Both the United Nations (UN) and international financial institutions (IFIs) hold pooled funds. Multi-partner funds can be useful tools to efficiently pool the resources of an array of development partners to help meet a shared goal.
Investing in multi‑partner funds
Abstract
Both the United Nations (UN) and international financial institutions (IFIs) hold pooled funds.
IFI trust funds complement core funding with financing arrangements set up with contributions from one or more development co-operation partners. These funds allow the IFIs to mobilise and direct concessional resources to strategic development priorities alongside the resources of other development partners.
The UN inter-agency pooled funds have distinct characteristics in three areas:
Design and administration: pooled funds support a clearly defined programmatic purpose, guided by a clear results framework. Financing is allocated to a specific UN organisation or held by a UN fund administrator.
Joint governance and/or fund operations: a UN-led governance mechanism decides on project/programmatic allocations in line with the fund's programmatic purpose and results framework.
Fund implementation: relevant UN organisations implement activities and remain programmatically and financially accountable for the resources received.
Multi-partner funds can be useful tools to efficiently pool resources from multiple development partners to help meet a shared goal. If used well, these pooled instruments can offer development partners the following benefits:
The UN Funding Compact commits member states to double the share of non-core contributions that they provide through development-related inter-agency pooled funds (and single-agency thematic funds).
Emerging good practice provides the following pointers to invest in multi-partner funds effectively (see Figure 2):
Note: Include reference to the relevant section of OECD DAC Peer Review Analytical Framework Pillar 3 of the OECD DAC Peer Review Analytical Framework sets out the Development Assistance Committee’s (DAC) expectations for multilateral partnerships, i.e., that co-operation across boards and between members, as well as engagement with multilateral partners, respects their mandates, promotes agreed system-wide reforms, and supports joint approaches, making individual organisations and the multilateral system as a whole more effective.
1. Use existing channels as default, rather than setting up new funds. New funding structures have high start-up costs and create too many bodies for partners governments to engage with.
The Peacebuilding Fund is the UN’s financial instrument for sustaining peace in conflict-affected and at-risk countries. The fund enables flexibility in addressing urgent needs without being bound by any development partner's political sensitivities. Nearly all DAC members contribute to this fund.
2. Support local systems instead of using parallel mechanisms. Promote harmonisation among development partners. If social protection or cash transfer systems already exist in a country, use and scale them up, rather than investing in a parallel multi-partner fund. Encourage partner country governments to challenge and expose parallel efforts.
Tanzania’s Health Basket Fund has been active for over 20 years and helps local government authorities through the Ministry of Finance and Planning to fund dispensaries, heath centres and district hospitals, alongside support to regional secretariats. The fund has received support from a range of DAC members – including Canada, Denmark, Ireland, Korea, Switzerland, and the United Kingdom – as well as UNICEF, UNFPA and the World Bank.
3. Use pooled mechanisms as an alternative to tight earmarking. While core (un-earmarked) contributions give multilateral partners the flexibility to match funding to urgent needs, they may not always be feasible. Investing in multi-partner funds can help preserve flexibility and fill financing gaps through rapid injections of “pooled” funds.
In Colombia, the UN Multi-Partner Trust Fund for Sustaining Peace finances co-ordinated responses on stabilisation, reintegration and transitional justice for the implementation of the national peace agreement, including in rural areas. The fund mobilised USD 255.7 million from 2016 to 2026, including from Canada, Germany, Norway, Sweden, Switzerland, and the United Kingdom.
In the Democratic Republic of Congo, the International Security and Stabilization Support Strategy is funded by the DRC Stabilization Coherence Fund, whose main contributors are Germany, Norway, the Netherlands, Sweden and the United Kingdom. In 2022, the fund provided USD 50.5 million to promote joint action and multi-stakeholder partnerships.
4. Encourage innovation and reform. Multi-partner funds can help test new ways of working, pilot innovation, and drive system-wide reforms through shared approaches to broader policy challenges.
The Iraq Reform, Recovery and Reconstruction Fund (I3RF), founded in partnership with the Government of Iraq in 2018 and managed by the World Bank, supports financing and strategic dialogue on reconstruction and development, with a focus on promoting targeted national reform efforts and improving the effectiveness of public and private investments. Its principal funders are Canada, Germany, Sweden and the United Kingdom.
5. Strengthen the visibility of contributors to development co-operation. Making individual contributions to multi-partner funds more transparent and visible can help sustain the support of key domestic stakeholders, including parliaments and taxpayers.
The Central Emergency Response Fund (CERF) highlights its top 10 development partners on its homepage and gives them visibility in emergencies and protracted crises responses.
6. Ensure multi-partner funds have clear results and timelines. Funds need to be time-bound, with a clear end date and transparent provisions on how to deal with residual funds. Monitor trends and progress to curb the proliferation of new funds and channels, especially those created at the global level rather than in response to country dynamics.
The Somalia Multi-Window Trust Fund highlights results, including access to gender-based violence services and information for 4.6 million people; sustained increase in the budget allocated by Puntland and Somaliland authorities for the Service Delivery Model; and improved capacity and facilities of 16 prisons across the country.
How do we know if DAC members are moving in the right direction?
Economies of scale: Multi-partner (pooled) funds reduce administrative costs for development co-operation partners, while maintaining low overhead rates.
Efficiency: Partner countries and/or implementing partners experience less fragmentation and reduced transaction costs.
Effectiveness: There is clear alignment between pooled funding, bilateral development investments, and partner country priorities.
Equity: The mechanisms are inclusive and delivering results for those most left behind.
Managing Unprecedented Times, Financing the UN Development System, United Nations Multi-Partner Trust Fund Office.
Multilateral Development Finance 2026 OECD Publishing, Paris.
From global to local: Multilateral actors and the pivot to locally led development, OECD Development Co-Operation Directorate.
Earmarked funding to multilateral organisations: How is it used and what constitutes good practice?, OECD Publishing, Paris.
DAC Evaluation Resource Centre (DEReC), OECD [website].
More Framework principles are available on Development Co-operation TIPs • Tools Insights Practices.
