NEW AUDITS BY THE EXTERNAL AUDITOR PART I SHORT-FORM REPORT AUDIT REPORT ON THE MOBILIZATION OF EXTRABUDGETARY RESOURCES SUMMARY

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1 Executive Board Two hundred and second session 202 EX/32 Part I Paris, 30 August 2017 Original: French Item 32 of the provisional agenda NEW AUDITS BY THE EXTERNAL AUDITOR PART I SHORT-FORM REPORT AUDIT REPORT ON THE MOBILIZATION OF EXTRABUDGETARY RESOURCES SUMMARY This document is the short-form report of the External Auditor s audit report on the mobilization of extrabudgetary resources as submitted in document 202 EX/32.INF pursuant to Article 12.4 of the Financial Regulations. Action expected of the Executive Board: proposed decision in paragraph 41. Job:

2 202 EX/32 Part I EXECUTIVE SUMMARY AUDIT REPORT ON THE MOBILIZATION OF EXTRABUDGETARY RESOURCES DISCLAIMER: This executive summary was drawn up by the External Auditor at the Secretariat s request in order to optimize translation costs and facilitate discussion by the governing bodies. Only the long-form report is authoritative in terms of exact content and the nature and scope of the External Auditor s findings and s. 1. The purpose of this audit is to analyse the means currently at the Organization s disposal and the actions it should take to develop extrabudgetary resources. does not seek then to express a view on the levels of extrabudgetary resources UNESCO should be seeking, as it is for Member States to weigh up the advantages and disadvantages of such funding. 2. Accordingly, this report examines how the Headquarters services in charge of seeking such funding are organized, their resources, the role of the field offices and the funding methods to be explored as well as the different categories of potential donors. I. HOW UNESCO IS ORGANIZED TO SEEK VOLUNTARY FUNDING 1. Highly diverse funding arrangements among United Nations agencies 3. Although UNICEF and UNDP do not have any mandatory resources, such funding makes up nearly half of the total resources of FAO (41%), UNEP (40%) and WHO 1 (19%) and slightly over half the funding of the United Nations Secretariat (52%). Since the 1990s, the proportion of voluntary contributions in the funding of United Nations agencies has been increasing and these now represent 55% of their resources. 2. UNESCO: a drop in extrabudgetary resources and heavy reliance on a small number of donors 4. UNESCO s funding is characterized by the significant share of mandatory resources (47% in 2014), which underwent considerable erosion in 2011 with the disengagement of the United States. Despite the stated priority, the drop in assessed contributions has not been compensated for by an increase in extrabudgetary resources (EBR). 5. UNESCO has a multiplicity of extrabudgetary donors, and States are in the majority among them (68%), followed by multilateral institutions (19 %), then companies, foundations and individuals (13%). However, the Organization is still highly reliant on a small number of major public donors as, in each category, the ten main donors provide more than four fifths of resources. 3. Numerous but insufficiently precise strategy documents on fundraising 6. Numerous strategy documents on the mobilization of extrabudgetary resources emerged in the discussions following on from the Action Plan on Management of Extrabudgetary Funds (174 EX/INF.4, March 2006). Documents targeting certain categories of potential donors have also been drawn up, such as the UNESCO Strategy for Engagement with the Private Sector (187 EX/6, Part XII, Annex, August 2011). In the context of the Organization s financial difficulties, a 1 UNICEF: United Nations Children's Fund; UNDP: United Nations Development Programme; FAO: Food and Agriculture Organization of the United Nations; UNEP: United Nations Environment Programme; WHO: World Health Organization.

