VIEWPOINT: Disaster donors must set their aid free

Survivors of Hurricane Katrina in Mississippi in September 2005 REUTERS/Joe Skipper

You&${esc.hash}39;d think relief agencies would be able to prioritise funds to help those in the greatest need. Under the current system, they can&${esc.hash}39;t. Commentator and consultant Nick Cater explains why.

After Hurricane Katrina smashed into the U.S. Gulf Coast in August, donors gave an incredible ${esc.dollar}1.4 billion to the American Red Cross to help the relief effort.

Not a cent of that money could be spent on the string of hurricane disasters that followed. Just days after Katrina, Rita tore across the Gulf Coast again. Wilma then cut a swathe of damage from Central America to Florida while Stan killed 2,000 in Guatemala.

The problem is known as earmarking, meaning that funds are only raised for a particular disaster or to be spent in a specific way.

For example, no part of the billions donated specifically for last year&${esc.hash}39;s Indian Ocean tsunami can be freed to give life-saving help to the survivors of the Kashmir earthquake in October - despite a funding shortfall that could prove lethal for thousands as winter bears down.

Earmarking forces aid agencies to a launch new appeal for each new crisis, using suffering to compete for the attention of politicians, media and the public.

Between the United Nations, the Red Cross and Red Crescent and major charities, agencies launch scores if not hundreds of appeals every year.

The process results in unreliable and delayed funds that hamper effective agency responses. And earmarking undermines the credibility of humanitarian agencies if their priorities are set by the requirements of donors rather than the needs of cold and hungry disaster survivors.

MARKET PLACE OF MISERY

To address the inevitable delays that come from earmarking, U.N. Secretary General Kofi Annan hopes to have a ${esc.dollar}500 million emergency reserve operational from early next year to offer instant funding even before an appeal can be launched.

In a similar move, British finance minister Gordon Brown has declared that "the world needs to get better at delivering humanitarian aid... Money should be frontloaded, fast disbursing and readily accessible".

Brown has pledged ${esc.dollar}85 million to a new International Monetary Fund "exogenous shocks facility" to swiftly help countries hit by disasters or trade and energy crises.

If these funds had been available last year, a poorly met ${esc.dollar}9 million appeal to prevent a locust crisis in Africa&${esc.hash}39;s Sahel might not have become a ${esc.dollar}100 million appeal after untreated insects swarmed across eight countries.

The new disaster funds may well help, but they could still suffer from subtler forms of earmarking if they are politicised by multinational management.

They would also need to be filled and replenished by states with their own agendas. And they would be allocated first to U.N. bodies and governments rather than to the international aid agencies or domestic charities that have the least resources.

There remains a tougher problem: Without a satisfactory trigger mechanism for disaster relief funding, earmarking makes donors - from governments to individuals - all-powerful in a marketplace of misery.

No matter their lack of information or expertise, donors can dictate where, when and how money is spent or withheld on the basis of national interests or media disinterest, distorting politics or parochial prejudice.

SILENT TSUNAMIS

Such motives should not influence humanitarian agencies, whose independence, neutrality and impartiality ought to require disaster funds that don&${esc.hash}39;t come with strings attached so they can respond to priority needs.

Today&${esc.hash}39;s priorities might well include "silent tsunamis" and "quiet quakes", from the millions hungry in Southern Africa or displaced in Colombia, Sudan and Congo.

Earmarking is unjust, inflexible and inefficient. Of the tsunami&${esc.hash}39;s many billions donated or pledged, much remains unspent, yet one smart choice - funding local community foundations for disbursement over future years - appears unlikely to fit earmarking&${esc.hash}39;s usual rules.

Tsunami survivors may be living next door to equally needy victims of conflicts - such as those displaced by Sri Lanka&${esc.hash}39;s civil war - yet receive far more. Disasters that coincided with or followed the tsunami, including Guyana&${esc.hash}39;s floods, found almost no media coverage, political attention or funding.

A good example of bad earmarking was the massive response to the September 11, 2001 attacks in the United States, in which local charities were severely restricted in how they spent funds. Significant sums went to the relatively wealthy families of victims and to others who suffered little or no loss despite living near Ground Zero.

SIMPLE SOLUTION

To end earmarking, aid charities should insist all donations go into their general disaster funds for spending where the agencies judge they can achieve the best results, including local capacity-building, disaster preparedness and investing in their own systems and structures.

It&${esc.hash}39;s not complicated. Agencies should just clearly label all appeals "for those affected by this disaster and others in priority need worldwide".

But can aid agencies persuade governments, companies, foundations and the public to trust them to spend the money wisely?

They&${esc.hash}39;ll have to educate donors and demonstrate greater transparency and full accountability. Donors may be initially less generous to a system that prevents them dictating where every cent is spent. But that will be outweighed by the far greater impact agencies can achieve when every dollar is free and flexible.

All those affected by disasters should be treated equally, yet the systemic failure of earmarking plays games with people&${esc.hash}39;s lives in a global zip code lottery. If only the vulnerable, poor and oppressed could pick and choose as easily which disasters they wish to endure.

Any views expressed in this article are those of the writer and not of Reuters.

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