An Evaluation of the World Bank's Trust Fund Portfolio

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CHAPTER 2THE WORLD BANK’S TRUST FUND PORTFOLIO AND POLICYissuing bonds in the capital markets to fund vaccination programs indeveloping countries, thus using the financial markets to frontloadcommitments. Other FIFs provide GPGs at the country and globallevels. Examples of these include Climate Investment Funds (CIFs),which are designed to mitigate rises in greenhouse gas emissions anddevelop climate-resilient economies in developing countries, andCGIAR, which is committed to mobilizing sustainable developmentof agriculture by providing international agricultural research centerswith financial assistance and strategic guidance. While most supportactivities in multiple countries, two recent FIFs are focused on a singlecountry recipient—the Guyana REDD-Plus Investment Fund and theHaiti Reconstruction Fund.2.16 The IBRD/IDA trust funds. The predominant use of trust fundsmanaged by the World Bank is to support country (and someregional) investment projects. This use accounts for more than twothirdsof total IBRD/IDA trust fund disbursements.6 Of thisinvestment-related financing, slightly less than half (about 47 percent)directly supports IBRD/IDA operations.7 The larger amount (some 53percent) funds stand-alone projects. Fragile states account for 43percent of the total combined support (roughly one-quarter of cofinancedand two-thirds of stand-alone disbursements).82.17 The IFC trust funds. IFC trust funds are used primarily tosupport its provision of advisory services and usually are deployed inconjunction with IFC’s own resources. This evaluation does not assessthe IFC trust funds, but a summary assessment prepared by IEG-IFCis presented in appendix F. The remainder of this report concentrateson Bank-managed trust funds (that is, the RETFs and BETFs), as wellas the FIFs administered by the World Bank.The Bank’sBoard approveda new trustfundmanagementframework in2007that sets outrevised internalcontrolsandmanagementprocesses.THE WORLD BANK’S TRUST FUND MANAGEMENT FRAMEWORK AND POLICY2.18 In response to accountability and efficiency challenges posedby the Bank’s expanded trust fund portfolio, a new trust fundmanagement framework was prepared and was approved by theBank’s Board in 2007. The framework, which sets out revised internalcontrols and management processes, is designed to assure thestrategic relevance, risk management, and cost-effectiveness of theBank’s trust fund portfolio. The main objective of the framework is tobring trust funds into the mainstream of Bank business. Asupplementary intent is to promote transparent and comprehensivemanagement of trust funds along with all other Bank resources.2.19 The framework divides Bank-administered trust funds intothe three current categories—FIFs, RETFs, and BETFs—and identifiesthe different responsibilities assumed by the Bank in relation to eachcategory. It also specifies the operational policies and processes that20
need to be applied in managing each type of trust fund. Specifically,the framework states that:CHAPTER 2THE WORLD BANK’S TRUST FUND PORTFOLIO AND POLICYBETFs, which are funds that support the Bank’s workprogram, are administered in accordance with policies andprocedures that apply to the Bank’s administrative budget.RETFs, which are funds that the Bank passes on to a thirdparty and for which the Bank plays an operational role (that is,in appraising and supervising funded activities), areadministered under the operational policies and proceduresthat apply to IBRD and IDA financing, though the approvalprocess for trust fund grants is determined in accordance withseparate processes for trust fund proposals and legalagreements with donors.FIFs, which are customized funds for which the Bank providesspecified administrative, financial, or operational services butdoes not have authority over the use of funds, are subject tooperational, administrative, financial, and budget policies andprocedures as determined case-by-case on the basis of thecharacteristics of each fund.2.20 The framework was the basis for a revised World Bank trustfund policy (Operational Policy 14.40) sent for information to theBoard in July 2008 (and which is reproduced in appendix G). Thepolicy’s key principles are that the Bank:Establishes and administers trust funds to “complement IDAand IBRD financing” and “leverage its capacity anddevelopment knowledge” so as “to promote development andaid effectiveness” 9Encourages trust funds that draw on its operational role,includes contributions from more than one donors, reinforcescountry capacity and ownership, and promotes harmonizationand alignment of donor aid modalitiesProvides administrative and financial services “for trust fundsthat support work on issues of global importance and wherethe Bank may not perform an operational role.”2.21 The Bank decides whether to accept administration of aproposed trust fund based on the six criteria listed in box 2.2.21
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
Page 39: CHAPTER 1THE ROLE OF TRUST FUNDS IN
Page 42 and 43: CHAPTER 2THE WORLD BANK’S TRUST F
Page 56 and 57: CHAPTER 3THE RELEVANCE AND EFFECTIV
Page 80 and 81: CHAPTER 4MANAGEMENT AND ACCOUNTABIL
Page 96 and 97: CHAPTER 5THE IMPACT OF TRUST FUNDS
Page 98 and 99: CHAPTER 5THE IMPACT OF TRUST FUNDS
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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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