intensive, the report noted.
Providing a multitude of individual reports, tailored to donor-specific
needs, templates and contents, and maintaining the necessary underlying
systems, comes with extra transaction costs and is costlier than if
structures only provided their corporate performance and annual reports
to governing bodies of the organizations.
In addressing the challenges resulting from donor reporting, the JIU
report recommended that organizations should engage with donors in
a dialogue at the strategic level in line with the UN Secretary-General's
proposal for a "funding compact".
In the spirit of partnership, views of both organizations and donors
should be taken into account, notably donors' expectations for greater
effectiveness, transparency and accountability regarding system-wide
One of the critical elements of the dialogue should be the adoption
of donor report templates and accommodation of the common information
needs and requirements of donors and the regulatory frameworks and
capacities of the organizations, said the Inspectors.
Pooled funds or other innovative funding sources should continue to
be explored. Ideally, agreement with all donors would be most advantageous.
However, success even with some key donors has the potential to significantly
reduce the reporting burden, they added.
The United Nations System Chief Executives Board for Coordination
should provide the platform for the development of such a unified
position in the United Nations system, the Inspectors further said.
The JIU report noted that donor reporting requirements are determined
by the provisions in the respective contribution agreement and related
Specifying details of the reporting modalities in the donor agreements
is important for organizations to recognize their reporting obligations
and ensure that donor information needs are met.
Negotiations, therefore, play a key role in clarifying donor reporting
requirements and ensuring that donor needs are spelled out in the
Organizations and donors should discuss, at the outset, and agree
on needs and requirements, their feasibility and the attendant resource
implications. Similarly, there should be an agreement on ad hoc information
and reporting requests such as project site visits, donor meetings
Organizations should ensure that the relevant offices, notably finance
and legal, are consulted in a timely manner, so that the reporting
requirements agreed upon are compliant with rules, regulations and
Clarity on reporting requirements will help avoid protracted discussions,
ambiguity and grievances at a later stage, said the Inspectors.
They also noted that a number of organizations do not have a central
repository for all contribution agreements signed with donors. This
may be the case in particular for decentralized organizations. The
situation is exacerbated by the fact that fundraising and reporting
activities are increasingly taking place at the regional and country
While legal and finance offices are consulted as part of the internal
clearance process, this is not always the case for standard agreements
or small contributions. Similarly, several organizations do not have
a central repository for individual donor reports, for the same reasons.
"Executive heads should encourage better access to, dissemination
and exchange of information concerning donor reporting among the member
States, and they should ensure that every organization maintains a
corporate repository for all contribution agreements and donor reports,"
said the Inspectors.
According to the JIU report, many interviewees noted that providing
guidance and training to programme managers and staff engaged in donor
reporting activities, such as finance and operational support staff,
would help improve the quality of reporting and reduce transaction
"Guidance and training on donor reporting should foster compliance
with the organization's rules and provisions on donor reporting and
assure consistency of reporting conditions accepted across the organization,"
said the Inspectors.
It helps to adapt to evolving reporting requirements and to address
challenges posed by the turnover and rotation of personnel - both
within organizations and among donor agencies.
The report said the guidance should cover standard contribution agreement
formats, financial and programmatic report templates, results-based
project design, common reporting needs, results, outcome and impact
reporting, value for money, information on beneficiaries, performance
reporting and transparency initiatives.
It should also provide suggestions on avoiding common mistakes and
addressing common concerns (such as timeliness, results-based management
reporting, level of detail/granularity, comprehensiveness and the
alignment of programmatic with financial reports).
The JIU report also said a major concern expressed by organizations
regarding individual donor reports was the resources needed for producing
those reports and the related transaction costs. The majority indicated
that donor reporting was a considerable administrative burden.
Organizations admitted having difficulty in providing estimates for
the costs of donor reporting and the related administrative burden.
Most do not track the costs separately or quantify them.
The challenges of estimating or measuring the administrative burden
and transaction costs related to reporting stem also from the absence
of methodologies for computing them.
The inability to estimate the reporting costs impedes organizations
from ensuring that all additional reporting costs are included as
direct programme costs in line with their established cost recovery
policies, said the Inspectors.
Without a realistic estimate, organizations cannot have an informed
discussion or dialogue with donors on the reporting costs. Organizations
should, therefore, estimate reporting costs and develop methodologies
for calculating them.
"There should be a clear understanding at the outset that any
extra reporting will have to be paid for by the donor. This should
include procedures for ad hoc or informal reporting, which is difficult
to plan and quantify and usually ends up being subsidized by the organization."
The report also said that donor reporting on small contributions is
proportionately costlier. Defining a minimum threshold for contributions
below which only standard reporting would be provided, together with
methodologies for calculating reporting costs, would support the principle
of full cost recovery and foster consistency within an organization.
Having an adequate level of resources for individual reports will
help assure the quality and timeliness of donor reporting, it said.
According to the Inspectors, most organizations supported the idea
of a common template for donor reporting, especially financial reporting.
