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BP 8.45 - Grants

These policies were prepared for use by World Bank staff and are not necessarily a complete treatment of the subject.
BP 8.45
October, 1999

Note: Questions on BP 8.45 may be addressed to the DGF Secretariat, RMC.

Grants from the IBRD Administrative Budget: Development
Grant Facility

DGF Governance

1.  The Development Grant Facility (DGF) was established by the Board of Executive Directors in 1997.  The Board provides strategic direction to the DGF and approves the DGF budget each year.   The DGF is governed by a DGF Council with Bankwide representation,1 and is supported by a DGF Secretariat. This BP sets out the roles of the DGF Council and the DGF Secretariat, as well as those of the Networks and Sector Boards, sponsoring units, and program managers.

DGF Application and Allocation
2.  Each year the Development Grant Facility (DGF) Council and Secretariat set the parameters and a timetable for receiving and reviewing DGF grant applications for the following fiscal year.2
3.  Each proposed DGF program is sponsored by a Bank unit and is under the direct responsibility of an individual Bank program manager.  The program manager prepares the grant application,3 clears it with the manager of the sponsoring Bank unit, and forwards it to the relevant Sector Board head.4
4.  The Sector Board reviews the proposals received, endorses them as appropriate, and ranks them in terms of priority for funding against sector strategies. It forwards them to the Network head, under cover of an overview note.  This submission is the Sector Grant Package.
5.  The Network Council reviews the Sector Grant Packages, adjusts them as appropriate to reflect Network priorities, and forwards them to the DGF Secretariat for consideration by the DGF Council.
6.  The DGF Council, with the assistance of the DGF Secretariat, reviews the Sector Grant Packages, taking into consideration the relative quality of each individual proposal, its consistency with grant-making principles and DGF eligibility criteria, and its fit with institutional priorities. The DGF Council then endorses a Bankwide submission, including a total proposed DGF budget, for Management's recommendation and Board approval.  The DGF Council may also reallocate funds within the parameters set out in OP 8.45 para. 4.
Grant Letters of Agreement

7.  Once the DGF budget, including allocations to particular programs within this budget, is approved, DGF funds are made available to recipients.5 The program manager normally prepares a Grant Letter of Agreement between the Bank and the recipient of the grant funds, specifying the grant recipient, grant amount, grant purpose and activities, grant period, and reporting requirements. The Grant Letter of Agreement is cleared by the Legal Department (LEG) and the DGF Secretariat, signed on behalf of the Bank by the vice president of the grant-sponsoring unit or a person designated by the vice president, and countersigned by an authorized officer of the recipient organization.6

8.  When the Bank receives the countersigned Grant Letter of Agreement, the program manager sends the original to LEG and a copy to the DGF Secretariat, which commits the funds for the approved grant.

Disbursement and Implementation
9.  The manager of the Bank sponsoring unit normally makes disbursement requests to the DGF Secretariat on behalf of the recipient, according to the provisions of the Grant Letter of Agreement.7 Upon receipt of the disbursement request, the DGF Secretariat initiates disbursement of the funds to the specified account.
10.  DGF grants are normally executed by recipients that have a record of achievement and demonstrated financial probity. Grant recipients are required to exercise the same care in the administration of the grant as they exercise in the administration of their own funds, having due regard to economy, efficiency, and the need to uphold the highest standards of integrity, including the prevention of fraud and corruption, in the administration of public funds.8
11.  Recipients are required to return to the Bank any grant funds not used within the time frame set out in the Grant Letter of Agreement.
Supervision, Monitoring, and Evaluation
12.  The recipient organization implements the activities and prepares all reports specified in the Grant Letter of Agreement, including an annual statement of account showing the use of grant funds, audited annual financial statements, and a report summarizing activities and results.  
13.  The program manager supervises implementation and, in particular, obtains and reviews all relevant program reports, including those required from the recipient. The program manager also ensures that an appropriate level of independent evaluation is provided.9
14.  At the end of the year's activities, if the program manager applies for further Bank grant funds, he/she prepares a Progress Report on the program and forwards it, along with audited financial statements, for review with the new application for funding.10
15.  If the DGF's funding for the program is ending, the program manager prepares a Grant Completion Report within six months after the closing date of the final Grant Letter of Agreement, clears it with the manager of the Bank sponsoring unit, and forwards it to the DGF Secretariat.  The Grant Completion Report describes the extent to which objectives were met and activities completed, assessing the program's development impact, identifying problems in the program's execution, and providing lessons learned. The Grant Completion Report should also include audited financial statements and any independent or recipient-prepared evaluation reports.11
16.  The DGF Secretariat reviews and reports on DGF programs, Progress Reports, and Grant Completion Reports in the DGF Annual Review it prepares for the Board.  The DGF Secretariat also reviews and endorses any individual DGF program report separately provided to the Board.
17.  The DGF and programs under it are subject to periodic reviews conducted by the Operations Evaluation Department and to periodic audits carried out by the Internal Audit Department.
Grants from IDA and IBRD Net Income
18.  IDA grant funding, like IDA credits, is pro-vided in the context of the Country Assistance Strategy, which takes into account country performance and the overall availability of resources.  Individual operations funded by IDA grants, like those funded with IDA credits, are subject to Board approval.  IDA grants are processed in the same way as IDA credits and are disbursed, monitored, and evaluated in accordance with regular procedures for IDA credits.
19.  Allocations from IBRD net income are forwarded to the Board of Governors for approval, based on the recommendation of Management and the Executive Directors.   Such allocations are normally considered at the end of each fiscal year as part of the overall use of the Bank's net income, to ensure that their size, modalities, and timing are formulated in light of IBRD's overall financial situation and after ensuring that adequate reserves are maintained.12  Individual grants from these allocations (for example, individual HIPC grants or grants under the IDA Debt Reduction Facility) are approved by the Executive Directors.
20.  Allocations from IBRD net income to IDA are disbursed, monitored, and evaluated in accordance with regular procedures for IDA credits.  Allocations from net income for special country-specific situations for which use of the Bank's normal lending instruments is not feasible are typically deposited into a trust fund and may be provided to recipients as grants or on IDA terms, repayable to IDA.  These funds are normally administered in accordance with regular IDA procedures. Procedures for disbursing and administering other allocations from net income are developed as appropriate to the particular circumstances.


