An Evaluation of the World Bank's Trust Fund Portfolio

SUMMARYfunds). Units draw on trust funds for a wide rangeof Bank-executed activities, especially nonlendingtechnical assistance and incremental economic andsector work. They also pay for coordination andpartnership work, and sometimes provideoperational support for the preparation andsupervision of projects. Overall they account for32 percent of expenditures on the Bank’s coreknowledge products, with three-quarters of thattotal used for Bank analytical and advisoryservices.THE BANK’S MANAGEMENT FRAMEWORK ANDPOLICY. The Bank’s 2007 trust fund frameworkand policy focus primarily on financial andoperational control processes, and are beingimplemented. But neither the framework nor thepolicy has been used to elucidate strategic issues inthe Bank’s continuing uptake of responsibility inadministering donor trust funds and their impacton Bank business. There are four such issues: (1)when and why trust funds should be used inadvancing the Bank’s mandate; (2) what featuresof trust fund design and management foster theiraid effectiveness; (3) the assignment andsegregation at the corporate level of three separatefunctions: mobilizing trust fund resources,managing trust-funded programs, and managingthe risks of Bank trust fund administration; and(4) how to account for the uses and results of theFIFs and the Bank-managed trust funds.ACCOUNTABILITY AND RISKS. Managerialaccountability is a way to ensure that resources areused to deliver results. The Bank’s accountabilitiesfor the trust funds it manages are—with someexceptions—weaker than for IBRD/IDA andBank budget-financed activities. Theseaccountability weaknesses arise because the Bankand donors have agreed to parallel allocation,approval, and business processes (for example, forquality assurance, supervision, and resultsreporting). Despite ongoing efforts atmainstreaming trust funds in Bank operationalprocesses, many processes are attached to thesource of funds rather than the developmentactivity being financed. For example, some trustfund resources are allocated to Bank projects andstudies using a lengthy and unpredictable processthat is not synchronized with annual planning andbudgeting exercises. This has generatedinefficiency and weak accounting for results. IfBank-managed trust funds are to be used efficientlyand in an accountable way, they need to follow thesame policies, processes, and procedures that guidethe use of the Bank’s core resources.There are potential missed opportunities and risksto the Bank and its clients from the Bankcontinuing to accumulate trust fund resources andresponsibilities without a strategic approach andmore effective accountability. Clients facepotential development risks and the Bank facespotential reputational risks from the Bankaccepting trusteeship of individual trust funds thatlater fail to generate results and from taking onobligations that operate outside Bank operationalpolicies (as in the case of the FIFs) or operateinconsistently with Bank commitments to aideffectiveness principles as set out in the ParisDeclaration. Moreover, the unpredictability ofmultiyear donor contributions to established trustfunds and, therefore, of trust fund financing torecipients poses risks to program planning, bothfor clients and the Bank.RecommendationsThis evaluation concludes that because trust fundsaddress limitations in bilateral aid and the existingmultilateral system and have enabled the Bank toenhance its development role, the Bank shouldcontinue to accept them. But changes are needed tofoster more effective, efficient, and accountable useof trust funds. This evaluation recommends thatthe World Bank adopt a more structured anddisciplined approach to the mobilization anddeployment of these funds, based on the followingthree specific recommendations:1. FOR TRUST FUNDS OTHER THAN FIFS. To better aligntrust funds with recipient, donor, and Bank strategicpriorities and improve their effectiveness, efficiency,and accountability for results, IEG recommendsthat the Bank adopt a three-pillar structure for trustfunds, consisting of country-specific trust funds,global and regional partnership programs, andumbrella facilities.Country-specific trust funds: The Bankshould continue to accept trust funds createdto support operations in a single country,because these funds have generally workedwell in filling financing gaps and deployingxi