Role and Strategic Use of MDTFs: the way forward UNDG – Donor Meeting New York, 24 June

MDTFs are important funding instrument for UN system By end 2010, UN had 38 active MDTFs with total cumulative portfolio of about USD 5 billion 7 largest donors contributed 86% of total contributions MDTF Office is AA for 95% of MDTFs (99.5% of value) In 2009, MDTF contributions made up 7 % of non- core development funding for UN family (up from 3 % in 2006) For 2010, UN organisations reported USD 815 million in MDTF expenditures to MDTF Office 2

UNDG is committed to improving this funding instrument Key initiatives since January 2010: Guidance Note on Establishing, Managing and Closing MDTFs (Joint Funding sub-committee) Training package for UNDAF roll-out countries (Joint Funding sub-committee) UN inputs into INCAF-process, International Dialogue and preparations for HLF IV in Busan (Task team on transition financing) MDTF Office GATEWAY (MDTF Office) 3

Guidance Note on Establishing, Managing & Closing MDTFs Content Background Definition and Objectives Key stakeholders Establishing an MDTF Managing an MDTF Extending an MDTF Closing an MDTF Annexes MOU with non-UN Participating Organization Concept Note template Establishment of an MDTF (flow-chart) Generic UNDG MDTF TOR Oversight Framework for MDTFs (flow-chart) MDTF Closure Processes (flow- chart) Standard Definitions 4

Training package for UNDAF roll-out countries Integrated in 2011 UNDAF regional workshops in Bangkok, Kigali, Dakar and Panama UNDG content developed and presented at workshops by JF sub-committee members Covers both Joint Programmes and MDTFs Available in English, French and Spanish Can be used for training at UNDG level (RC/HCs, RCOs, etc.), within individual UN agencies and for training other stakeholders. 5

UN inputs on Transition Financing: into INCAF, Intern. Dialogue & Busan 2010 Study on Pooled Funding in Transition Situations Inputs in different versions of the draft INCAF Transition Financing Guidance messaging around UN and World Bank MDTFs UNs key messages for Monrovia meeting of International Dialogue Key messages on Transition Financing for UN preparation for High Level Forum IV on Aid Effectiveness in Busan 6

UN inputs into INCAF-process: DRAFT table on aid instruments 7 Ownership and Alignment Harmonization and coordination Speed and flexibilityScope for risk management General budget support Sector budget support Jointly managed pooled funds that implement through country systems Potentially high, as resources aligned with government strategy. Allows for pooling of development partner resources. Can take time to establish, as requires significant up-front investments and capacity building. Provide framework for risk sharing Jointly managed pooled funds that do not implement through country systems Potentially high, as long as resources aligned with government strategy. Provides opportunity to develop country capacity for planning and management of resources. Allows for pooling of development partner resources. Might require increased transaction costs, as relies on external implementation Can take time to establish. Might limit flexibility once resources have been allocated. Provide framework for risk sharing External implementation can decrease risks of strategic failure through allowing more rapid delivery of results Externally managed pooled funds, including interim and emergency funds Can support ownership if engagement at strategic level, but in general not aligned with or using country systems. Can allow more targeted support to strengthen country systems, including through funding recurrent costs Allows for pooling of development partner resources. Might require increased transaction costs, as will rely on external implementation Allows for rapid establishment and funding decisions. Provides great deal of flexibility in allocations Rapid results focus in support of immediate peace dividend Requires clearly defined and time-bound mandate Project support to state institutions Project support to and through non-state actors

For MDTFs & Joint Programs: Standard UNDG Pre-Agreed Documentation: Memorandum of Understanding (MOU) Standard Administrative Arrangement (SAA) Structural Cost clearly defined and agreed between Donors and UN Agencies AA = Focal Point for all administrative processes (i.e. contributions, reporting etc.) A Steering Committee consisting of representatives from the Donor(s), UN Participating Agencies, RC and Local Government determine the scope of the supported initiative and/or program and how monies are spent. Bilateral Modality UN Agency Agreed upon Country Program / initiative Donor MDTF & Joint Program Modality UN Agency (A) Administrative Agent or UN Agency (B) UN Agency (C) Agreed upon Country Program / initiative Donors Donor Program Scope & Flexibility Narrower Broader Bilateral Joint ProgramMDTF What are Your Options?

9 Enhance coherence and efficiency at country/global levels through: Facilitate coherent and consolidated reporting Enhance capacity to allocate resources strategically Mobilize resources jointly (with harmonized cost-recovery and legal instruments) Draw on comparative strengths of UN organizations, including non-resident agencies Respond to increased demand from donors to work jointly (Paris Declaration/Accra) Value added of MDTFs to UN system Strengthen national ownership (country-level) Strengthen programming support of specific thematic objectives shared by multiple UN Organizations (global)

When is it strategic for UN system to establish an MDTF? Programmatic needs: What long-term strategic, multi-agency UN programmes benefit from a MDTF mechanism? - Humanitarian: what criteria for establishment of a new CHF? - Transition: combining and sequencing UN and World Bank MDTFs? - Development: One UN Fund to support new UNDAF? Global MDTFs? Coordination issues: What type of UN agendas benefit from the enhanced coordination and coherence that MDTFs bring? Financial Issues: What type of MDTFs attracts sufficient donor interest to be financial viability? What to do when donors are interested in UN programme and MDTF coordination mechanism, but not in contributing through MDTF ? 10