“I want to break free”: the WHO Foundation as an Experiment in the Financing of International Organisations

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The current COVID-19 pandemic has thrown the World Health Organization (WHO) into sharp relief. Views differ on the questions of whether the WHO has convincingly managed the pandemic, whether its International Health Regulations are up to scratch and whether it and its current leadership are under too heavy influence of China, other member states or even private actors like the Gates Foundation. One effect of the current crisis is an intensification of reform debates. These debates focus mostly on institutional questions and the substantive law and policies that the WHO pursues. Almost inevitably in our times, they also pertain to the potential fallout of a United States (US) withdrawal from the organisation, as announced by the Trump administration in the summer of 2020 – another example of a gradual turn away of the US from international institutions and international law. It is not least this potential withdrawal of a major contributor to the budget of the WHO that has also caused concerns about the operating capability of the WHO. Accordingly, the financing of the institution has been identified as a major concern for a sustainable WHO reform.

It is in this context that a remarkable institutional development has taken place. In May 2020, a “WHO Foundation” (WHO-F) has been created as a charitable foundation incorporated under Swiss laws. Also in May 2020, the WHO has signed an “Affiliation Agreement” with the WHO-F which sets out to determine the relationship between the two. As we will explain in this brief blogpost, this is an innovative move with potentially wide-ranging implications for the law of international organisations (IOs). We argue that this is primarily due to the fact that the envisaged partnership between the WHO and the WHO-F sets out to enhance the general budget of the organisation through the activities of a separate legal entity. While IOs have acquired private funds through various channels in the past, these attempts were mostly aiming at project-related funding. In that vein, the WHO is an outstanding example in the amount of voluntary contributions it receives, representing about 80 percent of the organisation’s revenue and mostly earmarked for specific purposes. The envisaged relationship between the WHO and the WHO-F is aspiring to be of a different nature.

In light of the limited funding that the WHO receives from its member states, the potentially further diminishing numbers in the light of a US withdrawal and the great expectations that member states still level at the organisation, the WHO aspires to develop a new formula which breaks with established models of the financing of IOs. We will first recall some general issues of the financing of IOs before turning to the specifics of the cooperation between the WHO and the WHO-F. In a last step we will outline the pros and cons of this new model of funding and formulate some questions for the further debate on this development.

Refresher: Fundamentals of IO Funding

Let us first recall some basics of IO funding. IOs are creatures of their member states and depend on them to a significant extent. The founding treaty defines the tasks of the organisation. Member states are obliged to fund the organisation according to the powers they have transferred and the financial needs this entails on the side of the IO. IOs can set forth different rules how contributions from their membership base are divided up. This standard model of the financing of IOs follows a generally well-conceived rationale: If states set up an organisation and transfer some of their powers to that organisation, it is logical that they also need to fund the organisation so as to fulfil its tasks in an appropriate manner.

At the same time, the adequate funding of IOs can prove to be contentious. Accordingly, IOs have developed various techniques to work around budgetary constraints. They may accept gifts from individuals, NGOs or even from states on top of their regular contributions. However, the simple fact of gift-taking by itself does not necessarily remedy financial problems. As Schermers and Blokker write, IOs first determine their costs, detract their income and then allocate their further financial needs to their members: “By this process, gifts only result in a decrease in members’ contributions. Hence, a gift to the organization means in fact a gift to all Member States.”

Accordingly, IOs – and the WHO included – have experimented with various forms of acquiring extra funding in the past. These practices may consist in setting up trust funds for designated purposes. The creation of public-private partnerships (PPPs), particularly in the global health context, provided for innovative and flexible funding mechanisms. The WHO has, for instance, also engaged in PPPs like the “Global Alliance for Vaccines and Immunization” (GAVI) and other such endeavours. As Mbenge writes, these PPPs “highlight the emergence of a new form of co-operation in health” and “represent also a new approach to international health financing”.

The Envisaged Cooperation between WHO and WHO-F

With these basics in mind, it is now time to turn to the envisaged cooperation between the WHO and the WHO-F. The rationale as well as institutional questions and pointers for the allocation of acquired funds are laid out in the aforementioned Affiliation Agreement. On the face of it, this agreement takes the form of a “Memorandum of Understanding” (MoU) between the WHO and the Foundation. Although the classification as an MoU does not in and of itself say much about the legal nature of such an agreement, it is fitting here as the Affiliation Agreement is certainly not an international agreement in a formal sense. The WHO-F is a charitable foundation under Swiss private law and as such not in a position to enter into legally binding agreements on the level of international law. The creation of ties between the WHO and the WHO-F is hence another example of an ongoing informalisation of global governance processes.

