The Review of International Organizations

, Volume 12, Issue 2, pp 171–197 | Cite as

What determines earmarked funding to international development organizations? Evidence from the new multi-bi aid data

  • Vera Z. Eichenauer
  • Bernhard ReinsbergEmail author


Earmarked aid to international organizations has quadrupled over the last two decades and now represents almost 20% of total aid. This paper introduces a new dataset on earmarked aid, which alternatively has been referred to as multi-bi, restricted, non-core or trust fund aid. The data make it possible to track the rise of the new aid channel over an extended time period and in greater detail regarding, e.g., the implementing multilateral organizations. The data include more than 100,000 earmarked projects of 23 OECD donors to 290 multilateral institutions from 1990 to 2012. We graphically illustrate the patterns in earmarked aid for all actors: donor governments and their aid-providing agencies, multilateral organizations, and recipient countries. We also highlight promising research questions that can be analyzed with the multi-bi data. In a first empirical application of the data, we analyze four suggested donor motives for earmarked aid at the donor-recipient level. Contrary to donor claims, we find that earmarked aid and bilateral aid target the same recipients. We also find evidence that some donors use earmarked aid to bypass recipient countries with weak governance. Overall, our explorative analysis suggests that earmarked aid serves many purposes and that donors use it in different ways. This calls for more fine-grained research on the reasons and implications for earmarked aid.


Foreign aid Aid delivery channels Earmarked aid Delegation Principal-agent Collective principal 

JEL classifications

F35 F53 F59 O19 



The authors thank Tilman Brück, Axel Dreher, Andreas Fuchs, Hinnerk Gnutzmann, Elena McLean, Alexandra Rudolph, Rainer Thiele, Felicity Vabulas, participants at the Beyond Basic Questions Workshop 2015 (Hannover), the Conference on Development Economics Group of the German Economic Association 2015 (Kiel), and the Political Economy of International Organizations Conference 2016 (Salt Lake City, UT) for helpful comments on previous versions of this paper, Franziska Volk and Sven Kunze for valuable research assistance, and Jamie Parsons for proofreading. Both authors gratefully acknowledge support from the Swiss Network for International Studies.

Supplementary material (3 mb)
ESM 1 (ZIP 3071 kb)


