There are various ways in which Australia channels money to and through multilateral institutions and funds:

Core funding: Core funding allows multilateral institutions greater control over how that money is spent. Because core funding arrangements are generally negotiated on a multi-year basis, they also provide greater security and predictability of funding for multilateral organisations. Noting that “multilateral organisations need secure, long-term funding to engage in strategic planning and reform and be responsive to developing country priorities,” AusAID’s 2009 draft multilateral engagement strategy makes a commitment to increase core funding to “priority multilateral organisations.”[1]

Non-core funding: According to an OECD report on multilateral aid published in 2010, out of DAC donors, Australia made the second highest level of non-core contributions or earmarked funding to multilaterals.[2] Non-core contributions give AusAID more control over how money is spent (e.g. by selecting which programs and projects to fund) but decreases the predictability of funding for the multilateral institution.

Multi-donor trust funds (MDTFs): One means by which Australia provides non-core funding is through MDTFs, which pools money from a range of donors for a common stated purpose (for example, the Afghanistan Reconstruction Trust Fund). These funds are held in trust by multilateral institutions and governed by joint committees comprised of representatives of donor countries. MDTFs have become an increasingly important mechanism for multilateral institutions to mobilise funds. From a donor perspective, MDTFs give more selectivity over the use of their funds than providing core contributions. In 2007-08, Australia contributed nearly $190 million to over 60 MDTFs, of which about $116 million went to funds administered by the World Bank.[3]

Parallel financing: Parallel financing typically occurs when a bank identifies a large project with multiple components and then seeks funding from other donors to deliver discrete components of the overall project.

 

 

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Last updated 12 November 2010


[1] AusAID (2009) Draft Multilateral Engagement Strategy for the Australian Aid Program 2010 -2015, p.3.

[2] OECD DAC (2010) DAC 2010 Report on Multilateral Aid, p.39. http://www.oecd.org/dataoecd/23/17/45828572.pdf

[3] Senate Standing Committee on Foreign Affairs, Defence and Trade, Additional estimates 2008-2009; February 2009, Answers to questions on notice from AusAID, pp. 31-35. http://www.aph.gov.au/senate/committee/fadt_ctte/estimates/add_0809/dfat/ans_ausaid_feb09.pdf

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