An Evaluation of the World Bank's Trust Fund Portfolio

1. The Role of Trust Funds in theGlobal Aid Architecture1.1 Development assistance has undergone three major changes overthe past 20 years. First, objectives have expanded under changingglobal conditions in order to deal with a number of challenges, suchas globalization, climate change, and persistent political instabilitiesor conflicts. Second, in the aftermath of the Cold War, public scrutinyof aid has increased. Third, there has been a proliferation of newdonors—notably new sovereign donors as well as private for-profitand not-for-profit organizations. 11.2 These three changes have exposed the global aid architecture,which has traditionally consisted of bilateral and multilateral agenciesplus nongovernmental organizations (NGOs), to six major newchallenges and stresses:Increased pressure to show results of aid programs, evidencedprimarily by interest in narrowly targeting aid on specificproblems and piloting the delivery of aid on the basis ofresults rather than program plansHigher expectations for aid donors, as expressed in officialdeclarations to make aid more effectiveEmergence of new or newly constituted states that do not havesovereign status to borrow from the multilateral developmentbanks (MDBs)Recognition of the global nature of some problems—such asdepletion of the ozone layer, control of the spread ofHIV/AIDS, and the mitigation of global warming—thatdemand new financing and governance arrangementsIncreased demands on official aid budgets, leading to thesearch for innovative financing mechanismsPressures on the governance and modes of operation of themultilateral institutions, including the World Bank, to bettercope with the new development aid imperatives.Evaluation Highlights Trust funds account for about11 percent of officialdevelopment assistance, andthe World Bank is trustee forabout half of the totalcontributions. While donors, trusteeinstitutions, and beneficiaries oftrust funds each benefit fromthe arrangement, their interestsdiverge on matters of how fundallocations should be madeand how the use of resourcesshould be governed andmanaged. The varied interests of donors,recipients, and the World Bankin the use of trust funds raisechallenging questions abouttheir appropriateness—oradded value—as a distinct aidvehicle and about howeffectively and efficiently trustfunds deploy their resources. The World Bank’s now largetrust fund portfolio also raiseissues about the adequacy ofthe arrangements betweendonors and the Bank for themanagement andaccountability of these donorfunds and the impact of theiruse on the overall business ofthe Bank.1.3 The changing development environment and challenges are alsoleading the World Bank to revisit its strategic direction and its coreways of conducting its business. 21.4 During this period, trust funds have emerged as a significantpillar of the aid architecture, used as a “third way” along withbilateral and multilateral aid to meet the aid challenges. For example,trust funds have been established to help achieve the Millennium1