UN refugee agencies depend heavily on the funding of just a few Western States. While reforming the funding system may help to fulfil the agencies’ mandate and maintain autonomy, preserving their legitimacy is crucial.

In January 2024, the United States and other key donor States temporarily suspended funding for UNRWA (The United Nations Relief and Works Agency for Palestine Refugees) after the media reported on the potential involvement of some employees in the Hamas terrorist attack on Israel. Confronted with the potential loss of USD 440 million in funding, about one-third of the agency’s annual budget, UNRWA saw its already fragile economic foundation and its ability to provide vital services for the forcibly displaced people in Gaza endangered.

While most UNRWA donor States have since reversed their decision, its main donor, the United States, decided to withhold funding until at least March 2025. These events have been a powerful reminder of the financial dependence of many international organisations on a few influential donor States. They also point to structural challenges in the funding of UN refugee agencies and broader political shifts that are likely to pose a growing risk to multilateralism and the financial stability of UNHCR and UNRWA.

UN refugee agencies provide an international public good by protecting the rights of refugees and sharing responsibility for that protection among its Member States. Both UNHCR and UNRWA represent the rise of the international refugee regime and the heydays of the liberal international order and international responsibility-sharing. However, they both face persisting challenges concerning their funding sources and structure.^[1]

The nature of UN refugee funding

The current funding of UN refugee agencies is characterised by three main elements. First, almost all contributions to UNHCR and UNRWA are voluntary. In 2022, the UN general budget’s contribution added up to less than 4% of the total budget for UNRWA and only 1% for UNHCR, while non-state actors and private donors represented 21% of UNHCR’s budget and only 1.3% of UNRWA’s. The remainder consists of voluntary contributions from States.

Second, contributions are often earmarked or restricted to specific regions and missions. Earmarking refers to contributions that can only be directed to a specific country, project or sector. This restriction enables contributing States to link humanitarian donations with strategic objectives, but it gives less flexibility to international organisations and increases their administrative costs. The lack of flexible funding prevents UNHCR from responding effectively to emergencies. In 2022, only 9% of governmental contributions to UNHCR were unearmarked, as opposed to 41% of private donor contributions. For UNRWA, perhaps owing to its specific regional focus, more than 60% of its governmental contributions were unearmarked in the same year.

Third, most contributions are provided on a year-to-year basis. They need to be raised by the agencies through campaigns and appeals every year, which increases administrative and organisational costs. Only 10% of UNHCR’s voluntary contributions came from multi-annual pledges in 2022. UNRWA fares better in this regard, reporting in 2022 that 40% of its governmental donations were provided through multi-year agreements. Having short-term budget timeframes maximises influence for donors, but it increases the vulnerability of UN refugee agencies to sudden political changes or shifts in public perception.

Growing budgets yet continuous dependence

There has been an impressive increase in state donations to both UN refugee agencies over the past three decades. Since 1990, both refugee protection agencies have seen their donation amounts grow, gaining 737% for UNHCR and 429% for UNRWA as of 2022. While UNHCR’s donor base has grown steadily, UNRWA’s is much more volatile.

While the budget for UN refugee agencies has increased significantly over the past three decades, the number of donor States has only slightly increased. During the past decade, UNHCR has tended to receive funding from over 70 States. UNRWA, for its part, has received funding from around 60 States. However, both agencies rely heavily on the contributions of a handful of donors.

The top three donors for both UNHCR and UNRWA are the United States, the EU and Germany. For UNRWA, Saudi Arabia has also been a significant donor for some years. The share of the top three donor contributions as compared to the rest of the donations represents, on average, 60% for UNHCR and 55% for UNRWA. This share goes up to more than 85% for both agencies for the top ten donor States. These numbers show how concentrated the donor base of these agencies is, making them more dependent on a few States’ funding decisions, which must be renewed annually.

