Given the innovative potential of FbF and the necessary funding for the increasing number of FbF projects, a dedicated, scalable financing mechanism was required. This ensures that donor funds are used efficiently and that vulnerable communities and National Red Cross Red Crescent Societies have access to immediate, reliable and sustainable funding.

In December 2017, the IFRC established Forecast-based Action as a dedicated and sustainable financial mechanism, providing a vehicle for donors to support the FbF concept by extending the scope of the Disaster Relief Emergency Fund (DREF).

The DREF is a well-established and well-known response tool and has a proven track record of managing multi-donor funds. Since the Forecast-based Action mechanism is set up as a fenced component, it gives donors the flexibility to allocate contributions according to their mandate.