Distribution of cash instead of commodities is transforming humanitarian action. Cash distribution has grown quickly in past years and today represents roughly 20% of assistance is given.

Cash gives crisis affected populations choices and agency but it also places the sector based humanitarian architecture under stress. There is clearly a need to review the current coordination arrangements for cash assistance, but this has profound implications for the most powerful agencies in the sector.

To get things moving 95 organisations have sent a letter to the outgoing and the incoming Emergency Relief Coordinator to move the issue of cash coordination forward. You can find the letter here: https://www.calpnetwork.org/news/95-organisations-sign-letter-calling-for-strengthened-cash-coordination/

On this episode Lars Peter Nissen invites four guests to discuss why cash coordination is so difficult and what to do about it. The guests are:

Sophie Tholstrup, Head of Technology for Development Policy Unit at Tony Blair Institute for Global Change. https://www.linkedin.com/in/sophie-tholstrup-93222311)

Patrick Saez, Center for Global Development. https://www.linkedin.com/in/patrick-saez-143b3b9/

Edward (Ed) Fraser, Global Economic Recovery Adviser - Cash & Voucher Assistance Lead at Danish Refugee Council / Dansk Flygtningehjælp. https://www.linkedin.com/in/edward-fraser-6055aa1/

Isabelle Pelly, Global Thematic Expert - Cash and Basic Needs at DG European Commission Humanitarian Aid Office - ECHO. https://www.linkedin.com/in/isabelle-pelly-29a82244/

You can find the State of the World Cash report here: https://www.calpnetwork.org/state-of-the-worlds-cash-2020/

Patrick Saez research paper "Inclusive Coordination: Building an Area-Based Humanitarian Coordination Model" is available at this address: https://www.cgdev.org/publication/inclusive-coordination-building-area-based-humanitarian-coordination-model

The introduction of cash assistance as an alternative to commodity-based assistance is one of the most exciting recent developments in the humanitarian sector. The advantage of giving crisis-affected populations cash instead of stuff is obvious. It gives the recipient agency and freedom to do what is right for them, and there are obvious economies of scale, lowering transaction costs. At the same time, cash-based assistance challenges the way in which we have arranged ourself in the sector. The humanitarian architecture is centred around the cluster system, a sector-based coordination system, and that creates a tension with cash assistance. Tongue twisters, such as cash for education, cash for wash, and even cash for work has popped up in our clusterized world--and that's not healthy. It works contrary to the very purpose of distributing cash, enhancing the agency of crisis-affected populations. So there is a need to fix the way we coordinate cash and that's why more than 90 humanitarian actors have signed a letter to the outgoing and the incoming ERC, asking for the IRC to take a decision on the leadership and scope of cash coordination within the broader humanitarian coordination architecture. And they asked for this to be done within the coming years. To be clear, the letter doesn't promote a specific solution. It simply says that we have a problem and that we think that the IRC should fix it quite quickly. Apart from WHO the leader has been met with deafening silence from the UN organisations. The donors on board, the NGOs on board, a broad section of the humanitarian community seems to think we have a problem, but the UN, do not. I found that really interesting and that is what has inspired this episode. I began reaching out to various stakeholders and of course, also approached the main UN agencies to invite them to come on the pod and explain why we don't have a problem with cash coordination. You may be unsurprised to hear that I have been unsuccessful in getting them to participate. They are either overstretched, incredibly busy, or I simply haven't heard back from them. That's okay, though. I've managed to get some really interesting people to talk to me, and I hope you'll find this episode interesting. Before we jump in, I'd like to just provide two perspectives that may be useful for you as you listen to the episode. Firstly, cash coordination is a hugely complex and technical issue and there's no one simple, silver-bullet solution that will fix that problem. Secondly, don't let the fact that cash coordination is a hugely complex and technical issue overshadow the fact that essentially, this is a political problem. At the root of it is an extreme concentration of power, approaching monopoly status. And the stakes are high. Almost any change to the status quo would have profound implications for the most powerful actors in our sector. In other words, this is really exciting stuff. So sit back, relax and enjoy.

I first reached out to Sophie Tholstrup, who's the head of Tech for Development Policy at the Tony Blair Institute for Global Change. She used to work in the humanitarian sector, and she knows a tremendous amount about cash coordination and cash assistance in general. So I thought that was a good place to start.

Sophie Tholstrup, welcome to Trumanitarian.

Thank you. Thank you very much. Happy to be here.

I think the best way to describe you is that you are a escaped humanitarian and former more cash goddess. Is that a description you're comfortable with?

I mean, I'm very comfortable with being described as a former cash goddess. I'll take it. Yes, I recently left the humanitarian system (although you never really leave, do you?) after five or six years working on cash. And within that a lot of my time is spent on cash coordination, firstly, OCHA, and then for CaLP for the last three years, and I've now stepped outside the humanitarian system, but I can't stop thinking about cash coordination. Try as I might.

And as you know, there's this letter going around that a large number of NGOs and other humanitarian actors have have signed, and quite a number of the big donors have signed up to it as well, on... so basically saying to the IRC, we need to fix cash coordination. So this is a hugely complex and controversial issue. Can you just lay it out for us in simple terms? What is the issue with cash coordination?