3 202 EX/32 Part I page 2 remodeled strategy for the biennium was set out in the document entitled Implementing a Sharpened Resource Mobilization Strategy. 7. The framework for strategic partnerships nevertheless remains insufficiently detailed concerning priority areas for seeking extrabudgetary resources and the internal measures to strengthen the collection of extrabudgetary funds at every level, since in practice it amounts to no more than a call for all the services to mobilize without identifying the means to be applied to those responsibilities and without adequately explaining how they will dovetail with other UNESCO entities. 8. The indicators chosen for the different categories of partners to date are not such as to set the Organization an ambitious and challenging objective for raising more of its own resources, nor do they provide a clear view of its true performance in this regard. 9. The draft integrated budget, focusing in particular on analysing the gap between probable resources and overall requirements and mobilizing extrabudgetary resources should constitute a new tool and facilitate a new approach to the matter. 4. An organization with fragmented responsibilities 10. The high level of priority UNESCO gives to mobilizing extrabudgetary resources is not sufficiently reflected in its organizational chart or the means deployed by it. 11. At Headquarters, the Bureau of Strategic Planning (BSP) has the mission of coordinating strategy and monitoring the mobilization of extrabudgetary resources, as well as validating funding applications transmitted by field offices. However, its position in the hierarchy is unclear in a context where its resources have fallen sharply. Excessive formalism, and centralized and cumbersome validation procedures all result in a lack of fluidity in the exchanges between Headquarters and the field offices. Coordination at Headquarters is then uncertain. 12. Sectors suffer from responsibilities that are fragmented among UNESCO s different services, and between different staff members in a single sector. As a result, numerous, poorly coordinated strategies and targets are put in place and their coordination with the overall strategy is variable. The objectives are largely left to the sectors to determine, and they take very different approaches to setting their targets. 13. The field offices take part in the mobilization strategy, identifying partners at the level of each country or region, and negotiating with them. While the directors of the offices all state that they are able to correctly identify their interlocutors at Headquarters level, relations with the sectors, and in particular the capacity of the offices to identify their interlocutors, are more patchy. The field offices want to see support from Headquarters stepped up overall, with its action contributing more in helping identify donors (upstream) rather than merely validating funding proposals. The failure of the two sides to share information can lead to cases of direct competition between Headquarters and the field offices. 14. From the point of view of the offices, guidelines from Headquarters are too broad and not practical enough to draw up specific action plans. The targets for each biennium are thus not broken down at the regional level or, a fortiori, at field office level. Only 17% of the offices have drawn up a detailed strategy in this respect. 5. Staff with contrasting training in seeking extrabudgetary resources 15. The professional profile of staff responsible for extrabudgetary resources, in BSP as well as in sectors and field offices, is for the most part administrative. 16. Admittedly, the preponderance of States in the contribution of extrabudgetary funding, and the need for a thorough knowledge of the Organization in order to negotiate projects justifies this in part. Admittedly, some staff members do have a more specialized fundraising profile. Their presence in

4 202 EX/32 Part I page 3 teams lacks weight though, when this is an activity that requires very specific experiences and reflexes. The Organization should considerably strengthen the proportion of persons who have already held responsibilities in the field of sponsorship, master the tools and techniques of fundraising and have access to a range of contacts. 17. It should also strengthen its staff training policy in this regard, as it is quite out of step with the Organization s stated ambition. 18. Finally, the appraisal of key staff, including field office directors, should take into greater consideration their achievements in the field of seeking external funding. 6. Procedures that are cumbersome and lack clarity 19. The validation processes for donors or projects funded from extrabudgetary resources, or both, are often cumbersome. The multiplicity of actors dilutes responsibilities and prolongs the time taken for approvals. The revised action plan for mobilization of extrabudgetary resources does not really come down on the side either of a centralized arrangement or of full delegation of responsibility to the field offices and sectors. 20. The review of the process that has been undertaken partly addresses the issues. Responsibilities and procedures must be simplified and the role and resources of the units in charge of extrabudgetary resources stepped up, as part of an overall reworking of the internal arrangements in this area. The role of the Bureau of Financial Management (BFM) should be refocused and confined to ensuring the quality and transparency of financial monitoring, which are decisive for UNESCO s good image with potential donors. 21. Despite the setting up of a transparency portal, the lack of information on the data on project execution by beneficiary, and of the link between the budget and financial data and the qualitative results of the projects mean that UNESCO s action lacks clarity in the eyes of donors. 7. Comparison with other international organizations offers avenues for improvement 22. UNESCO s way of organizing differs considerably from that of the major institutions and international agencies that have the best record in raising voluntary contributions. Study of them shows that there is no rule of thumb where organization is concerned. Some agencies have greatly decentralized in order to mobilize funding at local level, while, for others, the role of Headquarters remains primordial. The point they have in common is, however, that they have created structures or entities with specific responsibility for the mobilization of extrabudgetary resources. 23. Furthermore, they are all distinguished by their capacity to call upon suitable skill sets and teams trained in voluntary resource mobilization. 8. Decentralized organization with clarified missions 24. A new allocation of responsibilities must be sought, along the lines prevailing in those organizations most effective in this area, international agencies and all types of major institutions successfully relying on sponsorship. 25. recommends the establishment of a directorate dedicated to seeking extrabudgetary resources, refocusing sectors on their missions, and giving greater responsibilities to field offices. 26. The new Extrabudgetary Resources Directorate (ERD) would be assigned the mission of coordinating and steering relations with potential external partners. It would develop operating strategies according to the funding needs of the Organization, recruit qualified staff, and equip itself with the necessary tools. The Directorate should be headed by an Assistant Director-General, and report directly to the Director-General. It should contain at least three divisions, with different areas

