A Multi-Donor Trust Fund (MDTF) is a funding mechanism which receives contributions from more than one donor which are then pooled and disbursed upon instructions from the Fund’s decision-making structure by an Administrative Agent (or Fund Manager) to a number of recipients. Multi Donor Trust Funds can be established in support of one theme (Peacebuilding Fund or Avian Flu Fund) or they can be country specific and designed for a variety of purposes (UNDG Iraq Trust Fund, Lebanon Recovery Fund). In this context, a UNDG Multi-Donor Trust Fund is an MDTF administered by one UN agency acting as Administrative Agent on behalf of all the members of the UNDG to whom the funds are then channeled for project implementation. UNDG MDTFs operate on the basis of the UNDG Joint Programming principles.

A number of MDTFs have recently been established in post conflict settings. In response, the UN system has strengthened its capacity to participate in and manage such pooled funding mechanisms through the creation or strengthening of dedicated expertise within the agencies. At the inter-agency level, systems and procedures, including standard agreements, have been established to reduce both transactions costs and the time required for the UN to establish an MDTF in which agencies can participate and channel resources to transition activities.

In 2006, the UNDG/ECHA Working Group commissioned a review of existing MDTFs. The review was conducted by Development Initiatives, with the support of UNDGO. Upon receipt of the review, the UNDG/ECHA Working Group issues a management response, to acknowledge, endorse or clarify the report’s conclusions and recommendations. The UNDG has also developed guidance on how MDTFs are structured, and how the UNCT can effectively participate in them.