The dialogue also explicitly focused on Catalytic Agenda recommendation 5 (“invest in long-term financing strategies to support nationally led systems”) and recommendation 6 (“increase domestic contributions by linking social protection to the social contract and demonstrating its value to economic stability and recovery”). Participants highlighted that financing discussions are both technical and political: volumes matter, but governance, incentives and risk frameworks matter just as much.
Fragmentation undermines system-building
A repeated message was that the issue is not only scarcity of financing, but fragmented flows and misaligned incentives that undermine systems. Participants repeatedly noted that funding rarely supports long‑term system building, instead flowing through short‑term, overlapping initiatives with separate rules and reporting requirements. This fragmentation creates duplication, inefficiency and competition for visibility, reinforcing parallel structures rather than coherence.
Incentives set by and within donor agencies and implementing organisations were seen as a major issue, prioritising rapid delivery and attribution over alignment with national systems, weakening coordination and sustainability – with a call to address these as a matter of urgency.
Constraints to domestic financing
Domestic financing for social protection in FCAS is constrained by fiscal limits and political realities. Participants emphasised that while linking social protection to the social contract is important, expectations must reflect limited fiscal space and uneven revenue capacity. In Syria, discussions stressed the need to match ambition to budget reality, framing domestic financing not only as a technical issue but as a longer‑term political project dependent on trust, transparency, and visible delivery. In Somalia, domestic resources were described as severely constrained, with remittances and Zakat playing significant but politically sensitive roles.
There was discussion about opportunities for government to support more formal Zakat structures and to engage more with other forms of community led support but also the need to manage legitimacy risks relating to government playing greater roles in previously local solidarity mechanisms (see crosscutting Section below for details).
Opportunities and challenges of climate finance
Climate finance was repeatedly framed as a major opportunity for social protection to tap into, but one that both the sector and FCAS struggle to access. This was seen as a missed opportunity given the exposure of FCAS to climate risk, and the role well-designed social protection systems can play in building resilience and supporting households to cope with and recover from climate-related shocks.
In the dialogue participants noted that a number of ‘hooks’ now exist that could be capitalised on, including:
- Social protection indicators, performance metrics and references now appear in global climate frameworks e.g. the Global Goal on Adaptation indicator list was recently expanded to include social protection and the COP30 Belém Declaration has a strong focus on the sector;
- There is increasing evidence of climate‑relevant impacts of cash transfers, cash‑plus, and public works approaches, especially where these have been designed with these objectives in mind;
- Many countries have included social protection in their Nationally Determined Contributions (NDC 3.0s) and useful guidance has been developed to support this process;
- Climate funds have acknowledged they are channelling insufficient funding to FCAS and are committed to addressing this.
Yet access barriers persist, including accreditation gaps and complex processes that fragile institutions struggle to meet – which participants stressed global actors could more systematically support in addressing, with a focus at country level.
From risk avoidance to controlled risk engagement
Risk avoidance often intensifies precisely when continuity of support is most needed. Participants repeatedly noted that financing and delivery arrangements are most likely to contract or pause during periods of conflict or political turbulence, despite rising needs. Discussions linked this pattern to institutional incentives and rigid risk frameworks that prioritise reputational protection over system continuity.
Participants argued for a shift from risk avoidance to more deliberate risk management frameworks, both at global and country-level, including clearer red lines, shared responsibility across institutions, and financing and delivery models that allow temporary modality shifts without dismantling underlying system architecture. They stressed these risks cannot be held by individuals working at country levels, but need to be pre-defined and pre-agreed, and held institutionally (with country-based staff adapting these to country circumstances).
Structural constrains on financing
Financing patterns reveal structural constraints that go beyond coordination failures. While aggregate social protection financing in FCAS increased in 2024, this growth was driven largely by Ukraine. Excluding Ukraine, financing for other protracted crises remains low and has grown only marginally. At the same time, international financing has become increasingly concentrated, with the World Bank’s International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) accounting for most flows. Participants noted that this concentration raises concerns about resilience as bilateral aid budgets tighten and humanitarian funding declines, increasing the risk that social protection financing becomes more volatile precisely where needs are highest.
A strong call for country pooled funds
‘What is stopping us from more pooled funding?’ was a recurring question whenever financing was discussed. There was a very strong call, especially from national participants, for more and better-designed pooled approaches across social protection, transition, and hybrid models, designed with government leadership at the forefront and tailored to different FCAS contexts.
Participants noted that levels of familiarity with different pooled fund models varied widely, and that views on their advantages and drawbacks often reflected which models individuals had experienced in practice. Some reservations were expressed towards the OCHA-managed pooled funds, and a request was made to systematically map the characteristics of ‘successful pooled fund models’ – particularly those that are risk taking and transition focused – to inform decision-making and experimentation, including through early adopters providing proof of concept.