An Evaluation of the World Bank's Trust Fund Portfolio

CHAPTER 3THE RELEVANCE AND EFFECTIVENESS OF TRUST FUND SUPPORT FOR DEVELOPMENTDonors provide MDTFs and SDTFs—sometimes both—because theywant to channel more funds to a particular country that their bilateralaid program cannot handle, or they want to piggy-back on the Bank’stechnical and fiduciary expertise. In this use of trust funds, recipientstend to see little difference between trust fund financing and WorldBank funding or standard donor cofinancing.Box 3.2 Multiple Financing Sources Support a Large Program in EthiopiaThe Productive Safety Nets program, an Adaptable Program Loan now in itsthird phase, aims to replace Ethiopia’s cycle of emergency food aid with asustainable and predictable way of addressing chronic food insecurity,primarily through food-for-work activities. The program receives both cashand food cofinancing from several donors. There are 11 different trust funds,including 1 MDTF and several SDTFs, associated with the program, as wellas considerable non–trust-funded cofinancing. All donors are included in theprogram’s comprehensive donor coordination processes. The design of theMDTF has reduced transactions costs for the government, as well as fordonors. Yet the benefits of the 11 trust funds for the implementation of theBank-supported program come at a high cost: many staff are required tomanage the accounts and paperwork and senior staff are required to devoteconsiderable time to managing relations with donors.Source: Ethiopia case study.Staff findsflexibilityenhanced by thecombination oftrust funds andother forms ofassistance, butalso finds thatthis requiresconsiderableadditional timeto manage.3.19 Bank staff attests to the flexibility provided by the combinedforms of assistance. For example, a program may receive overallfunding from an MDTF, supplemented by support from other fundsfor particular components, such as capacity development for NGOs.At the same time, staff notes considerable administration andmanagement difficulties involved in the use of trust funds for scalingup operations because of the many and varied donor requirements ofindividual trust fund arrangements. Box 3.2 provides an illustrationfrom Ethiopia of how trust funds have been combined with othersources to finance a complex national program.3.20 The use of trust funds to finance country investmentoperations has worked best when the resources were closely linked tocountry priorities and programs, and least well when donorsdetermined the use of resources with little or no country input. Box3.3 provides three examples of trust fund financing that is wellintegrated into recipient programs and appears to have worked well.30