Trust Funds as a Lever of Influence at International Development Organizations
| Author | Bernhard Reinsberg |
| Date | 01 August 2017 |
| Published date | 01 August 2017 |
| DOI | http://doi.org/10.1111/1758-5899.12464 |
Trust Funds as a Lever of Influence at
International Development Organizations
Bernhard Reinsberg
University of Cambridge, United Kingdom
Abstract
Trust funds –broadly defined as financial vehicles to channel development funding earmarked for specific purposes through
international development organizations –have grown substantially over the past two decades. Reflecting the variety of trust
fund purposes and related governance arrangements, an emergent literature emphasizes a diversity of reasons underlying this
growth. This paper proposes a simple –yet encompassing –explanation applicable to all kinds of funds: donors use trust
funds to wield ‘influence’–leveraging financial resources to alter the policies of multilateral organizations. Based on interviews
at the World Bank, the study shows that influence is a dominant motive behind trust funds, though the capacity and willing-
ness to wield influence varies across donors. Influence is a salient motive especially for medium-sized donors and emerging
donors but surprisingly less so for large donors. In addition, attempts of influence are most effective when donors promote
new thematic issues that did not previously feature Bank assistance and outside established programs. Concerns among stake-
holders about undue donor influence are highest with respect to the global knowledge work of the World Bank but are virtu-
ally absent when involving donors in the operational activities at the country level.
Policy Implications
•Policy-makers need to be aware that trust funds are prone to be used as levers of influence.
•Donor involvement in multilateral agency operations can enhance the effectiveness of operations but at the same time
undermine the legitimacy of global governance; stakeholders must find a balance between these two considerations.
•International development organizations should have clear guidelines regarding which kinds of donor involvement they
can accept and which practices of involvement are incommensurate with their own procedural rules; they must communi-
cate these guidelines internally and vis-
a-vis external stakeholders.
•Sectors that are prone to undue influence –for example global knowledge work –should be financed from core contribu-
tions.
1. An influence perspective on the rise of trust
funds
In recent years, two phenomena have altered the develop-
ment aid architecture. First, ‘global funds’–such as the Glo-
bal Fund to Fight Aids, Tuberculosis, and Malaria –have
grown into serious competitors of the established multilat-
eral organizations –such as the World Bank, the World
Health Organization, and other United Nations entities
(Browne, 2017; Smyth and Triponel, 2013; Sridhar and
Woods, 2013). Governed by independent boards in which
donor countries control a majority of the votes, global funds
act outside the established multilaterals but contract the lat-
ter as their implementing agencies. Donor countries com-
mitted more than US$8 billion to global funds (OECD, 2016),
which implies that these funds channel a similar amount of
earmarked funding to implementing multilaterals.
1
Second,
at the same time, donor countries have created ‘trust funds’
at multilateral organizations to channel development assis-
tance earmarked for specific regions, countries, themes, or
sectors (OECD, 2011; Eichenauer and Reinsberg, 2017;
Reinsberg et al., 2015). In 2015, donor countries channeled
about US$20 billion as earmarked aid to multilateral organi-
zations (OECD, 2016), and for many implementing multilater-
als, earmarked funding accounts for the lion share of their
development budgets. Over the past few years, the United
Nations financed about 75 per cent of its operational activi-
ties for development through earmarked aid (UN, 2012).
These two trends tend to be analyzed separately. In this
paper, I propose a unified approach to studying both kinds
of phenomena: I argue that the common denominator
underlying the popularity of multilateral funds for donors is
‘influence’–the capacity of the donors to alter the behavior
of other donors and multilateral agencies according to their
own priorities. Capturing the relevant explanations for trust
funds through the lens of influence has a key advantage:
international relations scholars have a keen interest in pat-
terns of influence, for example, when states use multilateral
venues to advance unilateral interests, the conditions under
which such attempts are successful, and through which
mechanisms states wield influence (Kilby, 2009; Stone, 2011,
2013).
Global Policy (2017) 8:Suppl.5 doi: 10.1111/1758-5899.12464 ©2017 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 8 . Supplement 5 . August 2017 85
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