By Michael Caracache, Feras Abul and Stefan Haid

"As the multilateral system becomes more distributed, footprint strategy is emerging as a defining lever of relevance, impact and operational effectiveness."

International organizations (IOs) are navigating a new operating
reality marked by tighter donor budgets, increased political
scrutiny and less predictable multilateral funding. These pressures
are forcing IOs to make difficult decisions, not only about what to
prioritize, but also where to operate.

In this shifting landscape, the Gulf Cooperation Council (GCC)
countries are emerging as strategically significant platforms for
multilateral engagement. The current geopolitical turbulence in the
region only reinforces this relevance as it underscores the growing
importance of stable, institutionally anchored platforms in a more
fragmented world. Drawing on Roland Berger's experience advising
governments and IOs, this article examines how funding constraints
are reshaping the geography of multilateralism, and why these
shifts matter for global governance and for the GCC's evolving role
in this transformation.

From expansion to funding constraints: the new reality of multilateral financing

For the past 25 years, international cooperation expanded steadily with IO mandates broadening and delivery capacity scaling up, in response to successive global crises, from major security shocks to humanitarian emergencies, climate pressures and health challenges. However, this era of expansion is giving way to a period of sharper prioritization and increased competition for resources. Development budgets in advanced economies are under pressure, and major donors are reassessing their multilateral commitments. Recent US withdrawals from dozens of IOs, as well as similar trends in Europe, underscore this shift.

These changes are alreading impacting IO operations. Several organzations have already announced restructuring measures, hiring freezes or programme reductions. The launch of the UN80 reform initiative – which aims to streamline the UN system – reflects this new reality of tighter resource envelopes and heightened accountability expectations. The World Food Programme (WFP) has repeatedly
warned of funding shortfalls affecting food assistance operations. For example, in Somalia, the WFP announced it would reduce emergency food support from roughly 1.1 million people to just 350,000 – a two-thirds reduction in assisted beneficiaries in that operation alone. The World Health Organization (WHO) continues to face constraints driven by its heavy reliance on earmarked voluntary contributions. The UNHCR (the UN Refugee Agency) and UNICEF (the United Nations Children's Fund) have both highlighted widening gaps between humanitarian needs and available resources.

This marks a structural transition: IOs must now make tougher trade-offs and rethink not only their activities, but also their operating models and physical footprints. This shift is particularly visible in the UN system, where total funding declined by 9 % in 2023 after more than a decade of growth, and remained broadly flat in 2024, confirming that the downturn is structural rather than temporary.

Why IO funding models amplify shocks

To understand why funding constraints have such far-reaching consequences, it is essential to look at how IOs are financed. Using the UN system as a reference case, four main funding mechanisms dominate.

• Assessed contributions

Mandatory payments by member states, calculated according to economic capacity, providing the most predictable funding stream and primarily finance governance, core administration and peacekeeping operations. However, their growth has been modest over the past decade.

• Voluntary core contributions

Un-earmarked funds from donors that offer flexibility to allocate resources across mandates and priorities but represent a shrinking share of total funding as donors increasingly favor tighter control.

• Earmarked contributions

Donor-specified funds tied to projects or regions, now dominating the funding landscape. While earmarking has enabled rapid scaling in priority areas, it significantly reduces organizations' ability to reallocate resources when circumstances change and increases administrative complexity.

• Other revenues

Services, investment returns and cost recovery which play a marginal role and offer limited buffering capacity.

The UN system's dependence on voluntary and earmaked contribution – over 70 % of total UN funding in 2023–2024 – means that donor tightening has outsized impact, reducing both volume and strategic flexibilityto reallocate resources when circumstances change.

A key vulnerability for major IOs is donor concentration, where a small group of contributors (notably the United States, Germany, France and the United Kingdom) can account for more than half of total funding in organizations such as UNHCR, WFP, IOM and Unitaid. This creates a structural dependency, meaning that if even one or two major donors reduce their support, the operational impact is immediate and significant

Footprint is becoming a strategic choice, not just a legacy

As funding becomes tighter and more volatile, IOs are re-evaluating their geographic footprint. Historically, IO headquarters clustered in cities such as Geneva, New York, Paris, Vienna and London. These hubs offered strong ecosystems of agencies, missions and NGOs, as well as diplomatic density, political visibility and institutional legitimacy. However, high operating costs, with high office rents and compensation structures, are now a constraint, prompting IOs to consider alternative locations.

Strategic and geopolitical factors are increasingly influencing location decisions. Many location choices also reflect political and strategic factors, including institutional prestige, access to decision-makers and proximity to operational priorities. Being closer to crisis regions and key partners is increasingly important for IOs seeking to deliver through regional platforms rather than centralized HQ. For example, in 2024, several UN entities, including UN Women, UNICEF and the UN Population Fund (UNFPA), relocated functions and staff positions from New York to Nairobi to reduce operating costs and position teams closer to programme theatres in Africa.

Footprint strategy therefore now involves balancing operating costs, access to partners and crisis regions, as well as the ability to deliver effectively on the ground.