  1. Management is responsible for setting the DGF Council's membership to best reflect institutional strategy.   In FY99 it included representatives from all five Networks, three Regions (on a rotating basis), Strategy and Resource Management, Resource Mobilization and Cofinancing, and the Legal Department.
  2. In selected cases, the DGF Council may endorse multiyear funding for programs with longer-term work programs and strong partnership arrangements.  Any such endorsement is contingent on the program's meeting regular reporting requirements and on annual Board approval.
  3. A model DGF grant application is available to Bank staff at DGF.
  4. If the program involves activities pertinent to more than one Sector Board or Network, the primary Sector Board/Network evaluates the proposal, seeking the views of other Sector Boards/Networks as appropriate.
  5. The procedures set out in this section relate to individual grants disbursed directly by the DGF Secretariat to institutions outside the Bank for activities executed under Grant Letters of Agreement between the Bank and the recipient. In special cases, the DGF may disburse funds to a program housed within the Bank (without a Grant Letter of Agreement) if the program (a) has its own secretariat in the Bank funded directly by the DGF, or (b) is responsible for making numerous subgrants and obtaining clearance of Grant Letters of Agreement from LEG (specialized Grant Letters of Agreement for these programs are available from the respective secretariats; examples include the Institutional Development Fund, Post-Conflict Fund, InfoDev, and Small Grants Program); or (c) the program is covered by a multilateral agreement. In a few exceptional cases approved by the Executive Directors (e.g., Institutional Development Fund, Post-Conflict Fund), grants may be disbursed into trust funds administered by the Bank.
  6. A sample format for the Grant Letter of Agreement is available to Bank staff at DGF. 
  7. A sample disbursement request format is available to Bank staff at DGF.
  8. DGF grant programs (e.g. PCF, IDF) that provide financing for country-based activities similar to those supported under Bank lending operations are normally required to follow the Bank's procurement guidelines and procedures.  In such cases, where institutions are weak, grants may be extended to recipients that are developing, but have not fully achieved, a track record of achievement.  DGF grants that are provided to international organizations and similar entities, where the Bank grant finances a small portion of the overall activity and where it is not feasible to supervise activities on a contract-by-contract basis, may be administered in accordance with the recipient's own rules, if they are consistent with the principles set out in para. 10.
  9. All DGF programs receiving over $300,000 annually from the DGF are required to have an arrangement for regular and independent evaluations.  In some cases, the program manager, in consultation with the Sector Board, may arrange for evaluations to be carried out in conjunction with other programs in the same sector.  Smaller programs should also consult with Sector Boards about an appropriate level of evaluation.
  10. A model grant progress report is available to Bank staff at DGF.
  11. A model grant completion report is available to Bank staff at DGF.
  12. In exceptional cases of an urgent nature, grants from net income may be considered at other times of the fiscal year.


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