Tracking earmarked funding to international organizations: Introducing the earmarked funding dataset

Abstract

Over the past two decades, donor funding of international organizations (IOs) such as the United Nations, has shifted from core resources toward earmarked contributions. While core resources provide IOs with discretion how to achieve their mandates, earmarked contributions require IOs to focus their assistance on specific themes, sectors, countries, or projects, as determined by the donors. Our understanding of the drivers and effects of earmarked funding has been limited by the lack of systematic data. To address this gap, we introduce the Earmarked Funding Dataset. The dataset contains 342,812 earmarked aid activities from nearly 50 donors with over 340 IOs with a mandate in international development from 1990 to 2020. We first explore the data descriptively to cast light on the evolution of the multilateral development system. We then use the data to examine whether and how donors financially reward well-performing IOs. To that end, we combine our data with newly available performance data synthesized from Multilateral Organization Performance Assessment Network (MOPAN) evaluations of 32 IOs in 2009–2020. Using difference-in-difference estimations, we find a significantly positive relationship between outcome performance and earmarked contributions. In contrast, performance does not seem to affect core resources. These patterns suggest that donors reward well-performing multilaterals with more funding, albeit based on development outcomes which are not easily contractible. From a policy perspective, these findings suggest that performance-based approaches to aid allocation—as they are currently practiced—upload the financial risks of organizational reform processes to international organizations.