1. Trust Fund Management Framework Update and the Way Forward
Managing Trust Funds:
Trust Fund Management Framework Update and the Way Forward
Junhui Wu
Director, Global Partnership and Trust Fund Operations Department (CFPTO)
Christian Rey
Manager, Global Partnership and Trust Fund Policies (CFPTP)
Donor Forum Paris, May 19, 2010

2. Agenda Trust fund portfolio trends and key issues
The Trust Fund Management Framework (TFMF) and new reform directions
Implementation: Update on TF Reform activities and Donors Consultation

3. Trends in the Trust Fund Portfolio
Portfolio continues to expand in value, complexity, and diversity
Funds held in trust doubled from $11.6 billion in FY05 to $23.8 billion in FY09. At end March 2010, it reached $25.2 billion
Major increase in contributions to financial intermediary funds (FIF) that nearly doubled between FY05 and FY09
Increasing diversity of new TFs with varying governance, financial, and process arrangements have made the TF portfolio more complex

4. Trends in the Trust Fund Portfolio (Cont’d)
Gross IBRD, IDA, and WBG TF Disbursements, FY05-FY09.
RETFs disbursement have increased in absolute terms relative to IDA
By FY09, total TF disbursements reached $6.9 billion. FIF disbursement at $3.4 billion, about half of total TF disbursement
Disbursements by Category, FY05-FY09

5. Greater Significance in Supporting Bank’s Work and Partnership Engagements: Components of the WBG TF Portfolio, FY09
Contributions
Main Trust Funds
Programs
Grants
Activities
798
IFC/MIGA
Executed
TF Grants
920
Analytical &
Advisory
Products
(e.g. ESW, TA)
35 IFC
Facilities &
1 MIGA
1,437
Lending
Products
(e.g. IBRD/IDA, GEF Projects)
2,776
Bank-
Executed
TF Grants
250 Donors
From
83 Countries
1,045
Main
Trust Funds
182
IBRD/IDA TF
Programs
454
Other
Products
(e.g. CAS, Global Partnerships)
1,053
Recipient-
Executed
TF Grants
662
Projects by
other
organizations
16 FIF
Programs

6. Key Issues and Challenges
Context: Portfolio growth and increasing complexity, reflecting the evolvement of global aid architecture
Increased fragmentation of concessional finance
Grants financed by FIFs and RETFs has risen from 384 to 772 and average commitment size per grant has fallen from $6 to $5 million (FY05 to FY 09)
Corporate accountability and risk management
Potentially significant reputational risks in the case of global partnerships where the Bank plays no operational role.

7. Key Issues and Challenges (cont’d)
Earmarking of aid through vertical funds may constrain countries flexibility
TF may substitute for, rather than add to, multilateral ODA
How would increasing Bank (as well as donors) decentralization impact evolving aid architecture?

8. The 2007 Trust Fund Management Framework
Goal:
Mainstream Trust Funds into the Bank’s Strategies and Business Practices
Pillar 1
Alignment with Bank Strategies
Pillar 2
Risk Management and Controls
Pillar 3
Cost Efficiency and Sustainability
Conclusion: 3 pillars still remain relevant and significant progress has been made but more needs to be done

9. Further Trust Fund Management Reform Directions
Strategic Alignment
Bank-wide coordinating mechanism for fund-raising
Consolidation around CAS pillars
Integration of TFs in planning and budgeting process
Integration of Operations & Management Systems
Align with Investments Lending & AAA reforms
Knowledge and disclosure agendas
Improvements in information systems and data reporting
Guidance, training, and communications
Portfolio Sustainability
Planned measures to recover costs not captured in current arrangements (annual fee on DBA and holding accounts)
Options for simplified standard fee structure to be developed in FY11

10. Update on TF Reform Activities and Donor Consultation

11. Pillar 1: Alignment with Bank Strategies
Status of Implementation of the
2007 Trust Fund Management Framework: Pillar 1
Pillar 1: Alignment with Bank Strategies
All VPUs managing TFs now prepare annual trust fund management plans
At the country level, RETF are increasingly discussed in country assistance strategies and country portfolio performance reviews
TFs are now more explicitly considered by Bank and recipients as integral to overall Bank country programs
Senior Management Review is now in place with regard to Bank’s engagements in complex partnerships
Processed used for FIFs such as: Adaptation Fund, the Climate Investment Funds, the Pilot Advanced Market Commitment, and the recently launched Global Agriculture and Food Security Program

12. Pillar 2: Risk Management and Controls
Status of Implementation of the
2007 Trust Fund Management Framework: Pillar 2
Pillar 2: Risk Management and Controls
RETFs > $5 million are now subject to same review and appraisal process as equivalent Bank lending activities
BETFs are subject to the same controls as Bank budget expenditures
Establishment of a new financial management department in the Concessional Finance and Global Partnership Vice Presidency
Expanded review process for FIFs that incorporate systematic assessment of risks and their appropriate management and mitigation

13. Pillar 3: Cost Efficiency and Sustainability
Status of Implementation of the
2007 Trust Fund Management Framework: Pillar 3
Pillar 3: Cost Efficiency and Sustainability
Bank now recovering 92% of the costs of administering TFs
Revised threshold and TF fee structure introduced in January 2008
New FIFs are established under a full cost-recovery policy based on tracked staff time and expenses for each FIF.
Streamlined CFP structure
Controller’s Vice Presidency and CFP continue to strengthen information systems
Institutional and system enhancements are resulting in more efficient services

14. Achieving Economies of Scale Strengthening Systems
Trust Fund Cross-cutting Consolidation Exercise:
An Opportunity to Shape up the Concessional Finance Agenda
Achieving Economies of Scale
Consolidation started with expanded use of multi-donor trust funds.
Consolidation is one of the drivers of the mainstreaming of TF into regular Bank operations
through
Aligning TFs to CASs &
Network Strategies
Strengthening Systems
(Legal, Accounting and Reporting)
And… a more Structured Approach to Donors and Fund Raising Mechanism

15. Trust Fund Consolidation Exercise: Six Sub-Working Groups
Six Sub-Working Groups – Bank-wide effort
Regional Operations: country/regional focus
Networks: sectoral / theme focus
Dormant TFs: including DBA (donor balance account) and holding accounts
Donor consultation: bilateral/multilateral, donor forum
Legal: perspective of consolidation
Portfolio Data: analytical underpinning of consolidation

16. Donors Consultation Fund raising: A more structured approach
Data reporting: Better Access to data
Disclosure: Improved transparency
Cost recovery: Ensure efficiency and sustainability
Annual fee charged for DBA and holding account 35 bp
Potential for a single fee (all-in cost) based approach will be examined in FY11

17. Thank You!