Sure. Well, I think it's it's a really interesting one, because on the face of it, it's a really niche and technical issue, isn't it? And it's a really small decision that needs to be made: who's in charge of coordinating cash assistance across responses. And I think it can be difficult for people that haven't been embroiled in this to understand what the big deal is. But the big deal is that this is is really kind of the frontlines of a much bigger existential tussle that's going on within the humanitarian system about supply versus demand, about who gets to decide what's needed, and about who is in control of humanitarian aid. So this small issue has become, the battleground has become the frontline. And that's why it's become so sticky. And I think in a few words, why is this important? And then why is it tricky? Why it's important is for two reasons. So first, it's very practical. Cash now makes up almost 20% of total humanitarian aid so there's huge volumes of cash being delivered in crisis zones across the world. And that's before you start thinking about what governments and non-humanitarian actors are doing. And to ensure the quality of that assistance, to ensure the coordination of that assistance, to understand where that assistance is going and what it's doing, in most contexts, you have about 20% of someone's time given on a voluntary basis, running a kind of scrappy startup cash working group with very engaged and interested people trying to pull it all together. So without an official decision about what this is and where it sits, the resources aren't there to make sure that cash coordination can happen. Right. So that's 20% of humanitarian assistance that doesn't have a home so far. And that 20% is growing.

But if I can challenge you on that...

Yeah, please do.

Why is that so different from handing out blankets? You know, I mean, why do... We do have something called OCHA. Their job seems to be to coordinate the sector. Why not use the existing setup?

Well, the existing setup has obvious, as you know, been arranged along cluster lines, along sector lines, and the clusters came into being for a reason. They were much needed to organise the ways that we deliver assistance and to deconflict some of the chaos that happens in disaster zones. And that's obviously still important. But if we put people's... but as the clusters have grown, they've kind of taken on a life beyond their original intention. And I think all sorts of unintended incentives have worked their way into the system. So we now have a system where humanitarian aid is broken up into fiefdoms, into buckets, which are owned, each one, by a UN agency and all sorts of vested interests have arrived around that. So cash is fundamentally different to buckets and blankets, because the use of assistance is determined by the recipient, not by the donor. And so it sits uneasily alongside a system which is split up along along sector lines. And as the clusters have grown, I think there's been a slight dehumanising impact where the more we think about people's needs in specific buckets, the more we dehumanise people and take agency away from them. What what we're all aiming to do, I think, is to flip this system, this system that's grown slightly out of control from being a supply lead system where a bunch of people from all over the place sit many miles away from the crisis zone and decide what's needed, to assist them where, to the extent possible, recipient people in crisis have a choice over what they most need. And we recognise that that choice, and how one family prioritises needs, will look very different over small distances in geography and between individuals and between families. So the more we create a space to be demand-led, the more our response is dictated and led by people in crisis themselves and the more control they have over what they need, and how they prioritise those needs, the more just and effective a response we can have. So cash is fundamentally different from buckets and blankets. Both are needed in any given response. But there is no home for cash currently in a sector based system.

One thing that confuses me deeply, and I find disturbing, is when we start talking about cash for something. Cash for education, cash for work, I even heard. This is just just work in my book, or... I mean, this business of sectoral lysing cash that seems to run absolutely counter to this idea of enhancing the agency of crisis affect the population. So what are the implications of our way of thinking sectoral cash or whatever you call it?

Yeah, you're dead right. And I think this cash coordination debate can become very theoretical unless we focus it on this, which is what is the downstream implication of having everyone fighting over cash and having cash split up into sectors? And the clearest example I can think of is Ground Truth Solutions looked at the response in Cameroon and they spoke to a man called Hemudu, who showed them that he had two identical phones, so two identical phones, given to him by two agencies. Both of the phones received a cash transfer to them. It was just cash. They had to be cashed out from different agents at different times, involving two time consuming and difficult processes. He had been told that the cash that arrived on one phone phone was for food, and food only, and the cash that arrived on the other phone was for shelter, and shelter only. Now imagine your life has been turned upside down. You're in a horrible situation anyway. It's pretty time consuming and difficult to try and hold it all together for yourself and your family. And agencies that are purporting to help you, are making your life extremely confusing, by putting in place a time consuming and kind of Kafka-esque process, where you're being told that you have a food phone and a shelter phone. We we can do better than that. That's isn't... It's such a it's such a simple example, but if we get cash coordination right... It's intellectually bankrupt and it's illustrative of the fact that if we get cash coordination right, what we're trying to do is flip the system, which is currently designed around, who are we what do we have to offer and how do we want to respond? That needs to be flipped on its head to, Who are we serving, what is needed, and how would they prefer to receive assistance? What is the assistance that that they need? And I feel like that's... where how that's what the cluster system was trying to do back in the day, but it's drifted so far from that, that we've now... and it now has an incentive structure around it that incentivizes these insane, intellectually bankrupt, as you say, ways of helping people, in inverted commas, while actually just serving our own business models.

So for me, that's very clear. What are the different options that are being discussed right now? What is the different positions in cash world on how to fix this problem?

