New approaches to WHO financing: the key to better health, by Charles Clift and John-Arne Røttingen

British Medical Journal – BMJ 2018; 361; k2218

Dr Tedros’s plans to reverse the trend towards earmarked funding are important but challenging, say Charles Clift and John-Arne Røttingen

 

If the World Health Organization is to become more effective it needs to have greater flexibility on how it spends its funding. This is the argument that the organisation’s director-general, Tedros Adhanom Ghebreyesus, has made repeatedly since taking office in July last year. Speaking at the WHO executive board meeting in January 2018, he said: “If we continue to operate under the same funding restrictions, we will produce the same results. No organisation can succeed when its budget and priorities are not aligned.”1 In his opening speech at the 71st World Health Assembly he reiterated the call to reduce earmarking and avoid internal competition for donor funding.2

Currently around 80% of the funds WHO receives are earmarked for projects specified by the donor (box 1). The result is that many of its programmes are seriously underfunded, including those for non-communicable diseases and maternal and child health.3 Tedros is not necessarily asking for more money, but he believes the current system hampers WHO in meeting its members’ aims. The reliance on voluntary contributions means fundraising is essentially devolved to individual departments and offices within WHO, stopping the organisation from operating as a coherent whole. The individual departments inevitably become more accountable to their external donors, who provide most of their funding, than to the management and leadership at WHO.4 As Tedros said last year: “By not working together we lose the synergy that is gained through joint working. But also, what one department does can actually undermine what another is trying to achieve.”4

Box 1

WHO financing

  • WHO has always been funded by a mixture of mandatory assessed contributions from member states and voluntary contributions from member states and other non-state organisations

  • The proportion of WHO’s income coming from assessed contributions, which have no conditions on spending, peaked in the 1960s at about two thirds as a result of rapidly rising assessed contributions, including from newly independent member states

  • Subsequently, leading UN contributors began to refuse to increase assessed contributions, although in the mid-1990s about 45% of WHO’s income still came from that source

  • Since 2000, WHO’s income has more than doubled, almost entirely based on rising voluntary contributions. Over 95% of voluntary contributions in 2017 were earmarked for particular projects and programmes decided by the donor

  • While member states in the WHA now agree a budget envelope covering 100% of WHO spending, the WHO secretariat can directly control the allocation of only the proportion that comes from assessed and unearmarked contributions (about 20%)

  • A paper submitted to the 2018 WHA notes that 10 of WHO’s programme areas receive 80% of all voluntary contributions while 14 programme areas receive less than 2%

  • In addition to these systemic problems, hanging over WHO is the impending eradication of polio. Nearly 20% of WHO staff (about 1300) have been funded by this programme, financed almost entirely by voluntary contributions, and a further 6000 people are on non-staff contracts. The eradication of polio will leave a large hole in WHO’s budget and its capabilities, particularly in country offices. Planning for this eventuality is occurring but it is not clear how this hole can be filled

Rise of tied contributions

Total contributions to WHO have more than doubled since the turn of the century, largely as a result of the rapid rise in voluntary contributions by both member states and non-governmental organisations. However, assessed (unearmarked) contributions have risen by less than 14%, representing a fall in real terms. In the past decade, the proportion of unearmarked funding available to the WHO has fallen as a proportion of total contributions from 36.5% in 2008-09 to 21.4% in 2017 (table 1).

Assessed contributions to WHO are based on the United Nations scale of assessments, which is revised every three years. The assessments are predominantly based on total and per capita gross national income (GNI).5 WHO implemented a new UN scale in 2017, which shifted the burden of financing slightly from high income to upper middle income countries (table 2). As a result, even with the 3% increase to be implemented in 2018, many high income countries will be paying much less in assessed contributions than they were in 2016. For example, the UK’s assessed contribution was $24.1m (£18m; €21m) in 2016 but will be $21.4m in 2018. By contrast, Argentina’s contribution increases from $2m in 2016 to $4.3m in 2018. Nevertheless, the system remains highly progressive in relation to per capita incomes. In 2017, low income countries share of contributions was just 20% of their share of global GNI compared with 119% for high income countries (table 2). 

The position for voluntary contributions is rather different. Although the numbers are not large, low income countries counterintuitively contribute the most in voluntary contributions relative to their GNI (table 3). This is because donor funds are “passed through” WHO. Thus in 2015, the three countries hit by Ebola in west Africa together donated $36m. Among the lower middle income countries, Pakistan and Nigeria donated over $30m in 2017, which represented donor funding for polio eradication. Thus, for these countries, voluntary contributions are a misnomer.

 

The voluntary contributions of upper middle income countries are surprisingly low. Although these countries create 27.5% of global GNI, they account for only 2.1% of voluntary contributions to the WHO. They are the only country income group where voluntary contributions are lower than assessed contributions—in fact, less than one quarter of assessed contributions (annual average for 2015-17, $89m versus $21m).

Challenges of voluntary contributions

The top 20 voluntary contributors to the WHO are responsible for about 80% of all voluntary contributions (table 4), with the remainder coming from about 210 contributors. This large number of contributors creates a huge administrative and management burden. Not only that, but each donor splits its earmarked contributions into several different grant agreements. The top 10 member state contributors and the Bill and Melinda Gates Foundation have over 1000 separate agreements. The remaining 200 or so contributors are responsible for a further 2000 agreements. Non-state organisations provide no unearmarked contributions— they only contribute to the WHO for specific purposes of their choosing.

Member state voluntary contributions are not well correlated with their assessed contributions. Some member states, such as the UK and Norway, pay voluntary contributions that far exceed their shares of assessed contributions or global GNI, whereas others, such as Japan or Germany, fall well below in relation to these shares. Several large high income countries are missing from the list of major contributors in table 4 as their voluntary contributions fall well below their “fair” share. France, Italy, and Spain each contribute less than one third of their share in terms of GNI.