This pattern of asymmetric funding has been stable over time. Interestingly, however, we witness instances of compensation behaviour where States have increased their donations when other donors have fallen out. Following the Trump administration’s decision to stop funding UNRWA between 2018 and 2020, for example, we observed a sharp increase in contributions from other donors such as China, the Gulf States and European countries. Nonetheless, these state’s contributions made up only a fraction of the usual financial contributions of the United States, and the UNRWA budget shrunk by more than one-third until 2020.

Risks of instrumentalisation and disengagement

What does the governance and structure of UN refugee funding mean for their mandate fulfilment and future prospects?

The dominance of voluntary, mostly earmarked year-to-year contributions of just a handful of wealthy Western States makes UN refugee agencies asymmetrically dependent on these States. Even though research suggests that UNHCR has maintained substantial autonomy, the data reveals the important leverage that key donor States can potentially mobilise vis-à-vis the agency. This has become more relevant due to political shifts in main donor States, such as the domestic politicisation of asylum policies, the electoral success of radical-right parties and the accommodation strategies of mainstream parties. These developments have led to a backlash against the liberal international order and multilateralism.

The election of Donald Trump in the 2016 US presidential elections was arguably the most dramatic and consequential example of disengagement with multilateral organisations and initiatives: the US contribution to UNRWA was effectively halted, the number of refugees resettled was drastically reduced, and the United States struck deals with countries in Central America to outsource protection responsibilities. In Europe, liberal States have increasingly embraced illiberal policies and sought ways to minimise their responsibility for refugee protection. These developments challenge the normative foundation of the UN refugee agencies and their mandate.

Two risks emanate from these developments: instrumentalisation of UN refugee agencies and disengagement by key donor States. The political shifts in the main donor States may lead to stronger efforts to instrumentalise UN agencies to pursue an illiberal externalisation agenda. In 2018, for example, Austria and Denmark proposed an externalisation scheme at the EU level in which UNHCR was foreseen to take responsibility for extraterritorial processing.[2] Traditionally cautious in criticising donor States, the agency took a clear position against Denmark’s later attempt to externalise the Danish asylum system in 2021.[3] Yet, such opposition against externalisation plans has been toned down as they have gained traction in several European States more recently.

In addition, the EU’s New Pact on Migration and Asylum, strongly opposed by asylum and human rights NGOs, has been welcomed by UNHCR as a step in the right direction.[4] The backlash against multilateralism and increasing hostility against refugees in some high-income democracies may motivate disengagement with the UN agencies. The retreat of the United States under the Trump presidency and the cutting back in refugee resettlement in various countries echo this trend.

Navigating a looming legitimacy crisis

Their dependence on main donor States forces UN refugee agencies to walk a thin line, balancing their refugee protection mandate with state interests. Facing the risk of disengagement of its largest donors, it is uncertain whether and how the agencies would manage a financial downgrade. The most influential donor States have gradually undermined the spirit of the 1951 Geneva Convention and opened the door to externalisation and deterrence. This subverts and potentially revokes the liberal foundation of the UN refugee agencies and may result in an illiberal restructuring of the agencies or their marginalisation and decline in performance.

What strategies could help mitigate these risks? So far, UNHCR and UNRWA have striven to increase their budget by broadening their donor portfolio, to include non-contributors and more non-state actors, while expanding the donations of existing donors. However, our longitudinal analysis shows that these strategies have had a limited effect. Moreover, broadening the donor portfolio and targeting non-signatory States of the 1951 Refugee Convention also holds the risk of shifting the donor base towards illiberal States.[5] Furthermore, in light of growing nationalism in key donor States, UNHCR and UNRWA cannot presume that these States will continuously increase their share – at least not without seeing it as a way to minimise their responsibility in refugee protection on their own territory.