Right, so that's where it gets a little bit tricky. Because within... If you think within the current system, there are four broad options going forward. There's the status quo, which is, essentially, whoever has the capacity or the will or the spare time or the... is quickest off the mark in a given context becomes the leader of a cash working group, which is... has one foot in the system and one foot outside. It's not quite clear how it relates to the clusters, how it relates to the rest of the architecture. And we kind of muddle through. And don't get me wrong, that's actually worked well in lots of places across the world. We've seen really brilliant colleagues take up the lead of these cash working groups, be extremely creative with it, build links with government build links with the private sector, really drive up the quality of cash across the response. But that is down to the right person being in the right place at the right time by chance. And it's never the majority of someone's job. So it can work brilliantly on occasion, but it's not delivering across the piece. And in sudden onset emergencies, we've seen situations where different agencies will waste time and resources tussling over who gets to be in charge of the cash working group. And that's not a situation that any of us want to be in. The second option is simply to approach this like a cluster and assign one UN agency to lead coordination across the... to lead cash coordination across the world. And that would likely be a mixture of WFP and UNHCR, depending on the type of response that you're looking at. I think the advantages of that are, it's very clear, it puts the richest agencies behind it so you suddenly have a resource. And those agencies have a lot of technical capacity because they have been delivering cash for a long time. The challenge is that, because both of those agencies work along specific sector lines, you lose the multisectoral aspect of cash, you you lose cash's, cross cutting nature, and cash start to be controlled by a specific sector. It's also a bit of a challenge, because we talk about cash a lot is building a more inclusive ecosystem and building... and bringing more players into the mix. WFP and UNHCR have both, for a long time, operated an implementing partner model where they're the boss, they decide what happens, and NGOs and others go and implement that plan. And I think there's a fear that that model would be replicated in a cash cluster-like setup.

Is there a difference between the perspective of WFP and UNHCR? Because, I mean, what they have in common, obviously, is that they're very powerful UN agencies, but the difference between them for me is that, whereas UNHCR has a mandate to to protect and assist refugees, WFP has a sector responsibility within food security. Does that position them differently visa vie this conversation.

Yeah, it does. It does. And I think in many ways UNHCR's current setup is much more easily extrapolated to deal with cash. They have a basic needs approach. I think WFP also, given how much cash they're using, and how developed their cash systems are, there's an there's a strong argument, to say that WFP should, of course, retain its its food security mandate, but should also be allowed by its donors, by the rest of the UN, to expand into a more multisectoral agency. They are using cash at such scale that pretending it's all for food security outcomes is becoming increasingly difficult, and they're having to tie themselves into more and more pretzel-like... not... so both WFP and UNHCR could easily expand into being that multisectoral agency. In the absence of a kind of clear, emerging option that everyone is comfortable with, of course, because there are winners and losers in all of these options, we look to the existing humanitarian authority, the IRC, to make this decision on behalf of the humanitarian system. And that's increasingly impossible. That puts them in a bit of a stalemate. To borrow someone else's phrase, not my own, asking the IRC to decide on leadership of cash coordination is like getting turkeys to vote for Christmas. Everyone in that room would like to own cash and would like to be the champion of cash going forward. And so how can you ask a group of leaders of the most powerful UN agencies to decide which of them gets to take that. It's impossible. It's something that IRC has been unable to do and unwilling to do over the past several years.

Which is why it's so interesting that right now the donors who, after all, do foot the bill here, have just done that. They've just asked them to fix it.

And not for the first time. They asked back in 2O18, and the request was roundly ignored. The official reasons for ignoring the request were bureaucratic: it was addressed to the wrong person, it was signed by slightly the wrong people. But I think the thing the real reason is that it's an impossible request. Simply turning to IRC and saying, Decide among you which of you gets to coordinate cash in the long term is, to be fair to the IRC, an impossible ask. It's... yeah. It's the turkeys voting for Christmas again.

So we have option one, which is muddle through, we have option two, give it to HCR or WFP or both them. What's option three?

Option three is acknowledged that cash is cross cutting in nature, but cash is fundamentally different because the choice of how to use it is up to the recipient, not up to the donor, and put it into that intersectoral space that OCHA currently control. That would mean that that intersectoral space needs to be a lot bigger, a lot better resourced, and a lot more powerful in the response. So putting it clearly into that intersectoral space is option three. And we... you know, when, over the last five years, I've asked cash working group leads again and again, how the system could be improved? The answer we keep coming back to, and the answer that many cash working group leads have given, is that more and more of what needs to be done in the humanitarian response fits into that intersectoral bucket. You know, how can you think about accountability to affected people in sectoral buckets? How can you think about giving out cash in sectoral buckets? How can you think about even measuring overall outcomes and impact and sectoral buckets? So that intersectoral space needs to be grown. So that's option three. I think that's tricky for many and tricky for the IRC, because that is de facto putting cash under OCHA's leadership. You know, you'll hear lots of arguments about the fact that OCHA is not operational, OCHA shouldn't be, you know, running a cash cluster. And lots of UN agencies are uncomfortable with that. But that's certainly option three. So options two and three are a bit of an impossible choice who's going to make that decision. The IRC has representatives from all of those organisations on it, so that's tricky. And then option four, which is clearly the right option, but a very unsatisfactory option in the long term, is the realisation that the coordination system needs a radical overhaul, that we not fit for purpose, that an entirely cluster-led coordination system is not inclusive of local actors, is not inclusive of government. It's just not fit for humanitarian response in 2O21. As we face mounting needs, and as the climate crisis starts to unroll, as many of our major donors are, unfortunately, cutting their aid budgets at the moment, we really, really need a system that makes the most of the limited resources that we have. And that system is clearly not the system we have in place. And I think there's a load of really interesting, creative options on the table for what that radical overhaul of the coordination system would look like. In theory, it's the right option, but in practice, as you know, taking the decision to overhaul the coordination system means putting ourselves in the hands of a glacial UN progress that will... process that will take, you know, five years plus. And it's not a good answer for right now. And this is a situation that's urgent enough that we need to find an interim way of making this work before those longer term changes can kick in. And I think it's worth saying that the four options that we've laid out are four options which are kind of broadly within the existing architecture and within a UN-centric system. And whenever we will make these arguments publicly, people will say, rightly, well, you know, this is quite myopic, you're just thinking about the UN system. What about localization? What about local actors? What about players that operate outside the UN system, like Give Directly in the cash space? What about, most importantly, governments who are delivering a huge amount of cash and social protection systems have really ramped up over the COVID pandemic. So, you know, governments aren't really included in the current system. And I think that is right. You know, the UN-led coordination system is becoming a smaller part of the overall picture. And other players outside the system, either intentionally outside the system, because they don't want to be mired in the treacle of the UN coordination system (and I think we can all understand that), or because they're just not operating in the same space, they are becoming a bigger part of the picture and should become a bigger part of the picture. And any coordination system should be inclusive of that. But, you know, at its heart, I think we do continue to need an effective UN humanitarian coordination system that works in sudden onsets that works in, you know, situations of extreme conflict. So I think, the option to just abandon the system we have, say it's not fit for purpose and go in another direction, while it's very tempting, is not right.