5 202 EX/32 Part I page 4 of responsibility and interlocutors: one in charge of private sector donors, the second, multilateral agencies and bodies and the third, bilateral donors. 27. Sectors must be refocused on their core missions: devising, steering and evaluating programmes. This would eliminate any risk of internal competition. Their close cooperation is on the other hand necessary in presenting and promoting programmes and projects to donors. 28. The field offices would have their own responsibility for the mobilization of extrabudgetary resources because of their knowledge of the local context and the links they have forged with national decision-makers. They must have greater delegated powers in this area, and competences to carry out donor prospection at their level. There must though be coordination with ERD. 29. The central services such as BFM, the Sector for External Relations and Public Information (ERI) and the Office of International Standards and Legal Affairs (LA) must act as service providers so that, at every stage of the donor prospection process, project, monitoring, reporting and final evaluation, they can bring to bear their know-how at the request of the teams responsible for mobilization of resources. 9. Strengthened means of support a. Develop the role of the National Commissions for UNESCO in mobilizing extrabudgetary resources 30. The policy framework for strategic partnerships gives National Commissions a role in the identification of private sector partners and as UNESCO s natural interlocutor at the country level. However, a significant proportion of the National Commissions fund their own activities as a priority, including when seeking non-state resources, and are thus in competition with the Organization. Their mission in this respect should be restated, as least for those countries whose legislation enables it. 31. Better coordination between BSP and ERI should also be sought so as to facilitate overall coordination in this area. b. Establish in countries with a strong private sector independent of the public authorities, foundations or structures with two aims: to enable donors interested in the Organization s programmes to benefit from tax deductions, to enhance visibility, in particular by highlighting support given to the most clearly identified activities (world cultural and natural heritage, education, etc.). c. More effectively leverage Goodwill Ambassadors for fundraising, and even select some with that main aim 32. Although the contribution to fundraising of Goodwill Ambassadors is not the main criterion for their selection, they could make a greater contribution thereto, either on a personal basis or by making use of their contacts. II. MAJOR CATEGORIES OF UNESCO PARTNERS I. The private sector: underutilized potential and tools to be developed 33. The private sector holds important potential sources of funding, which are currently underutilized by UNESCO. The results obtained are limited and have fallen in recent years. UNESCO is increasingly reliant on a small number of donors from the same countries.

6 202 EX/32 Part I page Moreover, UNESCO has not really sought to benefit from the legal and fiscal arrangements that exist in many countries to facilitate the search for sponsors and build the loyalty of major donors. In this area, the examples of other institutions, such as UNICEF, should be followed. 1. Multilateral donors: future, substantial partners for the Organization? 35. Despite an increase in European funding for UNESCO, which rose from $10 million to $22 million over the period, the amounts are still modest compared with the donations made by the European Union (EU) to other United Nations agencies. 36. Generally speaking, the field of multilateral donors still seems underutilized given the considerable potential for growth of this type of funding. Cooperation with the European Union and with UNDP could be improved, in a context where the resources available to the World Bank Group and the associated trust funds are considerable. 2. Bilateral donors: strategic, long-term partners maintaining relationships with the Organization that evolve over time 37. Bilateral donors maintain strategic relationships with UNESCO that have become stronger since the disengagement of the United States in Dialogue with donor States calls for in-depth knowledge of the countries political-strategic, institutional and even cultural contexts, knowledge that is acquired in particular through long-term partnerships. 38. Unlike some donors (Sweden, Norway, Mexico), many States are reluctant to sign framework agreements that include binding multi-year commitments. Moreover, their propensity to favour the contribution of unearmarked or lightly earmarked resources also varies greatly. 39. Bilateral donors have specific requirements, in particular as regards the results of activities. For instance, the quality and frequency of the internal and external assessment of projects represent a strong requirement on the part of States. 40. Lastly, States emphasize the capacity to highlight tangible success stories. They are keen for results to be more extensively publicized through more effective and transparent external communication. This capacity is crucial to leverage the actions of the Organization and attract new local funders. Proposed decision 41. The Executive Board may wish to consider adopting a decision along the following lines: The Executive Board, 1. Having examined documents 202 EX/32 Part I and 201 EX/32.INF, 2. Expresses its satisfaction to the External Auditor for the high quality of his report; 3. Invites the Director-General to report on progress achieved in the of the s in the report on the follow-up to all s made by the External Auditor.

