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The Grand Bargain

The Grand Bargain had a significant influence on humanitarian cash and voucher assistance. Find out what the Grand Bargain means and why it’s important.

21 February 2024

An illustration of four diverse individuals engaged in a discussion about financial growth and security. On the left, a woman gestures towards a thought bubble showing a rising financial graph and gears, symbolizing economic development. In the center, another woman ponders over a cloud with a lock, representing security. On the right, a man speaks about digital payments, visualized by a card transaction above his head.

What is the Grand Bargain?

The Grand Bargain was proposed during the World Humanitarian Summit in 2016 by the High-Level Panel on Humanitarian Financing as a solution to bridging the gap between the scale of humanitarian needs and the amount of money available for aid.

This was prompted by the fact that total funding requirements were $19.8 billion in 2015, but only $10.5 billion being financed – a 45% shortfall (ICVA). In addition, there was a feeling that the humanitarian system was broken and not accountable enough to people affected by crises.

The Grand Bargain originally included 51 commitments across ten workstreams, including increasing cash and voucher assistance to people affected by crises.

Originally an agreement between the five largest governmental donors and the six largest UN agencies, the Grand Bargain is now signed by member states, NGOs, UN agencies, Red Cross/Red Crescent movements, and inter-governmental organisations.

In the first five years there was Disappointment around progress which resulted in a redesigned Grand Bargain 2.0 being agreed in 2021 to address some of the political barriers to progress. I prioritised better support for cash coordination, locally-led humanitarian action, and long-term, flexible funding.

In June 2023, 66 agencies, including donors and aid organisations, endorsed a new iteration of the Grand Bargain for the following three years. It is informally referred to by some as the ‘Grand Bargain 3.0’.

How does the Grand Bargain impact cash and voucher assistance?

The Grand Bargain has had a significant impact on cash and voucher assistance (CVA). Since the original Grand Bargain agreement in 2016, CVA has been widely embraced by the humanitarian sector and the increase of CVA as a proportion of international humanitarian assistance has doubled. The growth and use of CVA is considered one of the most successful areas of the agreement.

The evolution of cash coordination systems didn’t keep up with this growth, impeding the effective use of CVA. To address this challenge, in 2021 the Grand Bargain 2.0 focused on getting agreement from humanitarian actors on CVA coordination.

In 2021, given continued slow progress, a Call for Action was signed by 95 organisations seeking resolution to this long-standing issue. This, along with other efforts, led to the formation of process within the Grand Bargain to resolve the issue and ultimately resulting in a fully endorsed new ‘Model on Cash Coordination’ to ensure more predictable and accountable coordination arrangements, thus enabling improved usage of CVA in terms of scale, quality and timeliness.

Research by CALP in 2022, highlighted the need for new policy commitments and expressed ‘concern about the implications of the pending potential conclusion of the Grand Bargain’.

However, six months after this report was published, a new iteration was announced (informally known as Grand Bargain 3.0), and was heralded by CALP as ‘potentially good news for cash’.

The Grand Bargain 3.0 has two focus areas:

  1. Continued support to localisation, participation of affected communities, and quality funding
  2. Catalysing sector wide transformation

Cross-cutting issues include gender and risk sharing.

Want to know more about evolving policy commitments? Keep up to date by following the Grand Bargain on X, (formerly known as Twitter), or by subscribing to CALP’s global newsletter ‘What’s New in CVA?’.

Why is the Grand Bargain important?

The number of people in need of humanitarian assistance continues to increase each year, with the gap between needs and funding also increasing – in 2021, only 53% of funding needs were met.

By bringing together donors and implementers in the humanitarian sector, the Grand Bargain was established to make funding go further by cutting down administration costs and increasing the direct transfer of funds to local organisations and people affected by crises.

According to Dr Jemilah Mahmood on a 2021 podcast the Grand Bargain has also been crucial in advancing CVA: “What was different with the Grand Bargain and the World Humanitarian Summit was actually donor commitment and setting targets and indicators…we cannot underestimate the importance of political will and when donors actually commit to this.”

Mahmood famously spoke at the 2016 summit asking: ‘Why not cash?’ and ‘If not now, when?’.

These were words quoted from a crucial report on cash transfers, prepared in advance of the summit.

Infographic titled "What Influences Humanitarian Agencies to Use Cash and Voucher Assistance?" It highlights four key areas: Agency Commitments, Evidence, Global Commitments, and Donor Influence.
The Grand Bargain – amongst many other influences – has been crucial in advancing CVA.

Grand Bargain and localisation

Localising aid continues to be one of the key challenges in the humanitarian sector. To address this challenge, donors and humanitarians agreed as part of the Grand Bargain to shift 25% of global funding to local and national actors by 2020.

However, there have been mixed feelings and disappointment in the progress made towards achieving this commitment. Direct funding to local actors has fallen short of promises, and there is no measurement of the 25% shift in global funding to local actors.

In the context of CVA, most humanitarian funding goes to the UN (66%), the Red Cross Red Crescent and International NGOs. Funding then reaches local actors indirectly, with international actors sub-granting funds for the implementation of agreed aspects of the response. The current way of tracking CVA means there is a lack of data and understanding of how much local actors contribute to the delivery of CVA.

Bar graph titled 'Graph 2.3 CVA % by organization type' displaying the percentage distribution of CVA by NGOs, RCRC Movement, and UN Agencies from 2017 to 2022. Each year is represented by a group of three vertical bars, with each bar color-coded to represent a type of organization: NGOs in orange, RCRC Movement in teal, and UN Agencies in pink. The percentages for NGOs show a generally increasing trend from 52% in 2017 to 66% in 2022. RCRC Movement percentages are relatively stable, with a slight decrease from 24% in 2017 to 15% in 2022. UN Agencies percentages have minor fluctuations but remain around 19% to 22% throughout the years. The highest percentage recorded is 66% for NGOs in 2022, and the lowest is 15% for RCRC Movement in the same year

 

 

 

 

 

 

According to the State of the World’s Cash 2023, progress on CVA localisation would require shifts in power, changes to funding and strengthening of local systems and structures.

Keep up to date with the conversations and progress on CVA and localisation by taking part in the Cash and Locally Led Response Working Group.

Read more about Cash and Voucher Assistance Policy and Funding on the Cash 101.