The multilateral aid architecture is a complex “ecosystem” with many different types of organisations delivering assistance in a variety of different forms. More than 200 multilateral donors receive or serve as a channel for 40% of all aid. The challenge is to ensure that this aid is delivered in the most effective way and that efforts among donors are as co-ordinated as possible, both with each other and with the priorities of the developing countries in which they work.

This report was prepared by Emily Bosch, under the guidance of Andrew Rogerson. Fredrik Ericsson provided statistical support and analysis. The report also benefited from comments, inputs and suggestions from many other colleagues, notably Suzanne Steensen, Kimberly Smith, Simon Scott, and Julia Benn. The chapter on climate financing architecture benefited from inputs from, among others, Rémy Paris, Tamara Levine, Alexandra Trzeciak-Duval, Richard Carey and the ENVIRONET Secretariat of DCD, as well as from Jan Corfee-Morlot and Helen Mountford of the Environment Directorate. Invaluable data support was provided by Cécile Sangaré, Olivier Bouret, Andrzej Suchodolski, Elena Bernaldo and Aimée Nichols. DAC Delegates and their colleagues at headquarters provided us with input throughout the process and offered detailed, thorough comments in the final months of the report’s preparation. Stephanie Coïc designed the graphics and Stacey Bradbury and Claire Condon provided technical support. Colleagues at UNDP (Bruce Jenks, Jennifer Topping, Gerd Trogemann, Jennifer Moreau, Bibi Halima Khanam, Mohamed Yar, Henriette Keijzers, and Amar Bokhari) and at the World Bank (Rocío Castro, Kjell Nordlander, Christian Rey, Jane Kirby-Zaki, and Michael Koch) provided valuable information and kindly reviewed the relevant sections of the report throughout its preparation.

The first DAC Report on Multilateral Aid was discussed in draft by the OECD Development Assistance Committee (DAC) in December 2008, and then published in June 2009. This second report takes up and updates the 2009 publication. It covers recent trends in multilateral aid; total use (core and non-core) of the multilateral system – with a special focus on the United Nations Development Programme (UNDP) and World Bank trust funds; development perspectives on climate change funding architecture; and finally an overview of the response of multilaterals to the financial and economic crisis. It provides an update on members’ multilateral strategies and assessment approaches.

This chapter presents a picture of evolving multilateral aid that updates the overall trends from the 2008 DAC Report on Multilateral Aid. It sets out this picture by looking at historical and main trends in multilateral aid, including the composition of multilateral ODA and members’ multilateral portfolio choices. It also includes an introduction to the next chapter on non-core multilateral aid.

This chapter concludes that non-core funding can contribute to a wide range of complementary activities, although they also discuss some of its less positive aspects. The existence of a large number of multi-donor trust funds is a testament to the growing use of non-core funding. Since non-core funding is likely to continue its upward trend, donors should ensure that it complements a minimum number of core contributions and does not undermine the multilateral organisation’s core objectives. To date, few evaluations of multi-donor trust funds have been conducted.

This chapter provides an overview of the role of non-core funding in the functioning of UNDP and the World Bank, primarily as it relates to trust funds. The World Bank Group is the largest single recipient of non-core funding (USD 2.7 billion in 2008) and UNDP is the second largest UN agency recipient (USD 1.8 billion in 2008). Non-core funding – often in the form of multi-donor trust funds – to UNDP and the World Bank accounts for 30% of total DAC non-core aid to the multilateral system and constitutes an important share of total resources entrusted to these agencies

This chapter examines the funding mechanisms and governance arrangements used to deliver financial resources to address climate change. The focus is on the institutional framework, rather than the resources themselves. This paper reviews the various levers and components of existing funds, focusing on public, and primarily multilateral, funds. This chapter’s aim is to map the type of configurations that could best meet developing countries’ requirements to adapt to and to mitigate the effects of climate change.

This chapter consists of three sections. The first summarises ongoing reforms at the Bretton Woods Institutions (BWIs), the UN system, the European Commission and the multilateral development banks (MDBs). The second section describes how multilateral agencies responded to the global economic crisis and the third covers issues of resource mobilisation and replenishments in 2009-10.

The first section of this chapter looks at DAC members’ multilateral aid strategies. More than half of DAC members now have a multilateral aid strategy, though they differ in nature and scope. Some are broad political statements to guide multilateral aid allocation, while others define specific priorities and implementation processes. No country has a fixed allocation formula across its entire multilateral portfolio. Countries often also have separate partnership agreements with their most important multilateral partners. In determining multilateral allocations, the effectiveness of multilateral institutions is one of the key considerations. The second section looks at current multilateral evaluation processes in this context.

Methodology Note: Data on non-core multilateral aid can be found in the Creditor Reporting System database. Non-core multilateral aid is reported as bilateral aid, with a multilateral agency identified in the channel code. A few donors do not provide detailed channel codes beyond the overall multilateral code of 40000. For this reason, an attempt was made to examine the channel names of bilateral ODA flows in order to gain a more accurate picture of 2008 non-core multilateral disbursements for this report. As a result, queries of the Creditor Reporter System may yield slight discrepancies with the tables presented in Annex B.