An Evaluation of the World Bank's Trust Fund Portfolio

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CHAPTER 1THE ROLE OF TRUST FUNDS IN THE GLOBAL AID ARCHITECTUREand operational processes that engage the private sector,foundations, civil society, and other nongovernmental actors.1.12 In an interview for this evaluation, a senior official of theUnited Kingdom said the government’s support for the large globalfunds in health, education, and climate change is “an expression ofimpatience with the existing multilateral system” and “a deliberateintention to do things differently in the way aid is mobilized,allocated for results, and governed.” The United States, France, andGermany stated that these “gap” situations are the main occasions forwhich they provide trust funds; for other development needs, theyprefer to rely on IDA and other multilateral institutions and theirbilateral programs.1.13 Target priority issues or countries. Six of the eight donorsindicated that they use trust funds as a way to direct aid resources toissues or countries of national policy or public interest. This aim,donors stated, cannot be achieved through core contributions to theWorld Bank and other MDBs, which cannot be earmarked and are forthe most part allocated on the basis of country performance. So trustfunds are a way to circumvent the allocation system of the MDBs’country-based business model.1.14 Scale up bilateral programs. Five of the eight donors said theyuse trust funds because they lack the funds or expertise to scale uptheir bilateral programs to deliver the amount of aid they arecommitted to provide. Trust funds allow these donors to associatetheir resources with the technical expertise and management capacityof the trustee international agency. As an official from theNetherlands explained, when the policy decision was made to give 15percent of total aid to education, “it was hard to spend that largeamount bilaterally.” This rationale was also cited by Canada, theEuropean Commission, Norway, and the United Kingdom, whichhave set high targets for aid/gross domestic product, while seeking tohold down on their aid administration budgets.1.15 Influence the Bank. Five donors said they provide earmarkedtrust fund financing to encourage the Bank and the broaderinternational community to pay more attention to issues already onthe agenda or to encourage the development, piloting, andmainstreaming of new issues and new development approaches. Thisuse of trust funds is particularly favored by Canada, Germany, theNetherlands, Norway, and the United Kingdom. A common viewexpressed is that “it is easier to get the World Bank to move via a trustfund.” France, in contrast, raised issues with the use of trust funds tosupport and influence Bank work because that support does not6
CHAPTER 1THE ROLE OF TRUST FUNDS IN THE GLOBAL AID ARCHITECTUREnecessarily reflect what the Board of the Bank wants, and these fundsshould be consolidated around core World Bank activities.1.16 Attract more funding. Finally, four donors view trust funds asa mechanism for attracting aid for priority issues. Three of thedonors—Canada, France, and the United Kingdom—specifically citedmultidonor trust funds as a way to mobilize resources from otherdonors, both traditional and new, in areas of priority and to “haveinfluence on key issues beyond what would be possible by actingalone.” This rationale includes interest in trust funds as mechanismsfor mobilizing innovative sources of financing.12 For a fourth donor,the United States, trust funds serve as a way to attract public support,and thus additional aid funds from its Congress, above and beyondthe annual aid budget.1.17 Donors say they prefer the World Bank as trustee of theirfunds because of its ability to manage and deploy financial resources,its global development expertise, and its generally strong workingrelations with recipient governments. The UK’s DevelopmentMinister stated, for instance: “much of our [aid to Afghanistan] goesthrough the World Bank trust funds, which means it is only paid outon the basis of reimbursable receipts,” giving the British taxpayer“some confidence that the money is being properly spent.”131.18 Donors, however, typically get less visibility and “credit” fromtrust funds, a factor that has been a source of considerable concern.14This is one reason why donors insist on special reporting, whichallows them to show their parliaments and publics how their specificaid contributions were used, but is a source of inefficiency (asdiscussed in chapter 4). But there are tensions between this donorconcern for visibility and the use of trust funds to foster collaborationand reduce fragmentation through the pooling of resources.RECIPIENT PERSPECTIVES1.19 Recipient government officials see trust funds as playing threemain positive roles:Provide additional financing on grant terms. For low-incomecountries, which regularly receive assistance on grant terms frombilateral donors and to a more limited extent from IDA, trustfunds can serve to bring more aid into the country than wouldotherwise have been provided. This is especially important forcountries in arrears and for nonsovereign entities where IDA isunable to lend and bilateral donors do not want to act alone. Inmiddle-income countries, which are reluctant to borrow fortechnical assistance, trust funds can finance such assistance ongrant terms. In addition, for both low- and middle-income7
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 22 and 23: MANAGEMENT RESPONSEplay at the leve
Page 24 and 25: MANAGEMENT RESPONSEattention needs
Page 26 and 27: MANAGEMENT ACTION RECORDMajor Monit
Page 28 and 29: Chairperson’s Summary:Informal Me
Page 31 and 32: 1. The Role of Trust Funds in theGl
Page 33 and 34: CHAPTER 1THE ROLE OF TRUST FUNDS IN
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Page 42 and 43: CHAPTER 2THE WORLD BANK’S TRUST F
Page 56 and 57: 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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