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Multi-Donor Trust Funds (MDTFs)

Multi-Donor Trust Funds


Trust funds at the Global Bank have become, and Financial Intermediary Funds will continue to be a mainstream instrument of development finance, delivering considerable benefits for partners at the global, regional and national level.

In the changing global environment of development cooperation, Trust Funds (FTs) and Financial Intermediary Funds (FIFs) have emerged as a significant pillar of the global aid architecture, commonly used to address limitations in bilateral aid and fill perceived gaps in the operations of multilateral institutions. They currently account for about 11 percent of official development assistance (ODA), and they finance a substantial part of the Global Bank’s business. The activities they fund are highly varied, ranging from large global programs with their own governance structures to conventional development projects, debt and disaster relief operations, and technical assistance.

Trust Funds at the Global Bank
Trust funds are flexible arrangements that serve the interests of recipient countries, donor countries and the Global Bank. Through the trust funds the Global Bank channels financial resources and technical assistance to fragile states and conflict-affected situations, infrastructure, climate change. They also support Global Bank's rapid responses in urgent situations; assist in designing innovative and potentially transformative solutions, and help the Global Bank Group and its agencies as well as the international community to address complex global and regional policy challenges in priority sectors and themes. Donors rely on trust funds as a way to scale up bilateral programs where they lack in-country capacity and to engage in global programs where bilateral interventions would not be cost effective. Moreover, the strong fiduciary standards of the Global Bank are highly valued by donor partners.

Global Bank is authorized by its Charter to establish and administer special funds (SF), trust funds, including Financial Intermediary Funds. Whenever a special fund involves contributions from financing partners, these funds are administered with the same level of care as Global Bank Group’s own resources

Global Bank three-pillar approach
Trust funds, including Financial Intermediary Funds, have become an increasingly important funding mechanism for development at the Global Bank, to the degree that the Global Bank has moved to mainstream the instrument into Global Bank’s operational and administrative processes and including it in its budgeting cycle.

Global Bank approach for trust funds consisting of country-specific trust funds; global and regional partnership programs; and multi-donor, multi-recipient umbrella facilities  such the Global Bank Disaster Risk Reduction and Reconstruction Fund – An Umbrella Trust Fund (GB-DRRRF), would allow the Global Bank Group and Global Bank to strengthen the effectiveness, efficiency, and accountability for results.

Global Bank trust fund operation is presently providing support for country-level operations, emergency responses, knowledge initiatives, advisory services, and collective action across countries on global priorities such as climate change, public health, and food security. Global Bank's Trust-funded programs also serve as platforms to actively engage various stakeholders—donors, recipient governments, private sector entities, and civil society organizations— allowing them to articulate their ideas and priorities, but more importantly, drawing them in to be part of the solution.

Financial Intermediary Funds
The role of Financial Intermediary Funds in the Global Bank Group aid architecture has increased substantially in the past several years, with Global Bank Group as trustee of the funds supporting several large global programs. Funds held in trust by Financial Intermediary Funds more than doubled during the FY14-FY17 period. This growth is largely attributable to the expansion of existing Financial Intermediary Funds and for undertaking new initiatives.  These include the Global Bank Infrastructure Project Preparation Facility (GB-IPPF) developed to leverage private investment to supplement public financing for public-private partnerships, the Global Bank Atlantic Reconstruction Fund (GB-ARTF) a regional Standby Recovery Financing Facility (SRFF) dedicated to the Atlantic hurricane region includes the North Atlantic Ocean, Caribbean Sea, and Gulf of Mexico, the Global Bank Disaster Risk Reduction and Reconstruction Fund, and the Puerto Rico Recovery Fund (“GB-PRRF” or the the “Fund”).

The majority of Financial Intermediary Funds (FIF) established over the past years in the context of international initiatives to support global programs often focus on the provision of global public goods, responses to climate change, and food security. The Global Bank’s involvement with Financial Intermediary Funds and with Multi-Donor Trust Funds started in 2014. Earlier Financial Intermediary Funds include the Global Bank Infrastructure Project Preparation Facility, established in Global Bank in 2014; and the Global Bank Disaster Risk Reduction and Reconstruction Fund initiative, launched in 2017.

The majority of Financial Intermediary Funds and Multi-Donor Trust Funds established since 2014 in supports of global programs created in the context of G7/G8 and G20 meetings, with a focus on infrastructure and climate change issues.  Recent Financial Intermediary Funds and Multi-Donor Trust Funds have aimed to assist fragile states and conflict-affected situations (e.g., the GBFCSTF) and natural disasters (e.g., the Global Bank Atlantic Reconstruction Fund, established in the aftermath of the 2017 Hurricanes Harvey and Maria). As of the end of FY17, there were 6 Financial Intermediary Funds programs in Global Bank’s portfolio.

Also, Financial Intermediary Funds can be an important instrument for issue advocacy and partnerships, supporting collective action by building on the comparative advantages of multiple implementing entities and facilitating coordination. At the same time, the number of Financial Intermediary Funds has grown substantially in recent years and continues to evolve, raising governance and strategic risks for the Global Bank and the overall aid architecture.  Building on its more than two decades of Multilateral Development Banks (MDBs) experience with financial intermediary funds, the Global Bank Group will document lessons learned to highlight the “value proposition” of this unique partnership mechanism, ensure that best practices inform the design of Financial Intermediary Funds, and improve risk management along the entire lifecycle.

To learn more about the Global Bank Disaster Risk Reduction and Reconstruction Fund, What we do and How we do it and Management and Organization, visit the About DRRRF and the Frequently Asked Questions Section of the DRRRF Website Section.

For more information about the Global Bank, what we do and how we do it, please go to the About Us section of the Global Bank Website. http://www.global-bank.org

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