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Lucia A Keegan  09/20/2006 10:02:00 AM  From  DB/Inbox:  Lucia A Keegan

Cable 
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UNCLAS        PARIS 06251

SIPDIS
cxparis:
    ACTION: UNESCO
    INFO:   POL ECON AMBU AMB AMBO DCM SCI

DISSEMINATION: UNESCOX
CHARGE: PROG

APPROVED: CHARGE: AKOSS
DRAFTED: POL: DROSTROFF
CLEARED: SCI: NJCOOPER

VZCZCFRI041
RR RUEHC
DE RUEHFR #6251 2611616
ZNR UUUUU ZZH
R 181616Z SEP 06
FM AMEMBASSY PARIS
TO SECSTATE WASHDC 1435

UNCLAS PARIS 006251 
 
SIPDIS 
 
FROM USMISSION UNESCO PARIS 
 
E.O. 12958: N/A 
TAGS: UNESCO SCUL
SUBJECT:  UNESCO -- A NEW VIEW ON ITS EXTRA-BUDGETARY FUTURE 
 
 
¶1. Summary: A day long debate at UNESCO raised the profile on the 
growing importance of extra-budgetary funding for the organization, 
and the associated challenges and problems that come with such 
voluntary contributions.  Craig Kennedy, President of the US German 
Marshall Fund, was among the best-received speakers, and reinforced 
the USG's position regarding greater accountability for extra- 
budgetary funds at UNESCO.  End Summary. 
 
¶2. In setting the stage, Deputy Director General Barbosa reminded 
the gathering that extra-budgetary funding is now greater than 
member assessments.  According to the latest budget figures, USD 373 
million was from extra-budgetary sources and USD 305 million was 
from member assessments. Barbosa said that one-third of the 
extra-budgetary funding was directly tied to the funds in trust for 
the Brasilia office, and another third was tied to Iraq 
reconstruction efforts.  He reminded the group that the total extra- 
budgetary funding is provided by only 10 major donors, and some 50 
other minor donors.  All in all, the extra- budgetary monies fund 
over 2,000 individual projects due to earmarking. 
 
¶3. The issue of earmarking raised the question about how UNESCO can 
ensure a coherent plan of action when individual donors are 
directing how their contributions must be spent.  DDG Barbosa said 
that the answer was to push for multi-year funding, more donors, and 
no earmarking of contributions. 
 
¶4. Among the key issues raised was the possibility of increasing 
extra-budgetary funding by tapping into private sources, including 
institutions, companies, and even soliciting funding from 
individuals. 
 
¶5. Another point raised was the possibility of reducing the 13 
percent standard UNESCO "service" charge, which is viewed as 
particularly high by donors.  Others said that the problem is more 
one of transparency, making it clear to donors what the money is 
used for, e.g., permanent staff, office space, communications, etc. 
 
¶6. The ambassador of Sweden, one of UNESCO's two biggest 
extra-budgetary donors, said that the key to improving the funding 
situation is better monitoring and accountability through results 
based management. DDG Barbosa pointed out that the rules that form 
the complex maze for the extra- budgetary funding are the result of 
demands on the part of member states, and that it is simply not 
possible for the Secretariat to change direction as it chooses. 
 
¶7. Later in the afternoon, Ambassador Oliver reinforced the need for 
greater accountability, saying that success in any fundraising 
effort is achieved when the potential donor is confident that the 
funds given will be used effectively and wisely.  She also told the 
group that any fundraising effort begins by ensuring the potential 
donor fully understands the importance of the project and trusts the 
capability of the organization to carry it out.  She said that no 
partnerships are possible when the potential donor doesn't 
understand what the projects will be and how the money will be used. 
 When those elements are clear, the money will come.  Finally, 
Ambassador Oliver made the point that UNESCO has great potential, 
but we must make some tough decisions to make sure that potential 
donors see the organization as a reliable and effective steward in 
handling voluntary contributions. 
 
¶8. The question was also raised about how exactly UNESCO would be 
raising funds in the future.  Would fundraising be the work of 
National commissions, in the style of UNICEF's national committees, 
which are responsible for their national level fundraising?  Or, 
should field offices be given the role of lobbyists and fundraisers? 
 
 
¶9. Craig Kennedy, President of the US-German Marshall Fund (a 
speaker arranged by the U.S. Mission), talked about the bias of 
private donors, who prefer to give to NGO's.  He said that private 
donors often see multilateral organizations as bureaucratic, 
inefficient and difficult to work with. He said that UNICEF's 
marketing genius was its ability to project itself as an NGO.  He 
also said that multilateral organizations are seen as too political, 
and are viewed as being resistant to evaluation.  He stressed the 
need to develop clear strategies, convey clear mission statements 
and priorities, and taking on an entrepreneurial approach to 
fundraising.  He said that the key is to create an identity of being 
able to do something "uniquely better" than anyone else. 
 
¶10. Ambassador Yai brought the day's discussions to a close by 
promising to hold further strategy discussions on the subject of 
UNESCO's extra-budgetary funding, and reiterating that UNESCO needs 
to develop the skills that the new world demands of it.  KOSS