The Review of International Organizations

, Volume 12, Issue 2, pp 199–226

Organizational reform and the rise of trust funds: Lessons from the World Bank

Article

Abstract

Over the past two decades, earmarked funding to international development organizations through special-purpose trust funds has increased greatly. This paper studies the incentives for trust funds from the perspective of multilateral agencies, notably the World Bank. A theoretically intriguing type of funds are so-called “pass-on funds,” in which one unit hosts the fund, then passes on its resources to another type of unit for implementation. Each unit has different preferences for the specific types of activities to be supported by the fund. Interviews with World Bank staff and complementary documents demonstrate the rationale for pass-on funds and the associated division of labor between fundraising network units and implementing regional units. While pass-on funds reflect an efficient division of labor between functionally specialized units, they increase the misalignment between sector-specific global priorities and country-specific needs. Organizational reform drove the sudden explosion of pass-on funds around the millennium turn, facilitated by growing availability of donor monies for specific sectors and by lenient internal regulation. Organizational reform undermined budget autonomy of sector units, causing those units to seek new funds in their areas of expertise. A number of reform features also reduced administrative budgets of country units, increasing their demand for pass-on funding grants. The results contribute to the emerging literature on earmarked funding and highlight the need to consider international organizations as heterogeneous actors.

Keywords

Trust funds Multilateral agencies Bureaucratic politics Collective agents 

JEL Classification

D73 F13 O19 

Supplementary material

11558_2017_9268_MOESM1_ESM.zip (343 kb)
(ZIP 343 KB)

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.University of ZurichZurichSwitzerland
  2. 2.University of CambridgeCambridgeUK

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