An Evaluation of the World Bank's Trust Fund Portfolio

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CHAPTER 6FINDINGS AND RECOMMENDATIONSfunds have generated improved coordination, donors find trust fundcoordination processes “too time-consuming.” And recipients preferdirect budget support, unmediated by a trust fund mechanism.6.14 Impact on Bank business. Trust funds have contributed to anexpansion of Bank business by the scaling up of country operations,enhancing Bank involvement in the provision of coordinated supportin special country circumstances, and increasing the Bank’s role at theglobal and regional levels. Trust funds have also shaped the businessof the Bank in two other major ways:Support for an issue-focused business model, in parallel with theBank’s country-focused model. Most FIFs and more than half ofIBRD/IDA trust funds are designed to support a particularsector or theme in multiple countries. Public administrationand law is the most popular such sector, accounting for morethan one-third of IBRD/IDA trust fund disbursements,followed by education and health and social services. Abouttwo-thirds of Bank sector managers interviewed for thisevaluation report that access to this type of support enhancestheir unit’s work modestly or significantly. In the absence offuller integration of trust funds into Bank sector and countryassistance strategies, however, it is not possible to determinehow overall trust funds affect Bank work overall, nor whetherthey help to generate an optimal allocation of total availableresources. The issue this raises for the coherence of Bankbusiness is not the targeting of resources on a particular issuein itself, but rather how the determination is made of whichissues to target and who is driving the agenda of the Bank. Establishment of FIFs as a Bank business line. The 16 active trustfundedFIFs, which received contributions exceeding $30billion in fiscal 2002–10, were each established in an ad hocway according to customized donor requirements, and each isdesigned to strictly limit the Bank’s responsibility for thedevelopment outcomes of the use of FIF resources. Thirteenof these FIFs were submitted to the Board for approval, whilethree were deemed not to require approval under the currenttrust fund policy. Notwithstanding the legal limitations, theselarge undertakings entail opportunities and risks fordevelopment effectiveness and for the Bank. Independentevaluations indicate that the record to date is mixed on thedevelopment and aid effectiveness of FIF-funded partnershipprograms. Since donors regularly propose new FIFs, it wouldbe advisable for the Bank to review the experience to date ofthis distinct and growing business line, to determine if thecurrent framework for accepting and managing FIFs funds82
CHAPTER 6FINDINGS AND RECOMMENDATIONSremains adequate to ensure consistency with the Bank’soverall trust fund policy of only accepting trust funds(including FIFs) that promote development and aideffectiveness.6.15 Management, accountability, and risks. All trust fundsreviewed by the evaluation are broadly consistent with the Bank’smandate, but not always well aligned with Bank or client countrypriorities. Its trust fund management framework and policy focusesmore on processes than on the strategic issues surrounding the Bank’scontinuing uptake of responsibility in administering donor trustfunds.6.16 The Bank’s accountabilities for the trust funds it managesare—with some exceptions—weaker than for IBRD/IDA and Bankbudget-financed activities. The accountability gaps arise because theBank and donors have agreed to parallel allocation, approval, andbusiness processes. Despite ongoing efforts at mainstreaming trustfunds in Bank operational processes, many processes are attached tothe source of funds rather than to the development activity beingfinanced. This has generated inefficiency and weak accounting forresults. If Bank-managed trust funds are to be used efficiently and inan accountable way, they need to follow the same policies, processes,and procedures that guide the use of the Bank’s core resources.6.17 There are both potential missed opportunities and risks to theBank and its clients from the Bank continuing to accumulate trustfund resources and responsibilities without a clear strategy and moreeffective oversight and accountability. Clients face potentialdevelopment risks and the Bank faces potential reputational risksfrom the Bank accepting trusteeship of individual trust funds thatprove not to work well, and more generally, from taking onobligations that operate outside of Bank operational policies (as in thecase of the FIFs) or are inconsistent with Bank commitments to aideffectiveness principles as set out in the Paris Declaration. Moreover,the unpredictability of multi-year donor contributions to establishedtrust funds and, therefore, of trust fund financing to recipients posesrisks to sustainability of support and program planning, both forclients and the Bank.Recommendations6.18 This evaluation concludes that because trust funds addresslimitations in bilateral aid and the existing multilateral system andhave enabled the Bank to enhance its role in pursuit of itsdevelopment agenda the Bank should continue to accept them. But83
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The World Bank GroupWORKING FOR A W
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©2011 The Independent Evaluation G
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CONTENTSAllocation of Trust Fund Re
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CONTENTSFigure 5.3 All Networks, Es
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AcknowledgmentsThis report was prep
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SummaryAs development challenges ex
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SUMMARYchannels? In addition, the B
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SUMMARYinnovative development finan
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SUMMARYdonor funds in line with rec
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Management ResponseIntroductionMana
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MANAGEMENT RESPONSEplay at the leve
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MANAGEMENT RESPONSEattention needs
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MANAGEMENT ACTION RECORDMajor Monit
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Chairperson’s Summary:Informal Me
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1. The Role of Trust Funds in theGl
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CHAPTER 1THE ROLE OF TRUST FUNDS IN
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CHAPTER 2THE WORLD BANK’S TRUST F
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CHAPTER 3THE RELEVANCE AND EFFECTIV
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Page 158 and 159: SELECTED BIBLIOGRAPHYKharas, H. 200
Page 160 and 161: SELECTED BIBLIOGRAPHY____. 2010l.
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An Evaluation of the World Bank's Trust Fund Portfolio

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