As Member States review the proposals emerging from the UN80 workstreams later this year, it will be important to draw on lessons from recent reforms. Several studies have shown that the Secretary-General’s UN development system reform fell short of some of its intended aims, in part due to misaligned financial incentives.45 This brief seeks to enable Member States and UN entities to avoid repeating some of those mistakes in the design of reforms within the UN80 initiative.
One of the main challenges for the UN development reform has been to mobilise the type of funding that is needed to deliver on the 2030 Agenda and meet the demand from programme countries. A 2024 report by the Secretary-General stated that: “A major concern remains the funding of the United Nations development system. Despite efforts by many Member States, funding continues to fall below the immense needs of the 2030 Agenda. It also continues to be provided in a manner that does not incentivise, and at times harms, a more strategic and collaborative response.”46
The UN’s funding mix reflects a collective-action problem. Donor decisions, made separately across ministries, agencies, and embassies, result in a suboptimal allocation of resources overall. Core funding functions as a common good, enabling normative support, policy advice and oversight functions. Since all donors benefit from this platform, even if they do not provide core funds, incentives favour free-riding and lead to underinvestment in core funding. This weakens the UN’s capacity to deploy the most effective combination of normative support, policy advice, capacity development and direct support and service delivery, undermining effective mandate delivery.
Underinvestment in common goods requires collective action, since individual incentives push in the wrong direction. The 2019 Funding Compact and the 2024 Funding Compact 2.0 constitute attempts to address this issue. While the Funding Compact argues that more flexible funding would bolster the UN’s capacities for policy advice, it does not include any indicator on the proportion of UN expenditure allocated to policy advice. Without such indicators, Member States cannot see whether increased flexible funding is leading to stronger policy advice capacities. Developing these types of indicators would require the UN to increase the transparency of its financial data.
More granular reporting by function would also facilitate reallocation of resources from earmarked contributions to normative support and policy advice. Currently, specialised agencies charge higher cost-recovery fees than other UN entities to sustain in-house capacities for normative support and policy advice. To enable other UN entities to build comparative expertise, Member States should support a review of their cost-recovery policies. In return, however, UN entities should start reporting on the share of their expenditure allocated to policy advice.
A relevant success story among specialised agencies is the decision to strengthen WHO’s predictable funding. In 2022, the World Health Assembly agreed to raise assessed contributions to cover 50% of WHO’s core budget by 2030–2031. Because these contributions are calculated according to the UN scale of assessments and tied to membership, the overall level of funding will remain stable even as members change. This mechanism illustrates how assessed contributions can provide both predictability and resilience in UN financing.
Recommendations
As the UN80 informal ad hoc Working Group starts convening, it should consider measures that improve how resources are allocated across core functions, particularly policy advice, capacity development, and direct support and service delivery. More specifically, UN entities and Member States may wish to consider the following mutually reinforcing recommendations:
1. Transparency and accountability
One obstacle to better resource allocation is the lack of disaggregated financial data showing how resources are allocated by function. This prevents the UN system from developing indicators and targets that can strengthen accountability. At the same time, RBM mainstreaming has created unintended incentives for UN entities to prioritise work that is easier to measure, such as direct support and service delivery.
MOPAN Members and other member states: Encourage increased transparency so that UN entities report expenditure by core function, and revise reporting requirements to focus more on qualitative results information that can better capture the outcomes of normative support and policy advice.
UN entities: Enhance financial reporting by function, set clear targets for resource allocation, and align staff performance metrics with system-wide objectives such as collaboration and policy advice.
2. Resourcing policy advice
To strengthen policy advice across the UN system, additional resources must be allocated to this function. However, a larger share of flexible resources, which could be used for this purpose, has not been mobilised, and UN entities at country level have not leveraged regional capacities as initially envisaged. Reviewing cost-recovery policies could enable UN entities to allocate sufficient resources to policy advice.
MOPAN Members and other member states: Support a review of cost-recovery policies to ensure they enable stronger policy advice capacities.
UN entities: Mobilise additional resources to strengthen in-house policy expertise, including through adjusted cost-recovery policies, knowledge partnerships and greater use of regional capacities.
3. Strategic integration and sustainability
Stronger capacities for capacity development and policy advice will only translate into more sustainable results if they lead to substantive changes in strategy development, programme design and ways of working. Driving these changes requires new system-wide guidance and Member State engagement.
MOPAN Members and other member states: Ensure UN country-level strategies and programmes prioritise areas of greatest need and include clear pathways for sustainable results.
UN entities: Embed sustainability in humanitarian work: scale up capacity development, strengthen exit strategies, and ensure national and local actors have access to a greater share of humanitarian funding. Develop system-wide guidance for integrating functions, including normative support, policy advice, capacity development, and service delivery, drawing on the six transitions and the 2023 Global Sustainable Development Report.