E-Paper
UN's funding crisis: Wake-up call for global cooperation
This article is authored by Ananya Raj Kakoti, scholar, international relations, Jawaharlal Nehru University, New Delhi.
The United Nations faces an unprecedented existential threat. What officials describe as the "deepest funding cuts ever" in the organisation's 80-year history has slashed humanitarian appeals from $44 billion to just $29 billion, with only $5.6 billion, a mere 13%, actually received by mid-2025. This is not just about numbers on a balance sheet; it's about the 343 million people facing hunger, 43.7 million refugees, and millions more depending on UN health and protection services who now face abandonment.
The World Food Programme is cutting 30% of its staff while trying to serve hundreds of millions of hungry people. The UN High Commissioner for Refugees has eliminated 3,500 positions, leaving half a million displaced people in Sudan without clean water access. In Yemen, only 9% of humanitarian funding needs were met by May 2025, the lowest coverage in over a decade. Meanwhile, 27 countries report failing tuberculosis response systems, and HIV/AIDS programs face treatment disruptions across eight nations.
This crisis stems primarily from the US's drastic reduction in foreign assistance, slashing nearly 90% of funding for international organisations and leaving a $1.5 billion gap in unpaid contributions. China's payment delays have extended from two months to ten months overdue, while traditional European donors reduce aid budgets amid economic uncertainty.
But this funding crisis reflects deeper structural problems. The UN confronts what experts call a "legitimacy crisis" as the Global South, representing 80% of the world's population, increasingly challenges Western-dominated multilateral institutions. The BRICS expansion, now encompassing 40% of global population and 37% of world GDP, signals emerging powers' determination to reshape international governance.
Countries like China have increased their UN peacekeeping contributions from 15.21% to 23.78%, adding $290 million annually, while demanding greater influence over organisational priorities. This shift is not just about money, it is about who gets to define global priorities and humanitarian responses
The crisis, while devastating, opens doors to innovative solutions that could make the UN more sustainable and representative.
Private sector partnerships offer immediate potential. UNICEF already derives 21% of its income ($717 million) from corporate sources and foundations, proving the model's viability. Other agencies must rapidly expand similar programmes, leveraging not just funding but technological expertise and global reach.
Cryptocurrency and blockchain provide revolutionary transparency and efficiency. The UN High Commissioner for Refugees successfully uses Stellar Aid Assist for direct cash transfers, while Save the Children has raised $8 million through crypto donations. The World Food Programme's blockchain platform handles $555 million in transactions while saving millions in bank charges.
South-South cooperation offers perhaps the most transformative alternative. Developing nations increasingly bypass Western-dominated institutions entirely, with Brazil, China, India, and others providing billions in direct assistance. The BRICS New Development Bank has approved over $32.8 billion for 96 projects since 2016, demonstrating viable alternatives to traditional multilateral lending.
This transformation reflects broader shifts in global power. Regional organisations like the African Union increasingly assert "African solutions for African problems," challenging UN centralised authority. Emerging economies contribute 80% of global growth while traditional donors retreat, forcing fundamental questions about who should lead international cooperation.
The UN's failure to prevent humanitarian disasters in Syria, its peacekeeping scandals, and Security Council paralysis have eroded moral authority precisely when institutional effectiveness matters most. As one scholar warns, we risk entering an era of "competitive multilateralism" where fragmented institutions compete rather than coordinate responses to global challenges.
The UN stands at a crossroads. It can embrace comprehensive reform that accommodates new power realities and innovative funding mechanisms, or face gradual marginalisation as emerging powers build alternative institutions. The latter path risks fragmenting global cooperation when coordinated action is most needed for challenges like the climate crisis, pandemics, and mass displacement.
Immediate action is essential. UN agencies must standardize cryptocurrency acceptance, expand private sector partnerships, and develop blended finance platforms that leverage public resources to attract private investment. Islamic finance integration requires dedicated outreach to Muslim-majority nations. Most importantly, the organisation must view alternative funding not as emergency stopgaps but as essential components of 21st-century multilateral financing.
Traditional donors must recognise reality: Their funding decisions have global consequences extending far beyond national interests. Cutting UN budgets does not eliminate global problems, it merely abandons responsibility for addressing them cooperatively.
The current crisis, while devastating, may ultimately catalyse the innovative financing revolution necessary to meet global challenges in an increasingly multipolar world. With 343 million people facing hunger and millions more depending on UN services, the organisation's financial viability directly translates to human survival.
The choice is stark: Transform or become irrelevant. The world's most vulnerable people cannot afford the latter outcome.
This article is authored by Ananya Raj Kakoti, scholar, international relations, Jawaharlal Nehru University, New Delhi.