Yeah. So the question I have is, Why don't we just have donors give money to governments and have MasterCard channel, the BBB, the... provide the infrastructure to do so.

Right. Yeah, I think there's been really interesting arguments over the last year, as we've seen the expansion of social protection, about what is the role of government in humanitarian action. And I think, in the most simple terms, working through the government works where the government have the capacity and willingness to serve and assist all of their citizens. But the majority of situations in which humanitarian actors find themselves are situations where the government doesn't have that capacity, or doesn't have that willingness. Now, I think, humanitarian actors, humanitarian mandate, has obviously expanded massively from where we were in the 80s and 90s and we now do find ourselves in lots of situations which are probably best characterised as development settings or situations of extreme poverty, where the government does serve all of its citizens and the government, either alone or with some technical assistance, does have the capacity to channel assistance to those citizens through it's systems. And there, I think, we should be working much more with governments and we should be working to support government capacity and government's ability to serve their own citizens. It's obviously not going to work everywhere. And it's not going to work all of the time. I think the idea about working with the private sector, working with MasterCard and others, is an intriguing one and it's one that that the humanitarian system has really wrestled with for many years. You know, I think there is this deep suspicion among humanitarian actors of working with the private sector because we say, Oh their motives are profit-driven, their motives are not humanitarian. I think, to be fair, you could say that for lots of actors within the existing humanitarian system. And I think is a huge mistake if we are trying to replicate the wiring that, you know, some of these big private sector companies have spent many years and many millions of dollars putting in place. I think we should work with private sector actors, but I don't think they have the answer. I think at at heart, you still need a humanitarian assessment system that's figuring out who needs assistance, how to get the assistance to them, and then checking on the other end that the assistance has done what it said on the tin.

Sophie, thank you so much for coming on Trumanitarian and providing your insights. We miss you in the sector, we really do. Please come back soon. And I was of course hoping for easy answers and recipes on what to do. But I think what you have provided is an incredibly deep insight into just how complex this issue is. And thank you for doing that.

Thank you so much. I've loved it. And good luck with the rest of the podcast.

I think you could hear why I chose to begin this episode by talking to Sophie. She has a very deep understanding of these issues and a very clear way of presenting them. At the heart of the problem is the sector-based coordination system, the cluster system. And so the second person I chose to speak to is Patrick Saez from the Centre for Global Development think tank in Washington. He has, together with a couple of other researchers, written a paper on area based coordination, which is an interesting alternative way of thinking about coordination. So I thought he would be able to provide some interesting insights into how do we actually change the coordination system. Patrick Saez, thank you for coming on Trumanitarian.

Thanks for having me, Lars Peter.

You're here because you have written a great piece of research on area-based coordination as a way of rethinking humanitarian coordination. You wrote this together with Jeremy Konyndyk and Rose Worden. And we'll include a link in the show notes to the paper so you can you can find the full paper there. Now, in several of the conversations I've had around cash coordination, the issue of a sectorally-based coordination system has come up as a major problem when you deal with cash. And so I of course thought when I read this paper, great here is an alternative to sector-based coordination. This must be well-suited for for cash coordination. But maybe let's start, Why did you why did you do this piece of research?

Well, this particular piece of research on coordination is part of a broader project that looks at the future of humanitarian reforms and trying to rethink why past humanitarian reform efforts haven't been as transformative as they could have been. And we really concluded that at the core was an issue with the business model and the incentives, power and influence, in the system that basically lead to a lot of inefficiencies and ineffectiveness in the sector. And that's related to governance, financing, obviously, but also the way the humanitarian programme cycle is organised and coordinated amongst different actors. So this is why we looked at coordination as part of that puzzle. And there are some interesting experiences of area based coordination led by individual NGOs, in particular, that we found inspiring for potentially evolving the current coordination model that's based on very rigid sectors through the clusters.

Now, reading the paper, it's clear that you frame this way much also as the root problem, in a sense, being high concentration of power with a few agencies, that this is part of the reason why the cluster model doesn't necessarily... or the cluster coordination doesn't necessarily work. How would that be based... How would that be different with area-based coordination? Wouldn't we just replicate the same pattern with the with the big agencies coming in and dominating the areas?

