EU-UN joint workshop on results-based financing and cost schemes

In the context of continuous efforts of the EU towards results-oriented approaches, as reaffirmed in the European Consensus on Development adopted last year, DG DEVCO hosted an EU-UN joint workshop to advance current discussions on results-based financing (RBF) and cost schemes on 22 March.

Over 80 participants from different UN Agencies, DG DEVCO, DG ECHO, DG NEAR, DG BUDG, DG EMPL, DG REGIO and FPI convened in Brussels for the workshop, which was an outcome of the discussions at the 13th meeting of the Working Group of the Financial and Administrative Framework Agreement between the European Community and the United Nations (FAFA) in Rome last year.

Not only the different speakers from Member State agencies, international think tanks, the United Nations and the European Commission ensured the success of the workshop, but also the interventions of many participants further guaranteed a constructive and fruitful dialogue.

Speakers as well as participants acknowledged that RBF has a considerable potential and demonstrated their interest to further exploit the challenges and conditions of this approach, for instance through pilot initiatives.

It arose from the discussions, that before the start of a project, it is crucial to find an agreement with the implementing partner on many aspects, such as common results - which should be verifiable - and indicators to measure the achievements.

However, as a first step, a mental shift will be necessary. Although data from past activities are clearly useful, an ex-ante estimation of costs might not be necessary anymore. The target of verification will no longer be the incurred costs but the outcomes, which might be challenging since this verification could be very expensive and time consuming.

The case studies explored during the day proved that RBF is not a one size fits all. RBF can be an effective approach in some circumstances, but not the right one in others. An increasing attention needs to be paid to risk management in the different interventions.

Several questions need to be resolved, such as to what extent the responsibility should be transferred to the implementing partners. In addition, it is key to avoid creating disincentives for operations in situation of fragility.

Finally, RBF seems to be rather a complementary tool, as projects are usually not 100% results-based financed. The recourse to simplified cost options, although more activity-oriented, can be seen as an intermediate step towards proper result-based financing.