Info Service on Finance and Development (Jul15/13)
28 July 2015
Third World Network
friends and colleagues,
is an insightful and well researched briefing paper, based on a new
report from Global Policy Forum titled "Fit for Whose Purpose?
Private funding and corporate influence in the United Nations"
Policy Watch #8
27 July 2015
for Whose Purpose?
By Barbara Adams and Gretchen Luchsinger
A critical issue repeatedly arising in the post-2015 negotiations
relates to responsibility. There is shared responsibility, the preference
of rich countries who would like to shift traditional official development
assistance (ODA) and other “burdens” given the “rise” of some developing
countries. There is common but differentiated responsibility, stressed
by developing countries to link common commitment with the reality
of varying capacities.
Debates also circle, directly or otherwise, around the role of the
state, with some camps continuing to promote its central responsibility.
Others call for more room for “stakeholders” to be responsible—notably,
the private sector.
The post-2015 agenda must aim for transformation, given that the current
course of development is so off track, from imbalanced consumption
and production patterns, to gaping inequalities, to the surpassing
of planetary boundaries. The intergovernmental negotiating process
has recognized this need; drafts of the outcome document have referred
to its unprecedented scope and significance. But will the rhetoric
see action? How likely is that if some newly “responsible” actors—namely,
the large private corporations and foundations from whom trillions
of development dollars are expected to flow—are also among the primary
drivers of unsustainable development?
Fit for whose purpose?
For a look at how the balance between public and private responsibility
has shifted, and what this means in the real world in terms of adherence
to international standards and norms, one needs to look no further
than the United Nations itself. A new Global Policy Forum Report —
Fit for Whose Purpose? Private funding and corporate influence
in the United Nations — details how private corporations and corporate
philanthropic organizations are increasingly paying to play there.
Why are corporate-led solutions to global problems seen as the way
forward? How is it that measures poorly aligned with UN values receive
the UN stamp of approval?
In recent decades, the United Nations has been subject to two trends
that may also be familiar to some governments. One is the tendency
for government donors to earmark funds, leaving different entities
scrambling to please donors instead of providing strategic guidance
for a consistent, coherent set of core programmes. Many organizations
have also ended up looking for new sources of funds, often with the
private sector. The underlying thinking is that the public sector
can benefit not only from greater private resources, but also from
private “efficiency” and “effectiveness.” Not factored into this equation
is how inefficient and ineffective large private actors have often
been in sustaining public goods and upholding human rights.
What are some of the results of “outsourcing” the United Nations?
Growing business influence in political discourse, the fragmentation
of global governance, the weakening of representative democracy, unpredictable
funding that undercuts UN mandates, and a lack of accountability,
to name some of the most obvious.
The UN system is meant to serve all the peoples of this world and
the planet they inhabit. Total funding per year is around $40 billion,
about half the budget of New York City, and less than a quarter of
the budget of the European Union. A zero growth doctrine for the UN
regular budget has been in place for over three decades—since the
1980s, as governments have bought into the theory that the public
sector is somehow less capable, and backed away from adequately funding
the multilateral system.
What’s the system to do? Increasingly, the answer has been: welcome
in big business and private philanthropies. Private funding for UN-related
activities reached an unprecedented US $3.3 billion in 2013, constituting
14 percent of all voluntary contributions. The growing use of general
trust funds—where contributions have jumped by 300 percent over the
last decade—allows donor governments and private concerns to direct
UN funding choices outside the “one country, one vote” democracy of
UN policy processes.
UN gateways for business
Private business interests now have multiple options to pay and play
at the UN. The one that has opened the door to many others is the
UN Foundation—established as a non-profit organization under US law
to receive a billion dollar gift from CNN founder Ted Turner. Since
the foundation is not a UN organization, the United Nations set up
the UN Fund for International Partnerships (UNFIP) as a trust fund
to channel the money into UN activities. The relationship between
the foundation and the fund is governed by an agreement initially
made public, but not so for the most recent iteration.
In 1999, as the UN Foundation established itself, almost all of its
annual expenses went towards grants, primarily through UNFIP. Today,
only around half goes to grants, and less than 60 percent of grant
funds go to UNFIP. Much of the rest backs activities outside the UN
system—aligned with UN causes, if often carried out by large US NGOs.
Deciding on the UN grants rests, in practice, with the foundation;
UNFIP reviews the selections.
Over the last decade, the original Turner funds have remained stagnant,
while contributions from other private and public donors have risen,
notably from the Bill & Melinda Gates Foundation. Others include
ExxonMobil, Goldman Sachs, Cemex, Bank of America and Shell, where
a variety of questions might be raised around their links to issues
ranging from environmental impacts to the stability of global and
national financial systems—in other words, some of the major concerns
at the heart of the post-2015 agenda. Where governments give funds,
there are questions around why these need to travel through the UN
Foundation instead of going directly into the UN system. For one recent
UNFIP grant, an internal UN audit flagged concerns about the source
of donations, noting the potential for reputational risks and a conflict
in ethical values.
