Resource mobilization for non-core funds and co-financing modalities is essentially two sides of the same coin when applied to generating resources that UNDP manages but that are separate from UNDP's core budget. (The term "resource mobilization" is also used, of course, to refer to a vital part of the task of raising funds for UNDP's core budget.) However, the term conveys different intents and motivations depending on the context in which it is used. Without clarification in conjunction with co-financing, the term is ambiguous, e.g., mobilizing for whom and for what purpose?

In UNDP and in its official documents, the term clearly refers to generating financial resources that UNDP will administer with associated fees for administrative costs and that are separate from UNDP's regular programme budget. This is the message in Executive Board decision 95/23 in which the Board recognizes:

"...importance of non-core resources, including cost-sharing and non-traditional sources of financing, as a mechanism to enhance the capacity and supplement the means of the United Nations Development Programme to achieve the goals and priorities as specified in decision 94/14"(para. 9).

"The Administrator is urged to explore further non-traditional sources of financing, such as multilateral and regional banks and non-governmental organizations, to mobilize additional resources for the Programme"(para. 10). 15

In this spirit, the Administrator's letter to resident representatives and staff of 3 April 1995 states that:

"...an aggressive and diversified resource mobilization campaign...is essential...While pressing unremittingly for core pledges, we must continue to build non-core resources."

The Administrator calls for "a major outreach campaign to mobilize support for UNDP's work" (underlining added). The intent here is to mobilize resources for UNDP administration and for its programmes with governments with income generated from fees to cover administrative costs.

At the same time, resource mobilization in a developing country setting is understood as attracting funds for the country's development programmes. In this context, is viewed primarily as a matter of obtaining additional external funding for country programmes that would not otherwise be provided. It is also viewed as efficiently and effectively moving existing, not additional, funds for agreed upon programmes that are being drawn down very slowly or not at all, such as authorized government budget allocations and donor project commitments.

These two objectives, i.e., increasing UNDP's budgetary resources for its programmes and administration and increasing resources available to the country, are not necessarily incompatible as long as UNDP and country development objectives are the same. However, the pursuit of one does not necessarily result in increased funds for the other. Thus, the mobilization of resources for UNDP to administer (and generating fees) may not necessarily result in increased resources for the country. In this situation, UNDP is providing project support service for funds that would be provided in any event. Similarly, the mobilization of resources for the country may not necessarily mean that additional funds flow through UNDP's accounts even though UNDP may have had a key role in their mobilization. These distinctions are important in co-financing strategies and in determining the usefulness of various modalities since they help clarify the underlying motivations that drive efforts to mobilize resources. From the reading of UNDP documents and conversations with staff, the evaluators conclude that generating more money for UNDP's accounts can be perceived as the dominant objective, particularly when country offices are being judged on the basis of achieving co-financing monetary targets.

The official basis for non-core resource mobilization is contained in the report of the Administrator to the Governing Council at its thirty-seventh session (1990)16, where reference was made to resolution 44/211 in which the General Assembly also recognizes the importance of non-core resources. This type of resource includes cost-sharing, trust funds and government cash counterpart contributions (GCCC). The term "co-financing" was not used in this report.

The General Assembly emphasized that non-core resources can constitute an important additionality:

"...provided they are designed as a means to ensure additional resources flows, and their projects are coherently and effectively integrated in the technical co-operation programmes of the United Nations system, in conformity with each country's national development plan and programme and in accordance with the respective mandates of programmes and organizations."

The report emphasized that this requirement can be met by the country programme which "reflect[s] national priorities and serves as a framework for technical co-operation which goes beyond the programming of UNDP resources. It can thus help guide the utilization of non-core resources, in particular that of cost-sharing and GCCC, the two types of non-core resources which are usually directly linked to UNDP core funds". The report recognized that trust funds largely reflect donor priorities.

The report envisioned that with non-core funding, there would be an "expanded country programme", i.e., a programme which goes beyond the activities that will be supported from core resources. The advantages of the expanded country programme would "allow for programming of core financing and non-core financing together", provide a "programmed, cohesive package of technical co-operation needs formulated without sectoral, bilateral or institutional bias", and provide a "pipeline of available projects whenever there is a slack in core-funded activities. Once donors see that non-core proposals form part of the country's technical co-operation priorities, resource mobilization efforts would benefit."

For UNDP, co-financing is an umbrella term for the several modalities being promoted for use by UNDP country offices when referring to cost-sharing (government, IFI, bilateral), trust funds, government cash counterpart contributions, UNDP-administered trust funds, and parallel financing. These modalities were first spelled out in a 1988 UNDP document, "Co-financing with UNDP" and again in 1995 in "Summary Note on Co-financing with UNDP".17 Implicit in the term co-financing is the existence of two or more sources of funds joined for a common programme. This situation does not always apply, as the evaluators observed, when a government or a donor provides 100 per cent of a project's funding-often referred to as 100 per cent cost-sharing. Also, the terms "cost-sharing" and "co-financing" are at times used interchangeably, causing some confusion about which modalities are in mind. (The evaluators have not included management support agreements as a form of co-financing; see the discussion below.)

