The Proliferation of Multilateral Funds

What are the recent trends of non-core multilateral aid ? To what extent do they threaten aid effectiveness through an increased fragmentation and proliferation of funds ?

Project Summary

Over the last decade, Official Development Assistance (ODA) experienced a hidden transformation. Since the late 1990s, traditional multilateral aid has been on the decline while non-core multilateral aid has been rising steadily.

Non-core multilateral aid, which includes trust funds, global programs, and joint programming, enjoys considerable popularity among bilateral donors: it allows them to earmark their contributions for specific development objectives, which provides them with more influence on aid allocation and makes ODA more visible to their national constituencies. However, non-core multilateral aid may pose severe risks for aid effectiveness.

It may replace the core contributions to multilateral aid institutions (MAIs), complicate the budgeting of these organisations, inflate administrative costs and governance structures due to additional reporting, relinquish the expert knowledge of experienced MAI staff, and attract their attention for shopping for funds.

From the perspective of recipients, non-core multilateral aid undermines developing country ownership and tends to make aid flows less predictable. The rise of non-core multilateral aid may threaten aid effectiveness through an increased fragmentation and proliferation of funds. This would contradict the international commitments laid down in the Paris Declaration and the Accra Agenda for Action.

The rise of non-core multilateral aid over the last years hence constitutes a research puzzle that needs to be addressed. Clarifying the concept of non-core multilateral aid and exploring recent trends, the project seeks to identify the motivations of the key actors from MAIs and bilateral donor ministries, as well as to assess the consequences with respect to aid effectiveness.

It will be the first systematic and comprehensive analysis of the new multilateral financing mechanisms. The results should help raise awareness among both international organisations and bilateral donors, of the associated problems and opportunities and help MAIs to take a strategic approach towards these contributions.

Executive Summary

The interdisciplinary project The proliferation of multilateral funds: Explaining the shift towards multi-bi aid and related institutions allowed to establish a cooperation of researchers and policy makers, resulting in several papers (all work in progress) and a joint workshop. The financial support by the Swiss Network for International Studies (SNIS) made this research possible by financing field work, research assistants, participation in academic conferences, and a dissemination event. The final project report proceeds with a brief summary of the project and its associated researchers (Section 1). Section 2 presents our main findings and outputs. The two subsequent sections illustrate our outreach activities (Section 3) and especially the final dissemination event in Zurich (Section 4). The final section provides an outlook on future activities.

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Working Paper

The rise of multi-bi aid and the proliferation of trust funds

Donor countries traditionally face a binary choice between two channels for official development assistance (ODA), namely the bi- and the multilateral channel, they now increasingly opt for a combination of the two, generally called “multi-bi” aid. In this context, they channel funds to an international development organisation (IDO), a multilateral agency that implements development activities, but without providing the IDO with the authority to spend these funds at its own discretion. Due to this earmarking to specific areas in which the funds may be used, multi-bi aid differs substantially from traditional core funding to multilaterals. Multi-bi financial contributions to IDOs are typically independent of long-term agreements at the international level. In contrast, they are released on a short-term basis, and they usually flow into separate trust funds with individually designed governance and management structures that may also allow for membership of private organisations, e.g., foundations or NGOs.

In the following, we will review the different donor reports and policy papers as well as the very few academic studies on multi-bi aid in order to provide an overview of the reasons for the development of this new trend and the opportunities and challenges it presents (Section 2). As the limitations of the existing literature are primarily due to a lack of comparable data, we then introduce a new dataset developed in consultation with statisticians from the Development Assistance Committee (DAC) at the Organisation for Economic Development and Co-operation (OECD). Based on this data, for the first time, overall trends in multi-bi aid can be described in detail for a prolonged time horizon and at a global level, rather than only for individual IDOs.


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Research Team

Simon Hug
University of Geneva

Axel Dreher
Ruprecht-Karls-Universität Heidelberg

Katharina Michaelowa
University of Zurich

Bernhard Reinsberg
Principal Member
University of Zurich

Francis Cheneval
Associated Member
University of Zurich

Joelle de Sépibus
Associated Member
University of Berne

Vera Eichenauer
Associated Member
Heidelberg University

Christopher Humphrey
Associated Member
University of Zurich

Stephen Knack
Associated Member
World Bank Group

Sabine Meitzel
Associated Member
World Trade Organisation – International Trade Centre

Alessandro Monsutti
Associated Member
Graduate Institute Geneva

Alain Patrick Nkengne Nkengne
Associated Member

Helmut Reisen
Associated Member
Organisation for Economic Cooperation and Development





Policy domains


Host Institution