As announced by the WHO Director-General Tedros Adhanom Ghebreyesus, the creation of WHO-F forms part of the WHO’s attempts in “increasing both the quantity and quality of funds at its disposal”. As one can gather from both the MoU and FAQs on the respective websites of WHO and WHO-F, extra funding for the WHO shall stem from a broader donor base the WHO-F is intended to approach, including gifts from individuals – “high net worth individuals” as the WHO-F calls them. And WHO-F shall address the WHO’s existing difficulties connected to funding through voluntary contributions: their – by definition – voluntariness and restrictions in the usability of funds due to the widespread practice of earmarking.  Therefore, the WHO-F shall “work towards more sustainable and predictable funding” for the WHO, increasing both reliability and flexibility of funds. And, quite remarkably, as the WHO-F makes clear in the FAQ on its mission, its work will also “provide a further layer of separation to protect the normative work of WHO from undue influence.”

In order to implement these purposes, the MoU deals with issues of governance such as executive relations between WHO and WHO-F as well as its Board. The heart of the agreement is the set of provisions dealing with fundraising activities in support of the WHO. Here, the MoU stipulates that in general the WHO-F is not to accept “funding from governments or governmental entities, or philanthropic organizations that have or can provide funds to WHO, except as exceptionally agreed” (Article 11.3). It is to be ensured that no conflict of interest arises. Contributions derived from “entities that form part of or are controlled by the Tobacco or Arms industries” are hence off-limits (Article 11.4). A key provision is Article 12.1 according to which the “WHO-F shall ensure that between 70 and 80 % of all funds raised over any given two-years period are provided to WHO in direct support of its General Programme of Work, WHO priorities and WHO technical norms and standards.” This underlines the novel character of the established cooperation: the contribution of funds is not meant to further specific projects of the WHO – pre-determined by donors – but is rather meant to bolster its general programme of work. The funding provided shall be under the exclusive technical control of WHO (Article 12.4). Article 13 provides, however, that the WHO-F may also, “in close consultation and coordination with WHO” provide funds to “third party implementing entities and provide them with funds for selected projects”.

What’s at Stake? Funding and Legitimacy in the Law of International Organisations

This partnership between WHO and WHO-F raises potentially very significant and structural issues for the financing of IOs. A central goal of this innovative set-up is to isolate the WHO from undue interference into its work. This interference is not characterised any further in the available documentation from WHO and WHO-F. But it is not far-fetched to assume that this undue interference is, on the one hand, the one of states who are either reluctant to fund the organisation in an adequate manner or constrain its normative work in some other dimension. The underlying rationale seems to be “I want to break free” from the ties that bind and that connect the WHO to its member states. On the other, ties can also stem from actors providing voluntary contributions: the earmarking of contributions by donors limit the allocation of funds to specific programmes and thereby have the potential to pre-determine priorities in the WHO’s activities. Trying to work around these existing constraints is certainly a promising avenue and might enable the WHO to fulfil its mandate in a better way.

Yet, we also think that this approach has some downsides. As Daugirdas and Burci have argued with respect to programme specific funding of the WHO, the main issue is that the “real action is not taking place at the WHO’s governing bodies. Instead, the real action is in the individual, behind-the-scenes decisions that donors take”. Whether the creation of WHO-F will reinforce the transparency of decision-making over policy priorities and allocating funds within the WHO is an open question. It might also add another level of confusion: Under the Affiliation Agreement, the WHO-F is empowered to use the WHO logo. In the public perspective, it will not always be easy to distinguish between the WHO and its private off-shoot. And the jury is out on the question of whether the independence of the WHO will actually be strengthened.

On a more general level, the characteristics of the WHO as an IO also bestow upon the organisation a special kind of legitimacy. It has been set up by states in order to fulfil an important issue of common concern. Whether or not one buys into the functionalist narrative underlying much of the law of IOs (Klabbers), being an IO brings with it a special kind of prestige and reputation, but also responsibility. IOs are supposed to represent particular variants of what can be identified as the collective good on the international level. The strings which attach them to states can be burdensome, but they are also supposed to prevent the IO from turning into a Frankenstein (Guzman), in other words to develop a life of their own which decouples them from the policy preferences of their creators and masters.

In this short blog post we cannot do justice to the manifold doctrinal, theoretical and policy questions which the creation of ties between the WHO and the WHO-F trigger. However, we hope to start a conversation on the legal implications of such forms of cooperation, which may look benign at first sight. But would we be equally open to the creation of a “NATO-Foundation” which would cater to the security demand of some states in situations where member states are unwilling to become involved? The legitimacy of the WHO might also suffer if the perception emerges, for instance, that the pharmaceutical industry becomes an important source of revenue which may then not be easy to discard again. Accordingly, issues that need further attention pertain to transparency and accountability. It also needs to be considered what long-term effects such a privatisation of the funding of IOs may have on the cultural, societal and political prestige that IOs enjoy. It is a capital that should not be spent easily.

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Kishor Dere says

October 18, 2020

Establishment of WHO Foundation and its nascent relationship with the WHO is a matter of study and research. Prof. Aust and Prisch Feihle raise very important questions about the implications of this on overall structure and functioning of the WHO. It is said the one who pays the piper calls the tune. International community needs to ponder over this issue. It seems that the extant theories of international. organization are being re-written.