7 202 EX/32 Part I page 6 Director-General s comments The Director-General thanks the External Auditor for his audit report on the mobilization of extrabudgetary resources. She welcomes this report, which sheds a fresh light on resource mobilization at UNESCO and proposes new, and sometimes original, methods and approaches. Detailed comments on the various s are provided below. In addition, the Director-General wishes to make three preambular comments: (1) Levels of resource mobilization The external auditors are right to underline that the 2011 fall in regular programme funds has not been compensated by a sustained growth of extrabudgetary resources, in spite of a surge in voluntary contributions in 2012 and However, with $287 million of extrabudgetary resources in 2015 compared with $289 million in 2011 (cash received), UNESCO has managed to at least stabilize its extrabudgetary resources in spite of huge cuts in RP staff and resources, and the Secretariat cannot therefore agree to the qualification of dégradation prononcée (marked deterioration). In addition, the Director-General notes that this negative estimate is contradicted by the upward trend in resource mobilization figures as measured by signed agreements. Excluding category 1 institutes, the total volume of resources mobilized in 2016 was US $283 million, representing a +25% increase compared with the corresponding figure for 2015 (US $226 million) and a slight increase compared to 2014 (US $280 million). These figures indicate a slight growth and a renewal of interest by Member States in UNESCO. In terms of signed agreements, the trends are not showing a marked deterioration, they are pointing to a slight rebound. More generally, the Secretariat encourages the use of signed agreements with donors as a key indicator of the Secretariat s performance and of trends in resource mobilization, in addition to cash receipts. While the amounts mobilized through signed agreements have certain limitations (as highlighted accurately by the Auditor in paras 32-35), the Auditor recognizes that they can serve as an indicator (para 32). They form indeed a coherent database and constitute today the closest best approximation of the Organization s performance in terms of resource mobilization. N.B.: The report accurately acknowledges that the experienced decline in cash receipts from 2012 to 2016 is particularly attributable to external factors (paras 42 sq), insofar as the impact of domestic financial situations on core donors has had a very significant impact on the trends. This has concerned in particular two countries which were until 2014 the first and second largest contributors to UNESCO. These countries have experienced domestic budget tensions and account for a reduction of US $31.3 million of funds received from Member States from 2013 to 2016 or a reduction of 25% of the funds received in 2013 from Member States (US $ 124 million). The table no. 3 under paragraph 39, which shows a reduction of -29% from 2012 to 2015 can in large part be explained by this specific situation, which has had a disproportionate impact on the overall decrease of voluntary contributions received by UNESCO. (2) Strategic relevance of the Integrated Budget Framework and Structured Financing Dialogue (IBF/SFD) to resource mobilization The Director-General signals that, while the Audit report devotes much attention to the need for a strategic framework, it only briefly refers to the introduction of an Integrated Budgetary Framework and Structured Financing Dialogues at UNESCO and to its benefits. While it is acknowledged that IBF and SFD do not replace resource mobilization strategies, it is recalled that these frameworks will now be a key component of future resource mobilization strategies and a key component for planning and resource mobilization at Headquarters and in the field.

8 202 EX/32 Part I page 7 They significantly help to enhance the transparency of extrabudgetary resources and their alignment on priorities decided by the Member States, and encourage lower levels of earmarking. The draft Programme and Budget for (draft 39 C/5), which reflects an IBF/SFD approach, includes for the first time the identification of funding gaps at Sectoral levels and in Field units. These will be the focus of future resource mobilization efforts. While the Director-General agrees with the External Auditor that it will take time to study the impact of this transition on the volume and distribution of extrabudgetary funds, the introduction of this new budget and resource mobilization (RM) method is already visible at various levels. It would have been useful for the audit to reflect somewhat more on the introduction of the IBF, and SFD which mark an important shift in terms of strategy development and in the development of a resource mobilization culture at UNESCO. Importantly, the new IBF framework is built on the ownership and responsibility of Sectors and Field units in establishing and reaching their own resource mobilization targets. While strong central coordination is indispensable, the Secretariat believes that this approach must be supported and maintained. (3) Private sector Although partnership with the private sector has always been practiced at UNESCO, the private sector has only grown into a significant contributor in recent years, in part as a result of the financial crisis of the organization and of top-level commitment. The Director-General agrees that private sector partnerships are a vital area of future resource mobilization. She underscores that the Organization was able in recent years to maintain its levels of private funding with very limited resources. Indeed, as highlighted in the report, the current share of private sector funding in UNESCO s extrabudgetary resources exceeds that of many other United Nations organizations. The Director-General agrees with the Auditor s report that capacities in this area would if possible deserve to be strengthened. She also agrees with the Auditor that emerging trends in resource mobilization and rapidly evolving resource mobilization methods and partners will require a continued adaptation of methods and continuous re-training of staff, including marketing and the use of social media to enhance outreach to the private sector. Details provided in Annex II.

