Through the previous reforms the World Bank has made significant progress toward increasing efficiency, alignment, oversight, and the use of larger programmatic MDTFs. However, the portfolio of trust funds remains fragmented, with many small funds—at end-FY18 just 10 percent of trust funds accounted for more than 74 percent of total portfolio value. While several of these small trust funds have provided vital support for innovation and knowledge, they are often highly customized, with heterogeneous governance mechanisms, resource allocation, reporting, results, and so on. Thus there are opportunities for increased efficiencies.
There is also scope for improving trust funds’ alignment with the World Bank’s priorities and their integration with the World Bank’s strategy, planning, budgeting, and staffing processes. These changes will improve the way Management allocates all resources (IBRD, IDA, IFC, and trust funds) to support the World Bank’s and clients’ priorities, in a “whole-of-finance” approach.
The World Bank continues its efforts to increase efficiencies related to the administration and use of trust funds by reviewing processes to identify opportunities for streamlining, eliminating duplicate or redundant steps, adjusting systems, and improving guidance and support to staff.
The ultimate goal of trust fund reforms is to deliver results on the ground and improve development impact for client countries. As the World Bank makes its trust funds more strategic, streamlined, and focused, continued to be underpinned by a sustainable recovery framework, client countries benefit from fewer transaction costs and donors benefit by having their resources leveraged to achieve greater impact.
Vision of current reforms
Fewer, Larger Umbrella 2.0 Trust Funds
To reduce fragmentation, the reforms will drive the World Bank’s future trust fund portfolio toward fewer, larger “Umbrella 2.0” Programs that could include multiple “associated” trust funds. All Global Practices and Regions will establish a limited (but not centrally mandated) number of Umbrella 2.0s, aligned to their highest strategic priorities, that will channel most trust fund resources. These Programs could be global, regional, or country-based in geographic scope.
Umbrella 2.0 Programs will enable donors and the World Bank to take a more strategic approach in partnering and financing their priorities. They will allow high-level policy dialogue and enhance the opportunities for donors to collectively tackle big development challenges and achieve meaningful results at scale. Moving to fewer and larger programs will enable efficiency gains by reducing the number of distinct governance mechanisms and allowing the mutualization of program management resources. Strengthened program management functions will in turn help increase the focus on results and improve reporting, communications, and visibility. Governance bodies for Umbrellas will focus on strategic guidance based on multiyear work programs and budgets, allowing a genuine interaction with donors on achieving the desired results around shared priorities. Global Practices and Regions will still be able to establish simpler “stand-alone” trust funds to finance activities that do not fit into these Umbrella Programs, to respond to unanticipated events, and to support the testing of innovative development solutions that may later become priorities.
Ongoing reforms will continue to improve the alignment of trust fund resources to the priorities of the Bank’s Global Practices and Regions, which themselves reflect the international community’s 2030 Agenda and country needs and priorities expressed in CPFs.
Trust Funds Integration into Strategy, Planning and Budgeting
Further strengthening trust funds’ integration into World Bank processes is essential to enhancing the trust funds’ role in the broader institutional delivery for shareholders and clients, ensuring that resources support priorities and allowing effective use of all Bank resources. Work to strengthen integration is largely focused on two areas: (a) improving the link between upstream decisions to mobilize trust fund resources and priorities for work program delivery; and (b) strengthening alignment of trust fund allocation cycles with the World Bank planning and budgeting cycle so that trust-funded activities and resources can be more fully taken into consideration as part of the overall planning process.
Today, to ensure strong technical dialogue and program design, decisions about whether to mobilize trust fund resources and for what are largely devolved to program managers and task team leads. Mobilization decisions are often based on project-specific needs rather than on a more holistic approach. Management endeavors to strengthen oversight of fundraising decisions, including focusing future fundraising on the highest priorities to be anchored by the Umbrella 2.0 Programs.
By aligning trust fund program planning with World Bank planning cycle, upstream trust fund resource planning can serve as an input during regional and country business planning processes. In addition, Umbrella trust funds will enable such information to be available in a more systematic and less fragmented manner. The Bank’s budget planning process for Regions and Practice Groups continues to incorporate available trust fund planning allocations. Therefore, enhancing the alignment of the trust fund program planning cycle will further support the Bank’s planning mechanism. As part of the trust fund reforms, a pilot in South Asia designed and implemented an approach for better integrating trust fund resources and activities into the annual planning process, informing the design of planning and allocation cycles for the Umbrella 2.0s. Initial results show that efforts to fund country-specific and regional integration activities from trust funds will benefit from cross-matrix discussions among Global Practices and Regions to reaffirm client demand and priorities before all potential sources of funds are considered. Such discussions can help identify gaps in funding, weigh trade-offs among potentially competing priorities, and reduce fragmentation of activities where appropriate, reducing potential strain on clients.
A range of efficiency measures are also being developed and implemented to streamline and simplify internal processes and systems. New steps have been introduced in the integration of trust fund and operational systems, removing duplicative processes. Better guidance has been made available to staff in a number of areas, including trust funds that finance both Bank and IFC activities, due diligence processes for new donors, and procedures for timely closure of trust funds. A support system that offers staff a single point of entry for questions and support related to trust funds is being rolled out, with up-to-date guidance on the entire trust fund life cycle.
These ongoing reforms will reinforce the value proposition of trust funds. Trust funds that are more efficiently managed, that focus on the World Bank’s core priorities, reflecting its “global to local” comparative advantage, and that are more tightly integrated with IBRD and IDA resources in a “whole-of-finance” approach will be even better at leveraging the Bank’s comparative advantage, with predictable multiyear funding that complements IBRD and IDA lending. They will have improved capacity to scale up the World Bank’s reach and to deepen and broaden its ability to generate and share knowledge. They will remain flexible and reactive instruments to support challenging situations, such as those found in fragile states, or to expand the Bank’s work on GPGs like climate change and cross-cutting issues such as gender.