“Contractors or Collectives?” Earmarked Funding of Multilaterals, Donor Needs and Institutional Integrity: The World Bank as a Case Study

We revisit the policy dilemmas thrown up by so-called Multi-bi funding (earmarked bilateral aid routed via multilateral channels), based on a case study of World Bank trust funds, given their industry-leading overall size and relative transparency. We update patterns of sources and uses of Multi-bi using the 2019 Trust Funds Directory and use this to derive a new Index of Responsible Multi-bi Donorship. We consider complementary donor motivations for Multi-bi, highlighting their perceived need to shift the focus of a multilateral institution faster than they believe possible through its core systems. We examine potential negative effects of Multi-bi on the distortion of funding choices available to client countries, and above all on the risk of “hollowing out” of the multilateral itself, as the locus of power and accountability shifts from the wider collective toward a narrower set of contracting relationships. We find that current trust fund reform efforts can at best partly address these dynamics, while the growing trend toward creation of sub-windows within the main core funding instrument could potentially make things worse. Instead, we offer a pragmatic two-track solution that could significantly reduce tensions between funder needs and institutional integrity. This involves (a) developing an improved battery of output indicators mapped to donor core contributions, to enhance visibility and results reporting and (b) routing new Multi-bi proposals increasingly through core governance processes, focusing initially on greater transparency and on demonstrating their additionality to donors’ core funding.