An Evaluation of the World Bank's Trust Fund Portfolio

ForewordIn the changing global environment of development cooperation, trust funds have emergedas a significant pillar of the global aid architecture, used to address limitations in bilateralaid and fill perceived gaps in the operations of existing multilateral institutions. Theycurrently account for about 11 percent of official development assistance (ODA), and theyfinance a substantial part of the World Bank's business. The activities they fund are highlyvaried, ranging from huge global programs with their own governance structures toconventional development projects, debt and disaster relief operations, and technicalassistance.This IEG evaluation, undertaken at the request of World Bank executive directors, assessesthe value of the trust fund vehicle as a way of delivering aid and the effectiveness andefficiency of the deployment of trust fund resources. In addition, the evaluation assesses theBank's management and accountability for the use of trust fund resources and the impact oftrust funds on the Bank's development role.The evaluation finds that donors, recipients, and the World Bank have considerableoverlapping interests in this vehicle, but their interests may diverge on specific issues suchas how trust fund allocation decisions are made and how trust funds are governed andmanaged. Furthermore, while trust funds can add value by providing coordinated grantfinancing for specific countries, development issues, and especially global public goods, thedeployment of trust fund resources does not consistently work in accordance with the ParisDeclaration aid principles of country ownership and donor coordination. Notably, manytrust funds of global scope involve insufficient recipient participation and lack clearoutcome objectives.Because trust funds help overcome limitations in bilateral aid, address operational gaps inthe existing multilateral system, and enable the Bank to enhance its development role, theBank should continue to accept them. But IEG recommends that the Bank and trust funddonors agree on a more strategic and disciplined approach to Bank acceptance andmanagement of these funds, as described further in this evaluation. In particular, the Bankshould strengthen its framework guiding the acceptance and management of FinancialIntermediary Funds—trust funds where the Bank does not have supervision or oversight ofthe use of resources, and which often pose greater reputational risks. For other trust funds, athree-pillar approach consisting of country-specific trust funds; global and regionalpartnership programs; and multidonor, multirecipient umbrella facilities would allow theBank to strengthen the effectiveness, efficiency, and accountability for results.Vinod ThomasDirector-General, Evaluationv