9 202 EX/32 Part I Annex I ANNEX I: LIST OF RECOMMENDATIONS Recommendation No. 1. recommends that an instrument be put in place at Headquarters (BSP) to monitor private sector contributions. Recommendation No. 2. recommends the simplification and better integration of strategy documents, which must be built around pragmatic operational methods enabling the challenge of raising extrabudgetary resources to be efficiently addressed, describing the organizational arrangements and means involved so that these can be approved by the Organization s competent bodies. Recommendation No. 3. recommends that the documents submitted to the Executive Board contain indicators not of means (meetings, etc.) but of results with a direct correlation to UNESCO s expected mobilization effort, such as the amounts of commitments expected from the different categories of donors and resulting from the new agreements signed in the course of each financial period. Recommendation No. 4. recommends making a selection of the priority projects for the Organization, according to the amounts of extrabudgetary resources sought and the expectations of potential donors. It is important to redesign their presentation to make them more targeted and specific, both in terms of description and expected results, and more attractive for donors, with stronger focus on the partners. Recommendation No. 5. recommends redesigning the UNESCO website to highlight a selection of projects having priority, notably in terms of the amount of funding needed, in a form that is attractive to donors. Recommendation No. 6. recommends that UNESCO break down its objectives for mobilization of extrabudgetary resources at regional and national level for each biennium and each four-year period. Recommendation No. 7. recommends that Headquarters make available to the largest field offices staff specifically trained in the mobilization of resources from donors. Recommendation No. 8. recommends (i) redoubling the efforts undertaken to simplify the processes for projects financed from extrabudgetary resources, by reducing the number of mandatory clearances at each stage and identifying one single person with responsibility for validating project content; (ii) making the service in charge of mobilization of extrabudgetary resources (BSP) responsible for reviewing private sector partners and exceptions to standard agreements. recommends setting up a mechanism for triggering the clearance process in all services at the same time. Recommendation No. 9. recommends strengthening the reporting to donors on amounts spent, by nature, purpose and results obtained under the responsibility of BSP or rather the Extrabudgetary Resources Directorate that this report recommends should be set up. Recommendation No. 10. recommends extending the remit of the Committee for the Review of High-Risk Projects to all categories of donors, including donor countries, and setting a 30-day cap on the time for review and decision. Recommendation No. 11. recommends the setting up of a directorate, under the Director-General, with overall responsibility for the mobilization of resources from all

10 202 EX/32 Part I Annex I page 2 categories of donor, the development, monitoring, enhancement and maintenance of relations with the donors, interface with the Headquarters units and offices as well as the definition, development and deployment of the necessary strategy and instruments. Recommendation No. 12. recommends reporting to the Executive Board, each year, on waivers granted on the management cost rate, the reasons for such waivers and the resultant loss of the Organization. Recommendation No. 13. recommends asking the National Commissions, when national law so permits, to engage actively in extrabudgetary fundraising for UNESCO, in accordance with distribution arrangements (30% Commission, 70% Secretariat) adapted to the needs of the Secretariat and objectives determined on a countryby-country basis. He also recommends entrusting the monitoring and mobilization of the National Commissions with regard to extrabudgetary resources to the Bureau of Strategic Planning (BSP), Section for Mobilizing Resources from Multilateral and Private Partners (BSP/MLP) or a new directorate. Recommendation No. 14. recommends encouraging individuals and companies that favour UNESCO and its areas of activity to establish or participate in the establishment of entities (foundations, etc.) to support projects within the Organization's remit that may be eligible for the tax exemption arrangements in the country concerned. The External Auditor recommends targeting as a priority large Member States which have legislation and an environment that encourages sponsorship. Recommendation No. 15. To offset UNESCO s excessively broad mandate, the External Auditor recommends approaching donors in line with UNESCO s most visible and most clearly identified main themes (world cultural and natural heritage, biosphere, intangible heritage, etc.), with the aim of attracting different categories of donors according to their own interests and policies within the framework of ad hoc foundations. Recommendation No. 16. recommends the formulation and the adoption by the Executive Board of a private donor incentive charter, according to status (company, foundation, individual, etc.) and to the size of the contribution. Recommendation No. 17. recommends renegotiating the agreements in place or due for renewal based on the donor incentive charter. Recommendation No. 18. recommends recruiting some UNESCO Goodwill Ambassadors based on the role they might play in contributing and raising funds. Recommendation No. 19. recommends establishing a UNESCO board of patrons for major sponsors and private donors. The main objectives of such a board would be to advise the Organization on sponsorship matters and facilitate its work using their resources and/or networks, and to provide expertise and support to programmes of the Organization that require extrabudgetary resources. Recommendation No. 20. recommends increasing the resources of the Bureau of Strategic Planning (BSP) or of the possible future Extrabudgetary Resources Directorate in the field of multilateral funding. Recommendation No. 21. recommends revising the 2007 Directives so as to increase the Organization s control over the use of its name and to assess, when such use is authorized, the corresponding risks and benefits.

11 202 EX/32 Part I Annex I page 3 Recommendation No. 22. recommends obtaining from the Education for Children in Need Foundation its financial statements for the years in order to verify the amounts actually raised by the Foundation and to obtain their full payment to UNESCO, as provided for in the 2009 agreement. He also recommends performing, if necessary, an audit of the Foundation s accounts. Recommendation No. 23. recommends registering in the form of trademarks the term World Heritage and its derivatives in order to guarantee their protection against uses not authorized by UNESCO. Licence agreements should be signed in order to collect fees established in accordance with the applicable commercial standards. The External Auditor recommends establishing, in standard-form contracts and agreements, financial reporting and account certification arrangements in order to give UNESCO reasonable assurances regarding the reported turnover and the royalties paid. Recommendation No. 24. recommends allocating the income from fees and royalties to the programmes concerned, subject to the costs incurred by UNESCO in promoting its brands, and reporting each year to the governing bodies of the sites covered by licence agreements the results of their joint actions.