First, we have to acknowledge that the cluster approach has actually delivered a lot of its original objectives to reduce duplication, to reduce gaps, it's improved coordination and make it made it more predictable, and it's also made it a bit more accountable. And in terms of its technical function, it's normative function of, you know, applying similar standards of humanitarian action everywhere, I think it's actually been quite successful. But after 15 years, its shortcomings have also become clearer. And they're exactly what you're referring to. It's the exclusion of national and local actors, it's the fact that the centre of gravity of the cluster model is at the capital level rather than at the local level, at the community level, and importantly, this fundamental fragmentation of people's needs and capacities by sectors. And that affects how resources flow. I mean, at CGD, we've found that 77% of funding goes to, or through cluster-led agencies. In Sudan, there's a 20,000% difference between the WFP appeal, compared with the largest national NGO in the food security sector appeal. So I think cash really shines a light on this because basically, it's multi-sector. In area based coordination, the the model that we advocate for in the CGT paper that we published last year, is much closer to the ground. It involves local actors much more, because they don't have the time and resources to attend multiple coordination for by sector, it makes participatory approaches easier for the same reasons. And more importantly, it also allows for a holistic assessment of needs and vulnerabilities and for better adaptation to contexts. And that requires a multi-sector, multidisciplinary approach. And it also opens the possibility to basically integrate much more with development actors and other actors. So the main advantage, really, is to reorganise the programme cycle and the resource allocation by geographical area, rather than sector.

Yeah, I fully agree with that analysis. But would it lead to more distributed power in the system? Wouldn't it be possible to simply maintain a high level of concentration of power and have the big checks being written to a few big agencies, and then have them dominate the areas? I get the point of the holistic assessment of needs, the lower transaction costs all of that, but would it really disperse power?

Well, what we're advocating for, in fact, is much more of a hybrid model, where actually the area coordinator is somehow delinked from operational delivery.

So OCHA?

Not necessarily OCHA. It could be it could be any other actor that's not involved in delivery, it can be an NGO that's local, and that has the capacity to organise delivery, it could be the government. This hasn't been tested at scale. So it does need to be tested. What's clear, that area based coordination cannot do everything. There are strategic and technical functions that are still needed at a national level. And that could still be held by the clusters. And in a way, it would be detrimental to do away with with that role. Because they really have a comparative advantage in provide providing technical guidance, quality assurance, and you still need that kind of sector-based analysis to make sure that people's needs are being met through cash transfers. I think this idea also, the last resort function, is useful in the in the cluster approach.

So do you think we can solve the cash coordination problem without area-based approaches?

I think that's... the cash coordination issue could benefit from some of the ideas around area based coordination. But I think ultimately, you can't completely fix it without an overall change in humanitarian coordination and applying error-based coordination models only to cash would not really make sense. So I think this has to happen within an overall change to the coordination architecture, one that doesn't ditch the clusters, but really realise their role with their comparative advantage and gives much more weight to locally-led coordination and programming, including more responsibility on how needs are defined, on how resources are are channelled. And for that, I think there's there's a need to unbundle all the functions that are required in the programme cycle, to make sure that they're not all performed by the same agencies, which is what is happening at the moment. The coordination in the way should be performed by dedicated, non-operational actors and coordinators that should be empowered normatively.

But that means that we will have the... that will flip the political economy of the human sector upside down.

It will it will realign it, yes--flip it upside down. But in a way you can't have... you can't pursue objectives or of people driven response, holistic response without looking at the overall model. And I think it really needs to be looked at not in isolation, but also looking at the other incentives that are that are not enabling change at the moment. And I think one of the main issues is that (and it's not really related to this), but that core functions of the multilateral and humanitarian agencies, the NGOs, etc, at the moment, are financed through the overheads on programmes. So there's there is that incentive to grow your programme. But I think donors need to reflect also on how to change that to make sure that agencies have much more predictable funding for those functions. So that reduces the incentive to to always be the dominant agency within within the sector within the response. And I think what what we're saying in the paper as well, is that it doesn't have to be a complete overhaul immediately, on a theoretical basis. I think there's opportunity to test different approaches in a number of countries first. I mean, the other alternative would obviously be for all the actors who are calling for a different coordination model for cash, for example, to design it this themselves separately from the clusters. But there are obvious risks of further fragmentation if you if you do that.

Patrick Saez, thank you so much for coming on Trumanitarian and giving us your insights into how area-based coordination might help us crack the cash coordination nut.

Thank you very much. My pleasure.

It was great speaking to Patrick and I think that he and Sophie has provided a really clear overview of just how complex the issue of cash coordination is. But I wonder what it actually looks like from inside a large humanitarian agency. To find out, I reached out to Ed Fraser from the Danish Refugee Council. Ed is one of the leading cash experts within the NGOs and I wanted to get his take both on the issue of cash coordination in general, but also specifically ask him whether the increase of the use of cash as assistance is actually a threat to the current business model of INGOs. Ed Fraser, welcome to Trumanitarian.

Thanks very much. It's great to be here.

Just walk us through, Why did you sign this letter on cash coordination?

We see in our operations day to day the challenges that come with with cash coordination in general, but also specifically when it's relatively under resourced or ad hoc. And we see day to day the the implications that that has operationally, you know, in terms of our ability to respond, either in terms of emergency response or in ongoing cash assistance interventions. And really, on behalf of my country colleagues, and those also then engaged with regional cash working groups, and on behalf of myself who engages with the global cash working group, we felt it's it's long overdue that that some clear decisions be made as to the future of cash coordination. We simply think that the hiatus that has existed for quite some time now needs to needs to be resolved and some key decisions made.