The UN Foundation, despite now diminished contributions to UNFIP,
enjoys a prominent role at the UN. It freely encourages closer ties
with business, often through global “partnerships,” and to a large
extent benefits from the UN name. Its representatives advise the UN
Secretary-General. In its own words, it has evolved from a “traditional
grantmaker to an actively involved problem solver…to solve the great
challenges of the 21st century.” All of this is happening aside from
the processes led by UN Member States that, from the beginning of
the UN system, have aimed at being democratic, inclusive and responsive
to the needs of all—not just a few.
Fragmentation and more fragmentation
Around 60 percent of UN funding overall goes to activities for development
and humanitarian assistance—Member States have now made vocal calls
for this system to be fit for achieving the post-2015 agenda. Yet
core or unearmarked resources have plummeted from nearly half of all
resources in 1997 to only a quarter today. Non-core or earmarked resources
make up the balance, imposing significant administrative burdens and
diluting programmatic focus. They introduce fragmentation, competition
and overlap—in the face of ongoing UN Member State calls for more
One response has been to try to diversify funding sources—in part
by turning to the private sector, often without fully acknowledging
the reputational risks that may be involved, or the strong potential
for further fragmentation, and the undercutting of the multilateral
nature and value of UN development programmes. In 2012, the Global
Fund to Fight AIDS, Tuberculosis and Malaria, created in the wake
of donor dissatisfaction with UN agencies, was, ironically, the largest
donor to UNDP—exceeding even the largest government contributor. It
is financed in large part by the Gates Foundation, which is now also
the second largest donor to the World Health Organization (WHO), behind
only the United States.
UNESCO has attempted to market itself to private donors by promising
“a strong image transfer by associating yourself with a reputable
international brand” as well as “benefit(ting) from UNESCO’s role
of a neutral and multi-stakeholder broker” and “strengthen(ing) your
The UN Capital Development Fund, faced with resource constraints almost
from the time it opened its doors, is now the beneficiary of large
multimillion dollar donations from the Gates Foundation as well as
Visa, MasterCard and Citigroup. Why the sudden interest in a fund
that spent years providing small amounts of microcredit and assisting
with local development finance? Could it be the market possibilities
from the estimated 2.7 billion people around the world who do not
yet have access to formal financial services?
Non-core resources have skyrocketed, from under $10 million in 2006
to over $70 million in 2014. Much of this funding goes, for instance,
to programmes promoting the use of electronic banking platforms.
An ongoing budget crisis has threatened the stability of the WHO,
long seen as the global health authority, even amid enormous global
health concerns. Until 1998, half its budget came from assessed government
contributions spent based on what the organization saw as the most
compelling priorities. By 2014, assessed contributions comprised less
than a quarter of the budget.
What has received the budgetary axe recently? Communicable diseases,
and outbreak and crisis response, both the top health priorities particularly
of the poorest countries. What’s flush with extra cash? Non-communicable
diseases, and preparedness, surveillance and response, both favoured
by wealthier countries who have bigger problems with the former, and
are interested in protecting themselves against disease outbreaks
in the case of the latter. These shifts were on ready display for
the Ebola crisis, where the WHO’s weakened capacities, especially
due to cuts that slashed staff expertise, diminished its response,
in stark contrast to its widely lauded action on the SARS outbreak
little more than a decade before.
Other concerns stem from the growing number of major pharmaceutical
companies that have become significant donors to WHO, including Glaxo-Smith
Kline, Hoffmann La Roche, Novartis, Bayer, Merck and Pfizer. In the
swine-flu outbreak of 2009-2010, experts who advised that WHO declare
it a pandemic had ties with drug companies that in turn used the occasion
to establish new vaccine contracts with governments.
WHO Director General Margaret Chan, in reference to her now highly
earmarked budget, says it is “driven by what I call donor interests.”
These include, as noted earlier, the Gates Foundation, which is mainly
interested in technical solutions with quick, measurable, visible
outcomes. As for health systems—which in most countries remain publicly
run—Bill Gates has reportedly said that he will never fund these because
“it is a complete waste of money, (with) no evidence that it works.”
Concerns have been repeatedly expressed by researchers that the large
sums Gates sinks into what he thinks is worth funding stifle the research
agenda and could divert attention in some health systems from underlying
causes of diseases such as malnutrition.
Chan notes that going against the business interests of powerful economic
operators is one of the biggest challenges facing health promotion.