12 ANNEX II PRELIMINARY IMPLEMENTATION PLAN BY RECOMMENDATION Audit s Preliminary plan and comments The Estimated date for the of the Recommendation No. 1. recommends that an instrument be put in place at Headquarters (BSP) to monitor private sector contributions. Recommendation accepted Pending the of the core redesign of UNESCO s systems, BSP with KMI will implement a solution in SISTER for tracking and monitoring agreement signed for all forms of agreement. No April 2018 Recommendation No. 2. recommends the simplification and better integration of strategy documents, which must be built around pragmatic operational methods enabling the challenge of raising extrabudgetary resources to be efficiently addressed, describing the organizational arrangements and means involved so that these can be approved by the Organization s competent bodies. Recommendation accepted: The Secretariat will build on efforts initiated in 2016 to articulate resource mobilization efforts with the IBF and SFD. The Director-General will also present an updated draft resource mobilization strategy to the 202nd session of the Executive Board, which will henceforth serve as UNESCO s reference document for resource mobilization. BSP will also formally launch the guidelines on field office resource mobilization strategies previously piloted in the first semester of 2016 in close articulation as relevant with the USCD. The Comprehensive Partnership Strategy is coming up for review at the 202nd session of the Executive Board. BSP and ERI will take this opportunity to present proposals for the simplification and rationalization of the strategy itself and reporting thereon. No March EX/32 Part I Annex II

13 Audit s Preliminary plan and comments BSP will prepare an internal guidebook on resource mobilization inter alia to clarify roles and responsibilities and the articulation of resource mobilization with the IBF and UCSD. The Estimated date for the of the 202 EX/32 Part I Annex II page 2 Recommendation No. 3. recommends that the documents submitted to the Executive Board contain indicators not of means (meetings, etc.) but of results with a direct correlation to UNESCO s expected mobilization effort, such as the amounts of commitments expected from the different categories of donors and resulting from the new agreements signed in the course of each financial period. Recommendation accepted The Secretariat fully agrees with the auditor on the need for better performance indicators on resource mobilization. In the context of the transition to the integrated budget framework, it would be important for Member States that these indicators are linked to the filling of the funding gap by Expected Result approved by Member States. A challenge faced by UNESCO is to adapt/upgrade its IT systems to be able to monitor meaningfully its resource mobilization targets. Dedicated efforts will be made in the future to upgrade IT systems and approaches in this area, in particular to ensure the automated tracking of signed agreement by donor by expected result for special accounts and framework agreements, and a tracking of any agreements signed by category 1 institutes. Preliminary plan: Pending the of the core redesign of UNESCO s systems, BSP with KMI will implement a solution in SISTER for tracking agreement signed for all forms of agreement. For 39 C/5, category 1 institutes should provide BSP on a quarterly basis with updates on agreements signed by ER and by donor. Yes March 2018

14 Audit s Preliminary plan and comments The Estimated date for the of the Recommendation No. 4. recommends making a selection of the priority projects for the Organization, according to the amounts of extrabudgetary resources sought and the expectations of potential donors. It is important to redesign their presentation to make them more targeted and specific, both in terms of description and expected results, and more attractive for donors, with stronger focus on the partners. Recommendation accepted The Programme Sectors are developing with BSP a presentation of their funding needs by expected result, including with reference to UNESCO s comparative advantage, contribution to SDG s and house-wide experience. In addition, BSP will work closely with the sectors to identify 2 or 3 project priorities by sector to make them more visible and attractive. BSP has also developed a new concept note format as a basis for exploring cooperation with a donor who has expressed preliminary interest. Yes May 2018 Recommendation No. 5. recommends redesigning the UNESCO website to highlight a selection of projects having priority, notably in terms of the amount of funding needed, in a form that is attractive to donors. Recommendation accepted: The main target audience for Internet-based communication is the general public and possibly private sector (not Member State donors nor multilaterals) It is agreed that the approach needs to be changed and it is not useful to upload concept notes on a self-standing partnership web site. Yes 31/12/ EX/32 Part I Annex II page 3

15 Audit s Preliminary plan and comments To attract the private sector and the general public UNESCO s offer should be hosted nearer to the more animated sites of the programme sectors where news and knowledge resource are hosted (and not on selfstanding partnership site). This should also underscore the message that we are not only giving visibility to given partnerships, but more importantly to the results and lasting impacts achieved through such partnerships. See recent example of the promotion of a partnership on the web site of a Programme Sector: The Estimated date for the of the 202 EX/32 Part I Annex II page 4 development-cooperation-agency-sida-grants million-usd-three-unesco The following change has already been implemented: The UNESCO Transparency Portal was designed in part for this purpose. Version 2, online as of now at: gives specific information about financial needs. A third version is due to be developed, better integrated in the website as a whole, and taking into account the observations of the External Auditor.