Just walk us through the nature of the problem. You talk about resources, but what's really at the root here. Is it is it a lack of clear mandate and humanitarian architecture? Is it because we need to throw more money at this cash coordination? What does it boil down to for you?

I think what's been revealing for me is that there is very much a lack of consistency in terms of the resourcing and leadership of groups I think is a critical point. The leadership tends to be relatively ad hoc or or there's frequent turnover, positions held for three to six months in terms of cash Working Group leads, and also the the other resources that are required to run an effective cash working group, for example, information management being being key among them. And so on the one hand, I would say that it is a resourcing issue, but I would also say that the answer isn't simply turning more money into cash working groups. There needs to be a reflection, as you touched upon, in terms of the mandate and the legitimacy.

Okay, so what is it? What do we need? Do we need a cash cluster?

Well the debate, or at least some debates I've engaged in have spoken about whether the cash coordination needs to be the same in all contexts, or whether there's necessarily a need for for flexibility. And I think this is also one of the challenges that comes. It's not always, I would say, necessary or pertinent or even appropriate to have a standalone cash cluster. But nor is it always the case that it should simply be a technical working group that supports the functioning of the other clusters. Ideally, it would be a bespoke approach that depends upon the the nature and scale of cash in a given response. I think the challenge that comes with that is, you know, a bit of a chicken and egg situation here. If we don't have a cluster will necessarily, you know, cash reach the scale that it needs to reach, or should arguably reach, in a context. But equally, if we do have a cluster does that perhaps overemphasise the role that cash can play in in a response?

So let's forget about a cluster. Let's talk about who has the mandate? Because I think that is somehow intrinsically linked, right? There needs to be... if I know us as a community, right, there needs to be somebody at the end of the table, who says, This is my mandate. This is what I do. Otherwise, we end up in month-, if not year-long fights between different UN agencies or large NGOs about who does what, and who has this slice of the pie. So who should that be?

As put forward in the State of the World's Cash reports, there are two of the four possible solutions that they propose to this, based on the research and the interviews they conducted, are to have not necessarily one single agency at the global level who's responsible for coordination in all responses, but to have a country-level decision as to who is the leading cash actor in that context. I think the two options on the table appear to be having the leading cash actor in a country leading the way with that coordination. And I... of those two options, that's probably what I would I would favour. Again, making it relatively bespoke.

But isn't that the way it works today?

Not always, I would say. It's not always the leading agency by those measures that is involved. And also, I think in certain contexts, the leading agencies don't stick their neck up above the parapet, and they want to avoid perhaps the political banana skin of leading a cash working group. So it's not necessarily always that way. And I would say, you know, there's always the possibility of kind of co-chairing and co-leadership and I would say what's done well, so far in in most contexts, is that co-leadership approach. But what it tends to be is only, really, UN agencies with large international NGOs. So the question there remains around, obviously, the localization agenda, and the key needs to have kind of a broader range of voices, not only participating in cash coordination, but also actually actively leading it. And that both applies to local NGOs, civil society, but also what role for national governments in cash coordination, I think it's also something that should be confronted. Perhaps a more radical (I would say it's potentially radical, but others would say it's necessary and it's the future)... is that, why not, in certain, if not all context, governments having key leadership roles and agen-... greater agency and cash coordination in their their countries?

Let's take this localization bit. That's interesting. Because for me, it seems that, you know, cash is almost anti-localization, in a sense, because it lends itself so well to economies of scale, that it speaks towards creating one massive pipeline, probably run by a combination of the UN agencies, say MasterCard, and the government of the country. And really, there's very few crumbs left, apart from that. Isn't this really the heyday of Big Aid?

Well, on the face of it, (and I must admit, I myself drew relatively similar conclusions when I started asking myself questions about cash and localization and the implications for the localization agenda), we're trying as cash actors to bring a bit more nuance to this and not necessarily draw that assumption and recognise that there certainly is a role to be played for local civil society in cash programming. You know, it might not mean, for example, that the large volumes of the cash transfer itself touch the books of local organisations, but I would say, arguably that that's also happening for NGOs and UN agencies that... with an increasingly componentized approach that's been promoted by ECHO and likely to be followed by other donors for large scale cash interventions, that, increasingly, we won't be the ones as agencies that touch that large sum of money, but we'll still be involved in the various elements of cash interventions throughout the programme cycle and also at a strategic level. So for me, it's important in this discussion to almost set aside that cash transfer volume amount and look at what all of the other components that are critical to effective cash programming, be it, particularly, targeting, but also implementation, monitoring, and evaluation, and so on, and see that there are multiple roles, and necessarily multiple roles, for local civil society to play within that.

You speak of the way in which, potentially, local civil society is marginalised by cash distributions, my question to DRC will be, isn't it the same for you? Your business model, you are your big powerful agency, you have several 1OOO people employed. But if you look at the business model and how you finance that, that's not... that's gonna be hard to justify if, let's say, 80% of assistance going through DRC is cash-based. That might have profound implications.