  1. Acht, M., Mahmoud, T. O., & Thiele, R. (2015). Corrupt governments do not receive more state-to-state aid: governance and the delivery of foreign aid through non-state actors. Journal of Development Economics, 114, 20–33.CrossRefGoogle Scholar
  2. Bayram, A. B., & Graham, E. (forthcoming). Financing global governance: explaining donor funding patterns at international organizations. Review of International Organizations.Google Scholar
  3. Bermeo, S. B. (2011). Foreign aid and regime change: a role for donor intent. World Development, 39(11), 2021–2031.CrossRefGoogle Scholar
  4. Brech, V., & Potrafke, N. (2013). Donor ideology and types of foreign aid. Journal of Comparative Economics, 42(1), 61–75.CrossRefGoogle Scholar
  5. Clist, P. (2011). 25 Years of aid allocation practice: whither selectivity? World Development, 39(10), 1724–1734.CrossRefGoogle Scholar
  6. Copelovitch, M. S. (2010). Master or servant? Common agency and the political economy of IMF lending. International Studies Quarterly, 54(1), 49–77.CrossRefGoogle Scholar
  7. Dietrich, S. (2013). Bypass or engage? Explaining donor delivery tactics in foreign aid allocation. International Studies Quarterly, 57, 698–712.CrossRefGoogle Scholar
  8. Dietrich, S. (2016). Donor political economies and the pursuit of aid effectiveness. International Organization, 70(1), 65–102.CrossRefGoogle Scholar
  9. Dollar, D., & Levin, V. (2006). The increasing selectivity of foreign aid, 1984–2003. World Development, 34(12), 2034–2046.CrossRefGoogle Scholar
  10. Eichenauer, V. Z. (2015). Trust funds: DAC donors contribute, Most Non-DAC donors don’t. Accessed Oct 2016.
  11. Eichenauer, V. Z., & Hug, S. (2015). The politics of special purpose trust funds. Unpublished manuscript. Heidelberg: Heidelberg University.Google Scholar
  12. Eichenauer, V. Z., & Knack, S. (2016). Poverty and policy selectivity of World Bank trust funds. Unpublished manuscript. Heidelberg: Heidelberg University.CrossRefGoogle Scholar
  13. Eichenauer, V. Z., & Reinsberg, B. (2014). Multi-bi aid: tracking the evolution of earmarked funding to international development organizations from 1990 to 2012. Codebook. Zurich: CIS Working Paper No. 84.Google Scholar
  14. Fuchs, A., & Richert, K. (2015). Who is the development minister and does (s)he matter? Unpublished manuscript. Heidelberg: Heidelberg University.Google Scholar
  15. Fuchs, A., Dreher, A., & Nunnenkamp, P. (2014). Determinants of donor generosity: a survey of the aid budget literature. World Development, 56, 172–199.CrossRefGoogle Scholar
  16. Goetz, K. H., & Patz, R. (2016). Pressured budgets and the European Commission: towards a more centralized EU budget administration? Journal of European Public Policy, 23(7), 1038–1056.CrossRefGoogle Scholar
  17. Graham, E. R. (2015). Money and multilateralism: how funding rules constitute IO governance. International Theory, 7(1), 162–194.CrossRefGoogle Scholar
  18. Graham, E. R. (2016). The institutional design of funding rules at international organizations: explaining the transformation in financing the United Nations. European Journal of International Relations. doi: 10.1177/1354066116648755.Google Scholar
  19. Haftel, Y. Z., & Thompson, A. (2006). The independence of international organizations concept and applications. Journal of Conflict Resolution, 50(2), 253–275.CrossRefGoogle Scholar
  20. Hawkins, D. G., Lake, D. A., Nielson, D. L., & Tierney, M. J. (Eds.). (2006). Delegation and agency in international organizations. Cambridge: Cambridge University Press.Google Scholar
  21. IEG. (2011). An evaluation of the World Bank’s trust fund portfolio: trust fund support for development. Independent Evaluation Group: Washington.Google Scholar
  22. Knack, S. (2014). Building or bypassing recipient country systems: are donors defying the Paris declaration. The Journal of Development Studies, 50(6), 839–854.CrossRefGoogle Scholar
  23. Michaelowa, K., Reinsberg, B., & Schneider, C. (2016). Multi-bi aid in European Development Assistance: The role of capacity constraints and member state politics. Development Policy Review. doi: 10.1111/dpr.12193.
  24. Milner, H. (2006). Why multilateralism? Foreign aid and domestic principal-agent problems. In D. G. Hawkins et al. (Eds.), Delegation and agency in international organizations. New York: Cambridge University Press.Google Scholar
  25. Nielson, D. L., & Tierney, M. J. (2003). Delegation to international organizations: agency theory and World Bank environmental reform. International Organization, 57(2), 241–276.CrossRefGoogle Scholar
  26. OECD. (2005). Managing aid: practices of DAC member countries. Paris: Organisation for Economic Co-operation and Development.CrossRefGoogle Scholar
  27. OECD. (2010). 2010 DAC report on multilateral aid. Paris: Organisation for Economic Co-operation and Development.Google Scholar
  28. OECD. (2011). 2011 DAC report on multilateral aid. Paris: Organisation for Economic Co-operation and Development.Google Scholar
  29. OECD (2013). OECD/DAC creditor reporting system. Paris: Organisation for Economic Co-operation and Development. Accessed Sept 2012 and July 2013.Google Scholar
  30. Reinsberg, B. (2016). The implications of multi-bi financing on international development organizations: the example of the World Bank. In T. Mahn, M. Negre, & S. Klingebiel (Eds.), The fragmentation of aid: concepts, measurements and implications for development cooperation (pp. 185–198). Basingstoke: Palgrave McMillan.CrossRefGoogle Scholar
  31. Reinsberg, B. (2017). Organizational reform and the rise of trust funds: Lessons from the World Bank. Review of International Organizations. doi: 10.1007/s11558-017-9268-1.
  32. Reinsberg, B., Michaelowa, K., & Eichenauer, V. Z. (2015a). The proliferation of trust funds and other multi-bi aid. In M. Arvin & B. Lew (Eds.), Handbook of foreign aid. Cheltenham: Edward Elgar.Google Scholar
  33. Reinsberg, B., Michaelowa, K., & Knack, S. (2015b). Which donors, which funds? The choice of trust funds by bilateral donors at the World Bank. World Bank Policy Research Working Paper No. 7441. Washington: World Bank.Google Scholar
  34. Schneider, C. J., & Tobin, J. L. (2011). Eenie, Meenie, Miney, Moe? Institutional portfolios and delegation to multilateral aid institutions. Unpublished manuscript. University of San Diego, California.Google Scholar
  35. Sridhar, D., & Woods, N. (2013). Trojan multilateralism: global cooperation in health. Global Policy, 4(4), 325–335.CrossRefGoogle Scholar
  36. UN. (2012). Analysis of funding of operational activities for development of the United Nations system for the year 2010. New York: Report of the Secretary General. UN Department of Economic and Social Affairs.Google Scholar
  37. Wagner, L. (2016). How do earmarked funds change the geographical allocation of multilateral assistance? FERDI Discussion Paper No. 150.Google Scholar

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Heidelberg UniversityHeidelbergGermany
  2. 2.KOF ETH ZurichZurichSwitzerland
  3. 3.University of ZurichZurichSwitzerland
  4. 4.University of CambridgeCambridgeUK

Personalised recommendations