16 Audit s Recommendation No. 6. recommends that UNESCO break down its objectives for mobilization of extrabudgetary resources at regional and national level for each biennium and each four-year period. Preliminary plan and comments Recommendation accepted The Secretariat agrees with this, and will formally launch the guidelines on field office resource mobilization strategies piloted in the first semester of 2016 in close articulation with the USCD. Consistent with the Integrated Budget Framework, it is proposed that each field office will evaluate its funding gap, which will be the resource mobilization objectives. A challenge faced by UNESCO is to adapt/upgrade its IT systems to be able to meaning fully monitor resource mobilization targets, including those established at national and regional level. The Estimated date for the of the Yes April 2018 Recommendation No. 7. recommends that Headquarters make available to the largest field offices staff specifically trained in the mobilization of resources from donors. Recommendation accepted within resources available Currently the Organisation does not have adequate resources to implement this fully, as it depends on the availability of additional resources. It is further considered that resource mobilization should gradually be built into the functions of relevant staff at the field level, in particular in large field offices. However, depending on the availability of the funds, the Organization could consider deploying in the future a resource mobilization and communication officer in regional offices. Meanwhile, BSP will continue actively the training of field office staff in the field of resource mobilization, and supporting the sectors and field offices in resource mobilization. Yes Pending availability of funds in the future (for the deployment of regional resource mobilization and communication officers) 202 EX/32 Part I Annex II page 5

17 Audit s Preliminary plan and comments The Estimated date for the of the 202 EX/32 Part I Annex II page 6 Recommendation No. 8. recommends (i) redoubling the efforts undertaken to simplify the processes for projects financed from extrabudgetary resources, by reducing the number of mandatory clearances at each stage and identifying one single person with responsibility for validating project content; (ii) making the service in charge of mobilization of extrabudgetary resources (BSP) responsible for reviewing private sector partners and exceptions to standard agreements. The External Auditor recommends setting up a mechanism for triggering the clearance process in all services at the same time. Recommendation accepted In general, the Secretariat agrees with the spirit of the, which aims at improving procedures with regard to the management of extrabudgetary projects and will consider the formulated by the External Auditor following discussions with Member States on the Audit Report. No 31/12/2018

18 Audit s Preliminary plan and comments The Estimated date for the of the Recommendation No. 9. recommends strengthening the reporting to donors on amounts spent, by nature, purpose and results obtained under the responsibility of BSP or rather the Extrabudgetary Resources Directorate that this report recommends should be set up. Recommendation accepted: The Secretariat agrees with the need to reinforce resultsbased reporting on resource mobilization and has taken steps in that direction. BSP in collaboration with sectors and BFM will develop a reporting format showing the expenditures by nature and results. It is to be noted that the accountability for delivering and reporting on specific results ultimately lies with the relevant sectors/field offices. No June 2018 Recommendation No. 10. recommends extending the remit of the Committee for the Review of High-Risk Projects to all categories of donors, including donor countries, and setting a 30-day cap on the time for review and decision. Recommendation accepted The terms of reference of the Committee for the review of high-risk projects will take into account this. No February 2018 Recommendation No. 11. recommends the setting up of a directorate, under the Director-General, with overall responsibility for the mobilization of resources from In general, the Secretariat agrees with the spirit of the, which aims at improving the capacities and level of the resource mobilization unit. However, it is observed that this appears to contradict 20, which proposes a choice between two options increasing the resources of BSP or of the N/A N/A 202 EX/32 Part I Annex II page 7

19 Audit s all categories of donor, the development, monitoring, enhancement and maintenance of relations with the donors, interface with the Headquarters units and offices as well as the definition, development and deployment of the necessary strategy and instruments. Preliminary plan and comments possible future Extrabudgetary Resources Directorate in the field of multilateral funding. It is further noted that the central resource mobilization function is located within BSP since 2011, a placement confirmed by the General Conference in 2015, and present in the Draft 39 C/5. The Estimated date for the of the 202 EX/32 Part I Annex II page 8 Recommendation No. 12. recommends reporting to the Executive Board, each year, on waivers granted on the management cost rate, the reasons for such waivers and the resultant loss of resources for the Organization. Recommendation accepted This reporting will take place as part of the standard monitoring of the of the cost recovery policy. No May 2018

20 Audit s Preliminary plan and comments The Estimated date for the of the Recommendation No. 13. recommends asking the National Commissions, when national law so permits, to engage actively in extrabudgetary fundraising for UNESCO, in accordance with distribution arrangements (30% Commission, 70% Secretariat) adapted to the needs of the Secretariat and objectives determined on a country-by-country basis. He also recommends entrusting the monitoring and mobilization of the National Commissions with regard to extrabudgetary resources to the Bureau of Strategic Planning (BSP), Section for Mobilizing Resources from Multilateral and Private Partners (BSP/MLP) or a new directorate. Recommendation not accepted: It should be recalled that extrabudgetary resource mobilization has been recently become one of the many roles of the National Commissions, codified only in 2013 by means of the action plan for enhancing the cooperation of the UNESCO Secretariat with National Commissions for UNESCO (191 EX/33). It is moreover up to each Member State to define the responsibilities and priorities of its National Commission. Furthermore, the capacities of a National Commission to mobilize extrabudgetary resources and its level of investment in this respect depend on its nature and its available resources (financial and human). By way of a reminder, Article VII of the Constitution stipulates that Each Member State shall make such arrangements as suit its particular conditions for the purpose of associating its principal bodies interested in educational, scientific and cultural matters with the work of the Organization, preferably by the formation of a National Commission broadly representative of the government and such bodies. The introduction and maintenance of activities to raise funds from donors and strengthen relations with private sector donors requires substantial investment in terms of human and financial resources, as well as a solid legal foundation enabling fundraising. However, many National N/A N/A 202 EX/32 Part I Annex II page 9

