In 2021, 61% of the $60 billion total United Nations budget, and nearly 80% of the financial contributions that flowed through the United Nations Development System, were earmarked by donors. The United Nations Development System consists of the UN programs, funds, and agencies that engage in what is usually called “operational work,” at the UN—those that deliver development and humanitarian aid, and implement projects related to health, climate, education, and other issues across the globe. We typically think of aid delivered through international organizations (IOs) like the UN as multilateral by definition, but “earmarked” means that the actor who contributes the funds—usually a state, but sometimes a non-state actor—places conditions on how they are used. The multilateral governing bodies that are so central to our conceptions of the United Nations do not exercise direct control over earmarked funding. Advocates of multilateralism often complain when states pursue unilateral strategies outside international organizations, but they tend to overlook the retreat from multilateralism that has occurred inside IOs.
This is the empirical starting point for my book, Transforming International Institutions: How Money Quietly Sidelined Multilateralism at the United Nations (Oxford University Press, 2023). I offer an explanation of how UN funding rules and practices evolved to reach the current condition of heavy reliance on earmarked funding, provide a history of the UN’s funding trajectory from its founding to the contemporary period, and outline the implications of these developments for the character and governance of the UN system. Here, I focus on four main takeaways that challenge the conventional wisdom about the United Nations.
The transition to heavy reliance on earmarked funding did not begin in the 1990s
Most analyses of earmarked funding begin in the 1990s or early 2000s, implying that earmarked funding took off during that period. A steady rise in earmarked funding (and a plateau in other types of resources) did take hold in the 1990s, but the origins of the transition came much earlier. The first move was to expand technical assistance programs like the Expanded Program on Technical Assistance and the Special Fund using voluntary rather than mandatory funding rules, removing member states’ obligations to provide contributions and enhancing donor states’ influence. Yet these rules placed an important constraint on that influence by prohibiting earmarks. These rules were altered starting in the 1960s. Rule changes were initiated in response to states like the Netherlands and Sweden who offered contributions for specific purposes. These states did not intend to implement fundamental changes to UN governance, like transferring control over resource allocation from multilateral bodies to individual donors. But rule changes to permit earmarks nonetheless made such a transformation possible. It was realized some 40 years later when earmarked voluntary contributions became dominant in the UN system. A focus on the 1990s and early 2000s mistakes the end of the UN’s transformation for its beginning.
The UN is susceptible to subtle modes of change
Observers often lament the UN’s resistance to reform. The UN Charter was last amended in 1973, and calls to reform the UN Security Council and other UN bodies are perennial issues. The UN is more likely to be characterized as sluggish and inflexible than nimble and adaptable. Yet the evolution in UN funding and governance makes clear that changes that would be politically impossible to legislate—like the contraction of multilateral control over UN funding—can and do occur through a more gradual, subterranean process over time. Incremental changes are less likely to provoke suspicion and opposition, and they simultaneously create opportunities for future actors to push changes further along, or repurpose the fruits of earlier efforts to serve their interests. This is what happened with rule changes to permit earmarks. They were initially intended to allow states to supplement their unearmarked contributions to UN programs to enable the UN to expand its work. The same rules were repurposed decades later as a substitute for unearmarked resources, to constrain the UN’s work.
Perceptions of the relative influence of developing and developed states require a rethink
Both advocates and critics of the UN focus on its egalitarian multilateralism. For United Nations advocates, many of the benefits associated with the UN system—especially those associated with its representative nature—stem from its one-country-one-vote decision rules. In the conventional wisdom, developing states exert far less influence at the Bretton Woods institutions, which use weighted voting based on countries’ financial contributions. Critics of the UN share this focus on egalitarian multilateralism. For them, one-country-one-vote is problematic because it is an obstacle to translating power into influence and UN governing bodies do not reflect political realities.
But in the context of the UN development system, both arguments need updating. For advocates, equal voting rights do not automatically translate into influence if multilateral governing bodies do not control resource allocation. For critics, one cannot decry a lack of influence when wealthy states are earmarking the bulk of their contributions to preferred priorities. UN observers should integrate the contemporary funding landscape into their understanding of how the UN operates and who exerts influence.
The UN is trying to rebalance funding toward core contributions. It will be difficult.
Over the past twenty years, UN programs and agencies have sounded the alarm about disproportionate reliance on earmarked funding. The primary complaints include that earmarked funding is unpredictable, distorts program priorities, and increases program costs. Donors too, recognize these issues, which are reflected in OECD reports. Individual UN programs have called for donors to provide a larger share of their contributions in unearmarked (core) funds, and in 2018, member states adopted the UN Funding Compact. The Funding Compact calls on member states to provide more flexible and reliable funding, including a higher proportion of core funding in exchange for improved transparency and efficiency measures from UN agencies. Although progress has been made on some indicators, the core share of voluntary funding has actually declined relative to earmarked funds since the Compact was adopted.
My book details why earmarked funding is so difficult to roll back, owing to its entrenchment in donor funding practices and its usefulness as a substitute for bilateral aid. Any rebalancing will likely mean a reduction in funds provided through the UN system. I also detail possibilities for change. But in the medium term, a contradiction at the heart of the UN, between its much-touted egalitarian multilateralism and its actual practice of allocating resources, is likely to remain.
About the author:
Erin R. Graham is Associate Professor of Global Affairs at the Keough School of Global Affairs at the University of Notre Dame. Her research focuses on the design, financing, and development of international institutions. She infrequently tweets @erinrgraham and @erinrgraham.bsky.social
This think-piece is based on the author’s book Transforming International Institutions: How Money Quietly Sidelined Multilateralism at the United Nations (Oxford University Press, 2023).
The views and opinions expressed in this think-piece are those of the authors and do not necessarily reflect the official policy or position of SIPA or Columbia University.