Building a denser network of national partners like España con ACNUR (Spain with UNHCR) or Japan for UNHCR, which are NGOs that levy funds and raise awareness regarding the needs of displaced people, could be a way to decrease dependence on State donations. To date, ten recognised national partners of UNHCR raise more than half of the agencies’ annual private-sector income.[6] The advantages of such partnerships are the diversification of income streams, the absence of earmarking tendencies and the potential to overcome illiberal influences exhibited by governmental partners.

More fundamentally, however, UN refugee agencies should seek ways to reform the funding system. They could advocate for more binding and multi-annual contributions. Aiming to reverse the trend of increasing earmarking of State funding, UNHCR is already showcasing States like Norway and Sweden, which are increasing the share of non-earmarked contributions.[7] Building a more stable and predictable agency with stronger performance, and limiting opportunities for domestic politicisation, is in the international community’s interest. However, while these ideas are not new, there is little indication that they are influential at times when States aim to increase their control over aid. Furthermore, the fact that UNRWA has more multi-annual contributions than UNHCR, but still less financial stability, reveals that changing the funding system alone will not solve the issue.

UN refugee agencies must not only find a way to navigate the vulnerable funding structure but also a looming legitimacy crisis. Put simply, they face a dilemma between preserving money and preserving their liberal foundation. Securing the financial support of powerful donor States could imply opening themselves to an illiberal restructuring of the organisation and bears the risk of increasing instrumentalisation for the donor’s agenda of refugee deterrence. Alternatively, using their autonomy to bolster the liberal norms on which the international refugee regime rests comes at the risk of dwindling funding and potential marginalisation. The agencies can neither ignore the funding needs nor the importance of their mandate of refugee protection to stay a relevant and legitimate actor. Therefore, a continuous strategy of muddling-through between these imperatives is most likely. However, in the face of a changing geopolitical landscape and growing contestation of liberal asylum policies, this balancing act tends to become increasingly difficult.

 

Frowin Rausis
Postdoctoral Researcher, University of Geneva, Switzerland
frowin.rausis@unige.ch
X: @FrowinRausis

Maud Bachelet
Doctoral Student, University of Geneva, Switzerland
maud.bachelet@unige.ch
linkedin.com/in/maud-bachelet-3532411b9/

Philipp Lutz
Senior Researcher, University of Geneva, Switzerland, and Assistant Professor, Vrije Universiteit Amsterdam, The Netherlands
p.lutz@vu.nl
X: @LutzPhilipp

Maud Bachelet and Philipp Lutz acknowledge financial support from the Swiss National Science Foundation (project 208858), and Frowin Rausis from the Swiss State Secretariat for Education, Research and Innovation (contract 22.00569).

 

^[1] The analysis of UN refugee funding in this contribution builds on funding statistics of the agencies between 1990 and 2022. For UNHCR, we use the Audited Financial Statements (1990-2001) and the UNHCR Global Report (2002-2022). For UNRWA, we extract information from the Report of the Commissioner-General to the UNRWA (1990-2004) and the official information provided on state contributions from the UNRWA homepage (2006-2022).

[2] Ministry of Immigration and Integration, Republic of Austria (2018) Vision for a Better Protection System in a Globalized World (2018) bit.ly/vision-for-better-protection-system

[3] UNHCR (2021) ‘UNHCR Observation on the Proposal for amendments to the Danish Alien Act’ bit.ly/unhcr-amendments-danish-alien-act

[4] UNHCR (2024) ‘UNHCR calls on EU to ensure Asylum Pact is implemented with protection at its core’ bit.ly/unhcr-calls-eu-asylum-pact-implemented

[5] See Cole Georgia (2021) ‘Non-signatory donor States and UNHCR: questions of funding and influence’ FMR 67: fmreview.org/issue67/cole-3/

[6] See list of UNHCR’s national partners bit.ly/unhcr-national-partners

[7] UNHCR (2024)‘Unearmarked funding makes a difference in the lives of people living amidst neglected humanitarian crises’ bit.ly/unhcr-unearmarked-funding

 

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