An Evaluation of the World Bank's Trust Fund Portfolio

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MANAGEMENT RESPONSEplay at the level of donors—involving several constituencies, from parliaments to executivepowers with a wide variety of decision-making processes, from centralized to verydecentralized.Focusing on political economy aspects would explain donors’ seemingly ad-hoc behavior increating trust funds, often responding to the need for visibility on issues of national interestand seeking swift action by the Bank. While the Bank has been successful in meeting donordemands and trust funds are basically aligned with the Bank’s broad strategy, there is arecognition that trust funds are contributing to aid fragmentation. These factors must betaken into account as the Bank moves forward with its work on improving the Bank’s trustfund framework.Effectiveness of trust fundsAdditionality. The issue of additionality may be more complex than presented in the IEGevaluation. While management agrees that trust funds may not mobilize additional ODAresources, they can leverage funds from non-ODA sources. In addition, trust fundschanneled through multilaterals may be more effective than funds provided bilaterally(which are sometimes tied, support political agendas, and are less coordinated). The metricsused in this section of the report might have been more explicit and the discussion couldhave been more nuanced and evidence-based.Consistency with aid-effectiveness principles. Management agrees with the evaluation’sview that the majority of country-specific trust funds are better aligned with countrypriorities than thematic/sector-focused trust funds. However, this view seems in conflictwith the assertion that the value added of trust funds is more evident in the financing ofglobal public goods than when they finance country priorities. In addition, managementwould have hoped to see more discussion of trust funds results frameworks, includingmonitoring and evaluation. Notably, IEG could have addressed the need to developcommon frameworks to assess the results and development impact of various trust fundcategories, particularly of FIFs.RecommendationsManagement concurs with the thrust of the recommendations, while not agreeing to certainspecific aspects. Specific comments are provided in the attached annex.More broadly, management accepts that timelines and completion dates are important in itscommitments. However, management finds that their inclusion in IEG recommendations ishighly unusual. IEG assessments may not take into account all Bank priorities, resourceallocation issues, and constraints.For trust funds other than FIFsThree-pillar structure. While management finds some elements of the proposed structureappealing, it does not see the overall usefulness of the typology. Most notably, managementdoes not consider trust funds managed under Global and Regional Partnership Programs(GRPPs) as a separate trust fund category with separate accountabilities. Management notesxvi
MANAGEMENT RESPONSEthat regardless of the governance arrangements, all IBRD/IDA trust funds—including thosesupporting GRPPs— need to be aligned with Bank/recipient country or sector strategiesand managed in accordance with Bank policies and procedures.Umbrella facilities. Management finds that the recommendation to establish umbrellafacilities is, in principle, consistent with current thinking in some parts of the Bank andcould be part of a more structured approach to fund-raising. The practical application of thisapproach needs to be determined, as well as whether such an approach would work betterthan existing thematic trust funds. Given the political economy issues raised above, it wouldbe important to identify a process whereby a consensus for change could be built. Thiswould require systematic consultations not only with donors but also with recipientcountries.Financial Intermediary FundsFramework for guiding the acceptance of FIFs. Management agrees that a strengthenedframework for guiding the Bank’s acceptance and management of FIFs would be beneficialto management and staff, and help improve the alignment of new FIFs with the Bank’sdevelopment mandate and strategies. In doing so, management notes that it will continue totreat FIFs as a separate business line, where the Bank provides financial intermediaryservices to support broad international partnerships. In that context, FIFs for which theBank’s role is trustee only cannot be expected to have synergies with specific Bankoperations, as implied in the IEG recommendation.Reporting on FIF results. This subrecommendation does not fit with the mandate given bydonors to the Bank as trustee. The trustee responsibilities do not include reporting on resultsrelated to development effectiveness. The Bank’s value added in producing these reports—and indeed its ability to do so—is thus not immediately obvious. The responsibility ofreviewing and monitoring FIF results rests with the governing bodies of FIFs, based on theresults frameworks that these governing bodies develop and monitor in cooperation withpartners. Should the Bank be asked to report on FIF results, it would be a secondary report,compiled from reports provided only by the FIF governing bodies.Management notes that the Bank does report to the Board on the efficiency and effectivenesswith which it carries out its trustee mandate. Specifically, it reports on the provision of anessential set of financial intermediary services (including receiving funds from contributors,investing liquid assets pending cash transfer, transferring funds, and reporting to thecontributors or governing body on the funds held in the FIF).Implications for Aid ArchitectureManagement concurs that it would be useful for the aid community to reflect on the reasonsfor the gaps in the multilateral system and the comparative advantages (real or perceived)of trust funds and other aid channels. However, management considers that it would not beappropriate for the Bank to conduct an assessment of the comparative advantage of theseaid modalities. The Bank is engaged in a continued dialogue with donors on these issuesthrough its work on IDA, trust funds, and FIFs. In this context, management notes that inunderstanding the factors driving donors’ decisions to use different channels, particularxvii
Page 2 and 3: The World Bank GroupWORKING FOR A W
Page 4 and 5: ©2011 The Independent Evaluation G
Page 6 and 7: CONTENTSAllocation of Trust Fund Re
Page 8 and 9: CONTENTSFigure 5.3 All Networks, Es
Page 10 and 11: AcknowledgmentsThis report was prep
Page 12 and 13: SummaryAs development challenges ex
Page 14 and 15: SUMMARYchannels? In addition, the B
Page 16 and 17: SUMMARYinnovative development finan
Page 18 and 19: SUMMARYdonor funds in line with rec
Page 20 and 21: Management ResponseIntroductionMana
Page 24 and 25: MANAGEMENT RESPONSEattention needs
Page 26 and 27: MANAGEMENT ACTION RECORDMajor Monit
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Page 31 and 32: 1. The Role of Trust Funds in theGl
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Page 42 and 43: CHAPTER 2THE WORLD BANK’S TRUST F
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CHAPTER 3THE RELEVANCE AND EFFECTIV
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CHAPTER 4MANAGEMENT AND ACCOUNTABIL
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CHAPTER 5THE IMPACT OF TRUST FUNDS
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6. Findings and Recommendations6.1
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CHAPTER 6FINDINGS AND RECOMMENDATIO
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CHAPTER 6FINDINGS AND RECOMMENDATIO
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the evaluation, namely operational
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Appendix A: Methodology NoteCalcula
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Appendix B: Trust Fund Use in the E
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APPENDIX B: TRUST FUND USE IN THE E
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APPENDIX B: TRUST FUND USE IN THE E
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APPENDIX C: LIST OF INDIVIDUALS CON
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APPENDIX D: CORE TRUST FUND PORTFOL
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Appendix E: Trust-Funded FinancialI
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APPENDIX E: FINANCIAL INTERMEDIARY
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APPENDIX E: FINANCIAL INTERMEDIARY
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Appendix F: Reliance on Donor Funds
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APPENDIX F: RELIANCE ON DONOR FUNDS
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Appendix G: World Bank Operational
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Appendix H: Organizational Aspects
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Appendix I: Trust Fund Support for
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ENDNOTES3. Over fiscal 2002-10, the
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ENDNOTES31. Cited in a 2008 indepen
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SELECTED BIBLIOGRAPHYKharas, H. 200
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SELECTED BIBLIOGRAPHY____. 2010l.
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An Evaluation of the World Bank's Trust Fund Portfolio

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