For the most part, the term co-financing will be used in this report since the focus of the evaluation is on the co-financing modalities in country programming. Non-core will be used when referring to the extra-budgetary resources additional to IPFs. The following definitions may help clarify the distinctions.

Cost-sharing (CS). Cost-sharing funds can come from two major sources:

(a) the recipient government (government cost-sharing) from the recipients's own budgetary resources or from the technical cooperation component of loans and credits to governments from the IFIs; or

(b) Donor-government and IFI grants (third-party cost-sharing with funding directly to UNDP).

It is the expectation that under project cost-sharing, funding from the Government, IFI, or third- party donor together with UNDP funds, if any, are integrated into one project document with a consolidated project budget. Similarly, programme cost-sharing involves funding for the UNDP country programme as a whole rather than for a specific project. For programming purposes, the amount of programme cost-sharing is pooled with the country IPF allocation and not recorded separately to arrive at the total amount of resources available. The identity of the source (or sources) of funds in cost-sharing is largely subordinated in the commingling. Also, cost-sharing may mean simply the transfer of funds to UNDP to provide project support services similar to a mini-OPS in the field-a form of management service. Fees are charged in cost-sharing arrangements and provide an important source of administrative income for the country offices and UNDP headquarters. Cost-sharing with IFIs refers to the direct transfer of IFI grant funds to UNDP for its administration.

Trust funds. Trust funds can be established for a specific purpose, covering particular projects, one or more countries, or regional and global programme interests; they can be limited to one donor or open to multiple donors. Under this modality, donor inputs are separately identified and accounted for although they enter UNDP's books, appearing as additions to its non-core budgets. A trust fund can also be established for one recipient country. Donors may chose trust funds over cost-sharing when their policies and interests are more directly served by this modality. Trust funds do not commingle with UNDP funds since UNDP funds are not included in the trust fund even if applied to the same project. Fees are also charged for UNDP's administration of these funds.

UNDP-administered funds. UNDP-admin-istered funds include UNCDF, UNFSTD, UNIFEM, UNSO, and others. These funds are established for special programme purposes of global or regional interest and are administered like, but separate from, IPF funds. They have voluntary contributions as do core funds and may include participation in sub-trust funds and cost-sharing. These funds are available for regional and country programmes and are additional to IPFs and thus for the field, represent additional non-core funding. The funds include budget items for the costs of their administration.

Government cash counterpart contributions (GCCC). Recipient governments are required to meet certain obligations towards UNDP-assisted projects, either through contributions in cash or in kind. Cash payments in local currency are known as the government cash counterpart contribution (GCCC). In addition to making cash contributions from its own resources, a recipient government could also utilize "local counterpart funds" for GCCC purposes. These funds also flow through UNDP's accounts although a fee is not required.

Parallel financing. Parallel financing is an arrangement in which at least two parties join in a common programme but make separately administered contributions. Following a joint programming exercise, both UNDP and the donor(s) finance and execute their specific segments separately but in continuous coordination. Funding under parallel financing arrangements does not enter UNDP's accounts and does not provide income from fees. The donors follow their own procedures. There are strong views pro and con as to whether parallel financing should be included under the co-financing umbrella.

Management support agreements provide support services at the request of recipient governments or bilateral and multilateral development agencies. They are not a form of co-financing but a procurement service for a donor's or government's programme. This view was expressed in the 1990 report on elements for a funding strategy for UNDP cited above:

"The provision of management services should not be seen as an instrument for mobilizing additional resources. While the modality serves to amplify and reinforce support provided by UNDP, and often strengthen its role in the country, it does not per se constitute a mechanism for augmenting the UNDP resource base. Funds pertaining to management services are accounted for separately by UNDP and are not treated as UNDP resources" (p. 19, para. 54).

Management agreements are appropriate for donors who want to maintain accountability separate from government administration and seek a "contractor" to help implement part or all of the donor's project requirements and/or admin-istrative and logistical services. In most instances, management support agreements are limited to the procurement of goods and services; however, there are instances when the service is broadened to cover project management. UNOPS is usually responsible for providing management services under the terms of MSAs. Fees are charged for these services and represent a substantial source of income for UNOPS which is shared with UNDP for accounting services. While country experience with MSAs will be noted in the report, UNOPS's operations are not being evaluated at this time; they require a separate exercise, if desired. From the country perspective, the distinctions between UNDP and UNOPS are largely lost and the strengths and weaknesses of one affect the image of the other.

Management support services can also be provided by UNDP country offices when they are called upon to assist in the implementation of national execution (NEX) projects and IFI loan implementation. UNDP country offices set up their own procurement services with their own staff augmented by personnel paid from the service fees-a subject that merits further examination. However, they do not constitute a co-financing modality and are therefore outside the scope of this report.