For us, the discussion is less, you know, grounded in an assumption that we want to shift a huge amount of the assistance we give to towards cash, and how do we fit our business model around that. I would say it's much more, you know, a reflection on our business model, our mandate, what we're seeking to achieve, and what we can realistically do as well, within the cash discussion. And it's still a debate we're having, but I would say I'm erring on the side of ensuring that we still leverage cash as a modality, particularly in our protection work, where feasible, relevant and appropriate, and that in certain contexts, where we have the capacity, where we have the expertise, that we focus... that we, you know, don't ignore the potential of being a large actor in cash at scale, multi-purpose cash, but that we don't, you know, throw the baby out with the bathwater to an extent that we don't chase doing cash at scale to the detriment of, you know, what is a long established and reasonably well-functioning and highly-effective way of working in many of the contexts that we operate.

For me, it's hard to ignore the perspective that if I was a donor, I may not want to throw the baby out with the bathwater, but I may want to throw the middleman out with the bathwater. Right? And I think what we're seeing here is a classic sort of disruption where cash comes in and puts the existing humanitarian architecture under tremendous stress. It doesn't make sense to have a sector-based coordination system when you're dishing out cash, that defeats the very purpose of it, as far as I can see. And secondly, the economies of scale and the way tech can distribute and allocate large amounts of cash with very little cost means that that the existing institutions that currently operate with a different modality come also under great pressure. And it's for me hard to see how there would not be a number of the big NGOs struggling to continue at the level that if cash really goes to scale.

I suppose the question there is, also should we be... should we necessarily be the ones who are who are distributing large sums of cash and cannot alternative mechanisms be adopted? Obviously, there's increasing engagement with financial service providers, there's increasing engagement of other mechanisms beyond kind of us-to-them cash distribution, obviously, considerations around peer-to-peer giving, around a greater understanding of remittance systems that are, you know, orders of magnitude greater than cash distributions in... humanitarian cash distributions within multiple of the contexts where we operate, and then obviously, as I mentioned a couple of times, it's the discussion around social protection and are not, in certain contexts at least, government systems best placed to be that channel, and what can we as agencies do to support that, or, perhaps in certain contexts to take a step back and focused on alternatives. I think that's one of the challenges of the growth of cash is that it's become something which we end up sort of coveting or designing our ways of working around when actually, sometimes the best thing to do is to say, you know this isn't for us, we'll focus on providing whatever support might surround that cash assistance, be it, you know, allowing for effective referrals to our protection teams, to provide more bespoke and non-resource based support, or simply, you know, avoiding the cash discussion altogether. It's not very popular thing to say, when we're looking to, you know, maintain, if not increase the amount of funds that we raised, but we shouldn't chase that that money if it if it compromises the quality of our work elsewhere, or the role that we are best placed to play in a response. Take the Tigray response, for example, at the moment that we're, we're operating in. I would say, at the moment, there are certainly actors that are providing some cash and even potentially supporting markets, but within DRCs response, we've rightly, I would say, focused on other areas, either because they were a gap or simply because we had the capacity and the best place to fulfil them.

Ed, thank you so much for coming on the pod and sharing your perspective. It's, to be honest, been difficult to find many people who would like to come on and discuss this very difficult, complex issue that's quite political and I deeply appreciate you coming in here and answering these questions. And thank you for all the work you do in cash land on trying to make this modality even more powerful.

Great, thanks very much, Lars. And yeah, just can't wait to see what comes of the letter and what follows after that. But thanks for the time, and yeah, looking forward also to hearing the views of others that have contributed to the pod. And let's hope it helps drive the agenda forward.

The final piece of the puzzle that I was able to find for this episode is the donor prespective. Donors pay the bill and almost all of them have signed the letter. That makes the silence from the UN system even more remarkable. I reached out to Isabelle Pelly who is the Global Thematic Expert on Cash and Basic Beeds for ECHO to hear what she had to say.

Isabel Pelley, welcome to Trumanitarian.

Thank you, Lars Peter. Good to be here.

You are the Global Thematic Expert for ECHO on Cash and Basic Beeds and ECHO is of course one of the donors who have signed this letter that this episode is about. And the first thing I'd love to ask you about is, How come you signed the letter? How come you backed this initiative?

Well this is an issue that ECHO's felt strongly about for some time, along with other donors. And something that we've really been discussing within Donor Cash Forum, which ECHO co-leads. And, as you may know, there was a letter written through the Good Humanitarian Donorship Initiative in 2O18 to the IRC, requesting that cash coordination be addressed. And unfortunately, that was ignored, but it definitely didn't make the problem go away. So in 2O19, these discussions were reinitiated through the Grand Bargain cash workstream. And we actually even needed to set up a sub-workstream called Tackling Political Blockages. And within that, cash coordination was determined to be the main area needing to be addressed in order to improve the effectiveness and impact of cash assistance. This confirmed the findings of two successive State of the World Cash reports. So for us, it was something that we absolutely couldn't ignore. And so we absolutely welcomed the initiative, which was led on by USAID but with strong support from us, to draft this letter in partnership with CaLP.

So you say that it's obviously a problem but I would say obviously we as a community we don't all agree on that. You say there was a attempt in 2O18 that was ignored, now we have this... you know it's... Let's be diplomatic and say it had more traction with the NGOs then with the UN... so let's just consider this. What... Are you sure what we do have a problem, right? It seems to be working somehow, in some kind of organic manner, out in the field. So what is the problem actually?