Many industries do not hesitate to use well-documented tactics to
fend off regulation and advance their interests. In her words, these
comprise “front groups, lobbies, promises of self-regulation, lawsuits,
and industry-funded research that confuses the evidence and keeps
the public in doubt. Tactics also include gifts, grants, and contributions
to worthy causes that cast these industries as respectable corporate
citizens in the eyes of politicians and the public. They include arguments
that place the responsibility for harm to health on individuals, and
portray government actions as interference in personal liberties and
She continues, “This is formidable opposition. Market power readily
translates into political power. Few governments prioritize health
over big business. (…) This is not a failure of individual will-power.
This is a failure of political will to take on big business.”
Slicing and dicing development
Despite all the talk about “integrated” issues in the post-2015 agenda,
there are already moves afoot to split up responsibilities and resources,
most notably through the use of so-call vertical funds that focus
on single issues—some commentators have gone so far as to propose
having a fund for each goal. For example, the new Global Financing
Facility to support the UN Every Woman Every Child initiative was
launched at the Third International Conference on Financing for Development
in July. Managed by the World Bank with the blessing of a few major
government backers, it is expected to serve as a major vehicle for
financing the proposed SDG on healthy lives.
Every Woman Every Child is one of a series of global multistakeholder
partnerships involving public and private actors. These are seen as
a practical step in a time of scare resources, pooling resources and
skills, and allowing quick, focused action on a discrete set of targets.
Their approach may appeal particularly to “partners” with little interest
in making links and questioning systemic issues that collectively
drive deficits across all elements of sustainable development.
For its part, Every Woman Every Child aims to save the lives of millions
of women and children. How is it doing so far? In 2010, it identified
a funding gap of $88 billion for reproductive, maternal, newborn and
child health services in 49 countries. To date, it has met at most
19 percent of this gap, with, as is often the case, only a portion
of committed resources becoming actual disbursements. But the number
of commitment-makers has tripled, including a number of governments,
foundations, large NGOs and other global partnerships, like the Global
Fund to Fight AIDS, Tuberculosis and Malaria.
The initiative’s most recent progress report trumpets “its success
in mobilizing the private sector.” Merck has made commitments to expanding
childhood asthma programmes and donate vaccines; Johnson & Johnson
agreed to donate medicines and help expand training for health workers.
In a series of “Business Impact Stories” published by Every Woman
Every Child, Nestl้’s Women’s Empowerment Initiatives are oddly
championed as “integrated in the company’s shared value approach and
result in increased penetration, footprint and additional volume for
Nestl้; strong and emotional links with consumers…and enhanced
trust with all stakeholders.” It is not immediately clear how exactly
women’s empowerment fits into this equation.
Other global partnerships include Sustainable Energy for All and Scaling
Up Nutrition. The former has allowed a definition of renewable energy
that includes hydropower and bio-fuels, despite negative environmental
consequences from both. Its initial Global Action Agenda was developed
by a High-Level Group where half the representatives were from the
private sector, including top managers from Bank of America (a major
financer of the coal industry), Accenture, Renault-Nissan, Siemens
and Statoil. One civil society representative was invited to attend,
from the Barefoot College in India. Similar patterns have persisted
throughout the Advisory Board and other governance structures set
up to manage SE4All, with the board now chaired by the UN Secretary-General
and the President of the World Bank.
The initiative so far has come up with solutions to finance sustainable
energy that rely on the same market mechanisms that tend to be associated
with perpetuating inequalities and unsustainability—they propose turning
to bond markets, public guarantees to mitigate private capital risks
and insurance products, among others.
It has also mobilized a series of both financial and non-financial
commitments from public and private actors, like the US Power Africa
initiative. Among the biggest expected beneficiaries of the $7 billion
scheme: General Electric. Companies that make commitments under SE4All
are prominently featured on the initiative’s website, but come with
no effective mechanisms to monitor and review implementation.
Changing the discourse
For the UN system to respond adequately to today’s critical challenges,
Fit for Whose Purpose? stresses that public funding of it must increase.
Funding must be high in quality, including through strict limits on
earmarking. Norms, standards and guidelines must be set to govern
all interactions of the United Nations with the corporate sector,
and both the intergovernmental framework and UN institutional capacity
for monitoring and overseeing partnerships must expand.
Perhaps most importantly, the surrounding discourse needs to fundamentally
change, drawing a clear distinction between those who regulate and
those who are regulated, and reclaiming the public space for the UN
system and within it. And responsibilities need to be more than just
generically “shared”—they must be well delineated and defined, grounded
in norms that protect the collective public interest, and linked to
Post-2015 aims for a transformative agenda. Is this to be sought in
the “new business model” that has emerged, where the focus is, literally,
on large corporate interests? Can the UN system ever be fit for purpose
for “we the peoples” if private players, arriving with a mix of contradictory
incentives, increasingly channel funds and steer agendas without democratic
In the post-2015 agenda, Member States face a turning point. Endorse
or tacitly accept this model. Or reaffirm that their primary responsibilities
are to speak and act according to the inherent rights of their citizens,
and the planet they share. Only the latter choice has hopes of putting
the world on track for transformation.
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