21 Audit s Preliminary plan and comments Commissions lack structures and resources that are suitable for developing and maintaining partnerships with civil society and the private sector. Others encounter difficulties connected with their governmental nature, which does not facilitate cooperation with such external partners. The Estimated date for the of the 202 EX/32 Part I Annex II page 10 As a result, few National Commissions at present have mobilized extrabudgetary funds from the private sector, and generally speaking those that have are those with the largest capacity and most resources (in particular, Germany, China and the Republic of Korea, see below). Even so, the National Commissions do not have standing enabling them to receive funds in the name of UNESCO. Recommendation No. 14. recommends encouraging individuals and companies that favour UNESCO and its areas of activity to establish or participate in the establishment of entities (foundations, etc.) to support projects within the Organization s remit that may be eligible for the tax exemption arrangements in the country concerned. The Recommendation partially accepted The Secretariat will explore the feasibility of this, especially in terms of identifying entities eligible for tax exemption status at national levels. Yes June 2018 for the feasibility study

22 Audit s Preliminary plan and comments The Estimated date for the of the External Auditor recommends targeting as a priority large Member States which have legislation and an environment that encourages sponsorship. Recommendation No. 15. To offset UNESCO s excessively broad mandate, the External Auditor recommends approaching donors in line with UNESCO s most visible and most clearly identified main themes (world cultural and natural heritage, biosphere, intangible heritage, etc.), with the aim of attracting different categories of donors according to their own interests and policies within the framework of ad hoc foundations. Recommendation accepted The Secretariat entirely agrees that higher-level messaging will be necessary to communicate with some target audiences along broad thematic lines, and especially with reference to UNESCO s contribution to the SDGs. BSP will work closely with the Major Programmes and ERI to develop a specific communication strategy for the priorities and the most attractive themes to attract more donors. Yes June EX/32 Part I Annex II page 11

23 Audit s Recommendation No. 16. recommends the formulation and the adoption by the Executive Board of a private donor incentive charter, according to status (company, foundation, individual, etc.) and to the size of the contribution. Preliminary plan and comments Recommendation partially accepted This issue will be explored. Private donations tend to be unique and do not lend themselves easily to standardized approaches. Nevertheless, it is proposed to carry out a review of possible incentives in order to ensure that private donors may receive adequate visibility and recognition, consistent with the nature of the Organization. This could apply in particular to the sponsorships of events. The No Estimated date for the of the Pending Executive Board decision 202 EX/32 Part I Annex II page 12 Recommendation No. 17. recommends renegotiating the agreements in place or due for renewal based on the donor incentive charter. Recommendation partially accepted (See also comment on 16). If incentives are adopted, they should apply only to new agreements or to those that are extended/renewed. No Pending Executive Board decision Recommendation No. 18. recommends recruiting some UNESCO Goodwill Ambassadors based on the role they might play in contributing and raising funds. Recommendation accepted The involvement of UNESCO Goodwill Ambassadors and Artists for Peace in resource mobilization, if accompanied with adequate resources, could provide significant benefits for the Organization. The Secretariat will review how individual UNESCO Ambassadors (present and future) could support UNESCO in its efforts of resource mobilization and develop modalities of collaboration as necessary. Yes June 2018

24 Audit s Preliminary plan and comments The Estimated date for the of the Recommendation No. 19. recommends establishing a UNESCO board of patrons for major sponsors and private donors. The main objectives of such a board would be to advise the Organization on sponsorship matters and facilitate its work using their resources and/or networks, and to provide expertise and support to programmes of the Organization that require extrabudgetary resources. Recommendation partially accepted This will be explored, in particular in the context of structured dialogues, evaluating the feasibility and impact of the proposed modality. Yes June 2018 Recommendation No. 20. The External Auditor recommends increasing the resources of the Bureau of Strategic Planning (BSP) or of the possible future Extrabudgetary Resources Directorate in the field of multilateral funding. Recommendation accepted in the limits of available resources In general, the Secretariat agrees with the spirit of the, which aims at improving the capacities and level of the resource mobilization unit and looks forward to further discussions with Member States, in light of the Audit s analysis and conclusions, with the view to proposing changes in the spirit recommended. Yes June EX/32 Part I Annex II page 13