How can WHO increase unearmarked funding?

These data clearly show the challenge WHO faces in transforming the way it is financed. Despite attempts in recent years to encourage more unearmarked voluntary contributions, the trend has been in the opposite direction. As Tedros has acknowledged,1 this is indicative of a “trust deficit” with member states.

We calculate, based on the above data, that if upper middle income countries were persuaded to make voluntary contributions more in line with their share in assessed contributions or GNI (table 2), the WHO’s annual contribution income could be increased by $160-$220m. If underperforming high income countries were to match their share in GNI or attain the current average share of GNI for the high income group (table 3) this could produce an extra $120-$220m annually. WHO’s annual contribution income could thus possibly be increased by $280-$470m.

However, even assuming the political will existed to raise unearmarked voluntary contributions, the current funding system creates practical difficulties. Decisions about voluntary contributions are not made centrally by, say, the health ministry, but by multiple people in different agencies with specific mandates, who interact with their technical counterparts in WHO. In Germany, for example, eight different government bodies provide voluntary contributions to WHO. The overall contribution is determined by many decentralised funding decisions in these bodies and is necessarily earmarked in line with their mandates. Even if the main provider of voluntary contributions is a country’s development agency, as is often the case, the contribution will be the outcome of a similar process of negotiation between technical units within the agency and their counterparts in WHO. Moving to unearmarked contributions would destroy those technical relationships between the donor and WHO, while obviously also weakening the donor control over how its money was spent.

Based on past experience, neither the US nor any of the WHO’s non-state voluntary contributors, which together account for 70% of voluntary contributions, are ever likely to provide unearmarked contributions.

The path that Tedros has embarked on is therefore challenging. WHO is not unusual among international agencies in its increasing dependence on earmarked contributions. An Organisation for Economic Cooperation and Development report argues that this system has occurred in response to donors’ perceptions about inefficiencies in the multilateral aid system.8 Earmarked funding allows donors to shape an agency’s agenda in ways that accord better with their priorities, permits better monitoring of implementation and results, and provides visibility to the donor. The report also finds that smaller and “new” donors perceive earmarking as a way to reduce their own delivery constraints, learn from multilateral organisations and scale-up their own bilateral efforts.

The WHO’s experience since 2000 bears this out. Tedros plans a “financing campaign” that will embody new approaches and engage with member state governments at the right level (box 2). He places emphasis on showing how WHO affects health outcomes,10 although, given the multiplicity of organisations involved, isolating WHO’s specific contribution will be difficult.

Box 2

Challenging the status quo on funding

Concern about the sustainability of WHO financing and its alignment with World Health Assembly (WHA) approved objectives initiated the process of WHO reform that began in 2010 under Tedros’s predecessor, Margaret Chan.9

WHO has tried to secure greater funding that is independent of donor funding priorities by increasing member state assessed contributions. This has encountered sustained resistance from member states. A proposal for a 5% increase was turned down by member states in 2015.

In 2017, the WHA was supposed to consider a proposal for a 10% increase, but, in response to opposition from some member states, the proposed increase was reduced to 3%.

Its alternative approach is to increase the proportion of voluntary contributions that are unearmarked. Tedros intends to launch a financing campaign, including a focus on persuading emerging economies to increase their voluntary contributions, encouraging contributors to fund WHO priorities and increase the flexibility of their funding.

 

The key question is what kind of message to potential funders is likely to be successful. A financing strategy based on the criteria and numbers described above, where the upper middle income and under performing high income countries are encouraged to increase their share of financing, may be one approach. However, the OECD analysis suggests this may have limited impact. Tedros’ strategy seems to be to put WHO at the centre of advocacy for the “big envelope” of funding for all global health organisations in support of attaining the sustainable development goal for health, and that WHO will benefit based on its coordinating role. Such an approach could include seeking unearmarked funding for parts or the whole of one or more of WHO’s six programme areas, as is already the case in respect of its Contingency Fund for Emergencies. Although donor response has been somewhat mixed in that area, the approach could be extended to other larger priority areas. For example, WHO’s work on health systems is central to achieving universal health coverage, which is a priority for most of the international community. Similarly, non-communicable diseases are currently the focus of international attention and also an underfunded part of WHO’s work. A collective approach to funding programmes, which can also use peer pressure, seems more likely to be successful than individual negotiations with donors.

Member states need to support the director-general in these efforts to achieve collective action in making WHO a more efficient organisation that delivers results for all. WHO cannot continue being a service provider for many individual donors.

Key messages

  • A shift to tied voluntary donations in recent years means WHO is unable to control how 80% of its budget is spent

  • WHO thus cannot give required attention to global priorities such as non-communicable disease and universal health coverage

  • Resistance to making non-earmarked contributions is high

  • Contributions of middle income countries and many higher income countries are low as a proportion of their share of world income

  • WHO must persuade countries to provide more flexible funding for neglected priorities

Footnotes

  • Contributors and sources: CC has written extensively about WHO, is an observer of the WHO reform process, and has been a consultant to WHO on access and intellectual property. In 2012-14 he acted as the secretariat to a high-level Chatham House working group on health governance authoring the report What’s the World Health Organization For? JAR chaired a companion working group on health financing with a final report entitled Shared Responsibilities for Health: A Coherent Global Framework for Health Financing and has chaired and been member of expert groups at WHO. CC is the guarantor of the article. JAR and CC were responsible for the original idea and CC for the research and drafting. JAR commented on successive drafts and agreed the final text.

  • Competing interests: We have read and understood BMJ policy on declaration of interests and declare that we have no competing interests.

  • Provenance and peer review: Not commissioned; externally peer reviewed.

References

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