ADB Evaluation Finds Trust Funds Boost Innovation but Warns of System Gaps

The IED’s analysis highlights that trust funds have become an important vehicle for introducing new ideas, technologies, and approaches into ADB’s lending and technical assistance portfolio.

A new corporate evaluation by the Asian Development Bank’s (ADB) Independent Evaluation Department (IED) has found that ADB-administered trust funds and cofinancing mechanisms have delivered substantial value to development across Asia and the Pacific, especially in driving innovation, scaling up new solutions, and responding to global challenges such as climate change. However, the report warns that persistent gaps in strategic focus, coordination, and monitoring are limiting the full potential of these financing tools.

Covering the period from 2015 to 2024, the evaluation assessed ADB’s trust funds, global cofinancing arrangements, blended finance initiatives, and project-level partnerships that collectively mobilized $14.7 billion across the region. These resources play a critical role in bolstering ADB’s operations by financing pilot programs, supporting global public goods, and expanding development impact beyond what ADB’s core lending can achieve.

Trust Funds as Catalysts for Innovation

The IED’s analysis highlights that trust funds have become an important vehicle for introducing new ideas, technologies, and approaches into ADB’s lending and technical assistance portfolio. They have helped countries advance climate adaptation and mitigation investments, promote gender equality, strengthen governance reforms, and expand access to essential public services.

“Trust funds and cofinancing have been a vital source of innovation and partnership for ADB,” said IED Director General Emmanuel Jimenez. “They allow us to pilot new ideas, scale up successful models, and respond to emerging priorities.”

Examples of innovation supported by trust funds during the review period include:

• Climate resilience projects that supported nature-based solutions and community-led adaptation.

• Digital technology pilots, such as smart agriculture and e-governance tools.

• Capacity building programs that strengthened financial sector governance and public health systems.

• Regional cooperation initiatives addressing cross-border environmental and infrastructure challenges.

Key Weaknesses: Monitoring, Coordination, and Governance

Despite their success in catalyzing innovation, the evaluation identified several systemic shortcomings that weaken the effectiveness of trust funds and cofinancing activities.

1. Weak Monitoring and Reporting Systems The report notes that ADB’s monitoring of trust fund results is inconsistent, making it difficult to measure long-term outcomes or assess value for money. Key gaps include:

• Limited results tracking beyond short-term outputs

• Fragmented reporting structures across departments

• Lack of standardized performance indicators

These weaknesses impede decision-making and reduce the ability to demonstrate success to donors.

2. Fragmented IT Systems IED found that ADB’s patchwork of information technology platforms slows down fund management and complicates monitoring and evaluation. Inefficient systems contribute to:

• Delays in disbursement

• Duplication of processes

• Reduced transparency across teams and departments

3. Complex Blended Finance Governance Compared with peer institutions, ADB’s governance mechanisms for blended finance were assessed as more complicated and rigid, making it harder to mobilize private investment and respond quickly to emerging opportunities.

Garrett Kilroy, Principal Evaluation Specialist and team leader for the report, said professionalizing fund management is essential. “Clearer strategy, more integrated IT systems, and enhanced capacity will help unlock their full potential.”

Recommendations for a Stronger Strategic Framework

To address the weaknesses identified, the evaluation recommends a series of reforms intended to streamline operations and enhance performance:

• Develop a clear, unified strategic framework for trust funds and cofinancing activities

• Create a consolidated cofinancing policy to harmonize procedures and reduce fragmentation

• Strengthen senior-level oversight to ensure coherence across departments

• Improve donor engagement strategies to attract more aligned and flexible financing

• Upgrade monitoring, evaluation, and IT systems to support greater transparency and efficiency

• Streamline blended finance governance to enhance competitiveness and accelerate implementation

These recommendations aim to ensure that ADB’s partnerships and trust funds can respond more effectively to complex development needs, particularly in the context of climate change and growing demand for concessional resources.

A Critical Moment for Development Finance

The report comes at a time when development finance is becoming increasingly fragmented, and global concessional resources are declining. As countries face mounting climate pressures, rising debt burdens, and widening inequality, ADB’s ability to mobilize external financing and deploy it efficiently is more important than ever.

IED argues that with stronger systems, clearer strategy, and more coordinated governance, ADB trust funds and cofinancing mechanisms can make a significantly larger contribution to development outcomes across Asia and the Pacific.

The evaluation serves as both recognition of the value ADB has generated through its partnership-driven finance and a call to action to modernize its internal systems to meet evolving development challenges.