2024–2025 Replenishment Traffic Jam Redux: Are Donors Getting into Gear?

Earlier this year, we warned of a fundraising pile-up on the horizon. Over the course of 2024 and 2025, almost all the major multilateral concessional funds—including some of the biggest like the World Bank’s International Development Agency (IDA); Gavi, the Vaccine Alliance; and the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund)—will seek to raise what could amount to over $100 billion in grants from donors.

With replenishment season well underway, the traffic jam is fast emerging: in the next six months, four institutions—IDA, Gavi, the World Health Organization (WHO), and the Pandemic Fund—will account for half of that amount (approximately $48 billion). But amidst news of several donors cutting aid budgets and competing demands on the same constrained pots of resources, prospects for a successful fundraising cycle now look grim.

Multilateral concessional funds are the dominant source of external development finance for the world’s poorest countries and a critical source of funding to address global challenges like health and climate. Failure to secure adequate funds from donors would be especially bad news at a time when these countries are facing a bleak economic outlook, with government spending in social sectors like health severely constrained.

The traffic jam also raises fundamental questions about the structural soundness and long-term viability of the current concessional finance architecture. The current moment calls for a radically new way of thinking about the system.

To advance this rethink, we are excited to publish a new interactive dataset which shows donor pledges and contributions to the 13 major funds, spanning concessional multilateral development bank (MDB) funds, health funds, and climate funds, going back to 2000.

1. What do the data tell us?

The historical data reveal several important trends which we hope you’ll explore yourself. Here are our five stand-out takeaways.

First, core multilateral aid as a share of total aid is in decline. Since 2010, the core multilateral share of ODA has dropped from 23 percent to 18 percent in 2022. Instead, the largest donor governments are opting to channel aid bilaterally (see Figure 1). And in cases where multilateral aid has risen, it is usually earmarked multilateral aid for the UN system and humanitarian assistance, not development. We believe this is largely due to growing skepticism of multilateralism and foreign assistance alongside inward-facing political priorities across advanced economies.

Second, the concessional finance landscape was historically dominated by multi-purpose development funds focused on poverty reduction, but that has shifted with the rise of thematic vertical funds. New health funds emerged starting in the early 2000s, and the 2010s saw the addition of several climate funds (see next two figures).

But even as donors enter a period of belt tightening, they are paradoxically increasingly opting to launch new funds to respond to emerging challenges. The past two years alone have seen a proliferation of new funds: the Pandemic Fund, the Loss and Damage Fund, the Child Nutrition Fund, and the World Bank’s Livable Planet Fund, to name a few (see next figure). And there is talk of a new climate finance fund as part of the COP29 deliverables. Whether new funds set up a zero-sum competition for funding from the same group of donors or bring in new donors is hotly debated.

Third, donors have prioritized contributions across funds differently. The US has established itself as the largest donor to the health funds, whereas China has devoted more than 95 percent of its pledges towards MDB concessional funds, mainly IDA. Meanwhile, Germany is the only major donor that pledges more to the climate funds compared to the MDB concessional funds and global health funds, respectively (see next figure).

Fourth, across the board, these funds rely on a similar group of core donors; the top ten government donors contribute the lion’s share of resources to these funds.

New emerging donors—with some exceptions, like China in IDA—are not stepping in to significantly support these funds. Notably, the global health funds have been able to attract large-scale financing from philanthropic foundations. For instance, the Bill & Melinda Gates Foundation is among the top donors to the Global Fund and Gavi, surpassing governments like Canada, Germany, and Japan in some cases.

Lastly, many of the MDB concessional funds—which provide grants and loans—have been able to significantly leverage donor grants through reflows and by borrowing on capital markets against their balance sheet. In the latest IDA replenishment, the ratio of donor grants to the total replenishment size was 1:4. By contrast, the health funds and most of the climate funds, with some exceptions, rely on grants with a 1:1 “cash-in cash-out” model (see next figure).

2. Where are we with the current replenishment traffic jam?

With further details emerging about the ongoing replenishments, the current pile up is coming into clearer view. There are several pledging events scheduled before the end of the year: the Pandemic Fund in end October, WHO’s inaugural Investment Round in mid-November, and the World Bank’s IDA pledging meeting in early December, where the Bank is seeking to raise $100 billion which would require $28-30 billion from donors. Gavi is also seeking to raise $9 billion, though timing for its pledging conference is yet to be confirmed. Additional events, such as the Nutrition for Growth Summit next March—a key moment for the nutrition community to mobilize financial pledges—add to this crunch (see next figure).

Prospects for fully replenishing all these funds’ coffers look grim as governments continue to cut aid budgets and elections add even more uncertainty to pledges, especially where they entail transitions between political parties.

But it’s still early days—and we’ll be keeping track as pledges roll in to assess how they stack up against targets.

3. Where do we go from here?

The current traffic jam reflects a deeper set of intertwined challenges confronting today’s multilateral concessional funding system. Left unaddressed, the world is likely to confront a scenario where a growing number of facilities are in perennial competition for a small and fixed—or arguably shrinking—pot of resources.

The current moment calls for more than repurposed high-level statements. First and foremost, donors must make a clear-eyed assessment of the entire landscape of funds. From there, we need ambitious—yet feasible—policy proposals to ensure a more effective and sustainable system that is responsive to the needs and priorities of low- and middle-income countries.

Watch this space—we plan to keep following this issue, and we're hoping to expand our exploration of the data, grapple with longer-term questions, and develop and refine policy ideas for a better and more coherent system. If you have questions, feedback, or ideas, or would like to support future work on this topic, we’d love to hear from you ([email protected] and [email protected]).