Efficiency and inefficiency in humanitarian financing

The goal of this study was to define and measure efficiency in the context of international funding for humanitarian response. Commissioned by the Office of U.S. Foreign Disaster Assistance (OFDA), the research was conducted to help inform donor decision-making at a time of surging financial demand for humanitarian aid and new momentum for change in the humanitarian sector following the World Humanitarian Summit in May 2016.

The research yielded four key findings: 1. The primary modes of funding have not yet proved efficient for rapid response. 2. Disproportionate requirements and inflexibility hinder efficiency at all levels. 3. The added value of intermediary agencies in multi-link (pass-through) grants is inconsistent, and they often create net inefficiencies. 4. Allocative efficiency and the stated goals of localization are impeded by risk perception and capacity constraints on the part of donor governments.