You're right that solutions have been found to muddle through. Because over this period, over the last decade or so, we've seen cash assistance go from... or cash and voucher systems go from 1% of humanitarian aid to 18%. So, by necessity, it's required solutions to coordination, particularly given its multi-sectoral and multi-purpose nature. But these solutions really remain ad hoc. And it's something that I've personally been engaged with from the very start because I was one of CaLP's first coordination focal points in Niger, when CaLP was kind of piloting different approaches to cash coordination. Then I supported the set up of ESCAP, or at least I was on their steering committee, which was by necessity, again, stepped up, and has been able to fill critical gaps in this space. And whilst working at CaLP, this is an issue that I also advocated for, very strongly, together with members of the CaLP network. So it's frustrating that we still don't have a predictable solution. And why does it matter? It matters because the impact of the quality of the assistance that we're able to deliver are really significant. So there's a myriad inefficiencies which directly impact on the quality of responses. Whether that's, you know, the fact that it took six weeks after Hurricane Matthew hit Haiti to... for the cash working group to finalise a terms of reference, or that two years into the Nigeria humanitarian response, we still didn't have a finalised minimum expenditure basket, you know, with the same experience repeating itself today in Burkina Faso, or that again, again, today our response in Gaza is plagued by fragmentation and bickering. There are so many examples but the point is, we need to do... we can and should do better, especially for the vulnerable populations we serve. There are so many examples, but the point is we need to do... we can and should do better, especially for the vulnerable populations we serve. It's also important to recognise OCHA's role in trying to find solutions to cash coordination, particularly by formalising the relationship between cash working groups and the wider humanitarian architecture, of elevating cash working groups to the Inter-cluster Coordination Group, putting cash coordination in the humanitarian coordinators manual, and so on. And also pushing for the inclusion of multipurpose cash in humanitarian response plans. But you know, that that's good in principle, but whilst we see an increase in the number of HRPs that have narrative chapters on multipurpose cash, very few have associated operational plans and budgets, which unfortunately makes them somewhat legless. So that's something that, as donors, we'd really like to see progress on.

But clearly what we're facing here, and as the name of the sub-working group of the Grand Bargain indicates, this is political. And the obstacles are political. And seen from that perspective, it's quite a soft letter, actually. It on one side, does not promote one specific solution, it just says, 'Hey, we should talk about this' and 'could we please find a solution'. And secondly, it clearly asks the IRC, so the current mainstream humanitarian architecture, to basically fix themselves. Take into account the political nature of this, the experience from 2O18 with the previous letter, what, in your head are the scenarios moving forward. How hopeful are you that we actually will see some change, either big change, small change, any change, no change? What are you thinking?

So, I agree that the letter is top-line and it seeks to find a solution saying that we see that cash coordination... the current cash coordination arrangement is suboptimal. But it was deliberately so in order to galvanize ownership and momentum, which it clearly has, but also being... effectively allowing us to draw a line in the sand to indicate who agrees with the need for a solution and who would like to be part of that solution, and highlighting therefore, as you say, the political nature of it. So in terms of what that means going forwards, as you know, the signatory letter has been sent to the ERC by CaLP and USAID, and with that was a clear request, firstly for acknowledgment of receipt, and secondly, for a roadmap on how the IRC will work towards taking a decision. And by acknowledging the role, the critical role, of the IRC in taking this forwards, we're also... we're requesting them to see how, you know, the current humanitarian architecture can be adapted to more... rightfully take on the responsibilities of cash coordination.

One of the previous interviewees in this episode, Patrick Saez, used the word unbundling. He said we need to unbundle the different functions here so that not one agency does everything. And I know that ECHO in... a couple of years ago in Lebanon, tried that, to unbundle the the monitoring... or the distribution from the monitoring. Could you speak a bit about that experience and to what extent that is the way ECHO sees the managing... and to what extent that is the way ECHO sees managing cash moving forward, unbundling, or chopping up the value chain, or however you want to put it?

Yeah, thanks. I think it's not a new idea. In fact, it was very much at the heart of the High Level Panel on Cash Assistance, which was published in in 2O15. The idea that, to improve, to increase the accountability, particularly of large scale cash programming, it was necessary and appropriate to look at segregation of functions along the programme cycle, and particularly with regards to monitoring functions, but also to some elements relating to design and some of the more common services, which can be very much disassociated from the pure delivery of cash. And that's something that ECHO put into its Large Scale Cash Guidance Note, which was published in 2O17, and which we're currently in the process of reviewing. In practice, because of many of the issues we've been discussing on this podcast in terms of how assistance is designed and delivered by the same agencies, it's been challenging to put this into practice. But the Lebanon example is an interesting one, where we, together with other donors, have funded a a consortium of NGOs to monitor large scale cash assistance programmes run by the UN, and provide that accountability function. And that's actually been particularly relevant in the context of the ongoing challenges in Lebanon in relation to inflation in particular. It's also something that we've done with the turkey ESSN programme where we have third party monitoring of that programme as well. So we're seeking to learn from those experiences and encourage other donors to co-fund those initiatives. And, yeah, also see how we can, as you say, unbundle some of the other functions, including around assessment and design.

Congratulations, if you're listening to this, you have made it to the end of the longest episode of Trumanitarian so far. I hope you've enjoyed the perspectives of our brilliant guests. Cash coordination is obviously complex, and it will take us a while to figure out how to get better at doing this. To me two things seem clear, one, we have to discuss this and we have to experiment. Silence or ignoring the problem is not an option. The status quo is not satisfactory. But it's also not realistic to discard the current system and opt for a new blueprinted humanitarian architecture. What we need, I think, is a long, messy, iterative, experimenting debate, we need to test out different solutions. And I hope that what you heard in this episode, the ideas and perspectives that our guests have presented, have been useful for you, and that that will help us move the discussion forward.