Multi-Donor Trust Funds (MDTFs)

Multi-Donor Trust Funds (MDTFs) are funding mechanisms which combine the contributions of multiple donors, generally for a program of activities over a number of years. Their arrangements include essentially standard legal agreements with all donors, which specify governance procedures covering TF management, operational and financial reporting, and the allocation and uses of funds. Under Bank-administered MDTFs, earmarking of funds by participating donors to specific activities or to specific recipients is not allowed.

MDTFs are used frequently in post-crisis environments – both post-conflict and post-disaster. These situations are normally characterized by large un-met needs regarding both immediate provision of basic services to a needy population, and more medium-term reconstruction of social and economic infrastructure. Governance and administrative systems may often be weak, and so capacity development may also be a requirement. Risk, uncertainty and information costs are thus high, so delivering on needs tends to be costly.

MDTFs are instruments for improving resource efficiency and effectiveness by reducing transaction costs, and in particular by managing the high risk levels inherent in post-crisis environments. For national authorities, MDTFs can increase and untie funding and provide political visibility. International support can bring legitimacy to the overall peace process, both nationally and internationally. For donors, MDTFs reduce information, coordination, administrative and various access costs. They provide a way to support fragile and failing states in a joined-up manner. For the Bank, administering an MDTF is in line with its focus on strengthening the institutions and processes of governance, and promoting economic growth. Involvement can provide re-entry into countries that have not been eligible for Bank support for a time, including helping address arrears and thus assist countries become eligible for IDA support.


Resources on Post-Crisis MDTFs

MDTF Review.  In 2006, the World Bank and Norway’s Ministry of Foreign Affairs and its Agency for Development Cooperation (NORAD), in cooperation with the Canadian International Development Agency (CIDA), the Netherlands Ministry of Foreign Affairs (MFA) and the UK’s Department for International Development (DFID) commissioned a Review of Post-Crisis Multi-Donor Trust Funds (MDTFs). 
Find the Full Report here, as well as the Country Case Studies.  Key findings from the Review are summarized in this presentation.

MDTF Speed and Results.  As a follow up to the MDTF Review, the Bank established a task team to conduct further analysis on the speed with which MDTF projects were launched. The task team was led by OPCFC, with membership from the Delivery Management unit in OPCS, the Trust Funds Operations unit, and the Development Research Group. Read the summary of that analysis of speed and results, or review the dataset.

Post-Conflict MDTFs: Practitioners’ Advice from Field Teams.  Based on consultations with Africa Region country teams and experienced MDTF managers, the MDTF TipSheet covers the early upstream discussions about MDTF purpose, scope, and structure, and then moves through the process of designing and launching the MDTF; staffing the local office and Technical Secretariat; identifying, preparing, and appraising projects; supporting Government in developing their capacity to play their designated roles; and supervising projects intensively to monitor progress and adjust accordingly.