The Effectiveness of Core and Earmarked Funding in Multilateral Development Cooperation – Systematic Review

Amid pressing global challenges, multilateral organisations are delivering a substantial and increasing part of official development assistance (ODA). Multilateral organisations receive funding from member states via two different financing modalities: core funding and earmarked funding, including trust funds. In these times of tightened spending and budgetary cuts, questions regarding the effectiveness of different financing modalities have become highly relevant. Yet, current research and policy discussions on these questions do not provide a clear overall picture, and empirical evidence on different financing modalities is scattered. Therefore, this systematic review analyses the state of knowledge on the effectiveness of core and earmarked funding. This entailed a systematic identification of literature that presents empirical evidence on the effectiveness of different financing modalities. Following a strict search process and quality assessment, 36 publications were included and analysed. The analysis draws on a nuanced, three-dimensional conceptualisation of effectiveness (covering “process”, “outcome” and “cost”) and three intervention levels (“project”, “organisation” and “system”). The review demonstrates, among other things, that core funding appears to be more effective than earmarked funding with regard to outcome effectiveness at the project level. Importantly, the review identifies several evidence gaps, primarily concerning the system level.