Poverty and Policy Selectivity of World Bank Trust Funds

Over the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of trust funds with the performance‐based aid allocations by the International Development Association, the World Bank's concessional lending arm. This study finds that the cross‐country allocations of aggregate trust fund aid are poverty‐selective and policy‐selective but reveals differences between types of trust funds. Overall, the evidence indicates that trust funds administered by the World Bank do not undermine the International Development Association's allocation criteria.