Many donors also welcomed efforts towards such standardization.
Both organizations and donors regarded that as an effective means
to better utilize reporting and allow for comparison among organizations.
The Inspectors suggested that a common template should accommodate
most of the donor requirements. At the same time, it should be flexible
enough to be adapted by different entities and to the varying requirements
of individual donors.
Several organizations have developed common report templates for government
donors and for non- governmental donors, or a donor-specific template
that is negotiated between the organization and one donor.
The report noted that some efforts have been made towards harmonising
and standardising donor reporting among multiple organisations and
donors, including common standard reporting of pooled funds, reporting
on thematic or loosely earmarked multi-donor funded projects/programmes,
and the United Nations template for inter-agency funding.
The most notable effort exploring a possible common report template
across the United Nations system for use by donors has been developing
the "10+3" common report template, refined to the "8+3"
common template, in the wake of the Grand Bargain following the 2016
World Humanitarian Summit.
Based on an analysis of the templates of 19 government donors on humanitarian
funding, a template was developed consisting of 10 core and 3 additional
questions covering about 77 per cent of the information commonly requested.
Such a baseline commonality suggests that a common template would
be feasible. The "8+3" common template is currently being
piloted in three countries (Myanmar, Iraq and Somalia) and, depending
on the outcome, its use would be suggested to organizations and donors.
Harmonizing the questions asked or categories of information requested
would reduce the complexity and multiplicity of the reports, without
necessarily reducing the information requested (streamlining the number
and scope of information requests may also yield time savings).
An immediate step would be to harmonize final (and interim) report
templates, which have significant commonalities among them.
Attempts should be made, based on the work done, to develop a "minimum
core" report format that is agreeable to all organizations and
covers their key common information/reporting needs, and flexible
enough that it can be adapted to the varying requirements of donors
and entities, said the report.
It also said that managing project-based and hard-earmarked funding
requires policies and systems that support such operations, including
To this end, and with a view to improving the quality and timeliness
of donor reporting, organizations should ensure that their policies
for the management of voluntary contributions are adequate, that they
possess robust project management systems, and that their enterprise
resource planning system and other management information systems
possess the necessary functionalities for such work.
The risks related to donor reporting need to be mitigated, and quality
assurance processes for donor reports should be strengthened.
Organizations should ensure, during the due diligence and clearance
process of accepting contributions and signing donor agreements, that
the contributions and project results framework are aligned to their
corporate strategic and results framework.
Organizations should treat donor reporting as an effective tool for
resource mobilization and should put in place measures for strengthening
partnerships so that reporting is perceived as a continuous process
of building lasting relationships with partners.
Robust and adequate oversight functions and reports have the potential
to enhance donor confidence and reduce assurance needs that donors
seek from organizations through project-specific, detailed and comprehensive
reports, said the Inspectors.
The JIU report makes seven formal recommendations, of which two are
addressed to the governing bodies and five to the executive heads.
The formal recommendations are complemented by 15 informal or "soft"
recommendations in the form of additional suggestions to both the
organizations and the donors for effecting improvements.
The formal recommendations are as follows:
Recommendation 1: The governing bodies of the United Nations system
organizations should encourage the Secretary-General and executive
heads of other organizations, in the framework of the United Nations
System Chief Executives Board for Coordination, to develop a common
position and pursue a high-level strategic dialogue with donors, in
order to address the challenges posed by the current funding models
and practices and the impact of strict earmarking of voluntary contributions
and reporting to donors.
Recommendation 2: The executive heads of the United Nations system
organizations that have not yet done so should put in place measures
for ensuring that partnership agreements, concluded at the corporate
level with the donors and at the corporate and field levels for individual
programmes and projects, spell out the needs and requirements of the
donors and the mutual commitments of the organizations and the donors,
with respect to the details of reporting on the use of funds provided.
Recommendation 3: The executive heads of the United Nations system
organizations should encourage better access to, and dissemination
and exchange of, information concerning donor reporting among the
member States and should ensure that every organization maintains
a corporate repository for all contribution agreements and donor reports.
Recommendation 4: The executive heads of the United Nations system
organizations that have not yet done so should regularly update guidance
on donor reporting and put in place measures for the professional
skills development and training needed to improve reporting to donors,
for personnel at headquarters and in the field.
Recommendation 5: The executive heads of the United Nations system
organizations that have not yet done so should work systematically
with donors to include in donor agreements the costs associated with
preparing donor reports.
Recommendation 6: The Secretary-General and executive heads of other
United Nations system organizations should, preferably within the
framework of the United Nations System Chief Executives Board for
Coordination, develop and adopt a common report template accommodating
the information needs and requirements of donors and the regulatory
frameworks and capacities of the organizations, as a basis for negotiations
Recommendation 7: The governing bodies of the United Nations system
organizations should request the executive heads to task, and adequately
support, the internal audit and evaluation offices of their respective
organizations with ensuring that the relevant oversight reports provide
the required levels of assurance that would help minimize reporting
to individual donors on the use of their earmarked contributions.