Institutional design and the variation in the effects of earmarked funding on IO performance

Resourcing challenges often represent a critical pressure spring for IOs. Such pressures have, in recent decades, led to the rising trend of earmarked funding arrangements. The institutional impact of earmarked funding is still a matter of debate, but concerns abound regarding its potentially undermining effect on IO effectiveness and autonomy. While IOs recognize such challenges, recent findings suggest that their ability to respond and tailor their operations—for reaping benefits while avoiding potentially unfavourable outcomes—is conditioned by their institutional design features. These include institutionalization, centralization, bureaucratic size, and authority, which are key determinants of the distribution of power and authority within IOs, their effectiveness in pursuing mandates, and their autonomy vis-à-vis stakeholders. As such, this article explores the extent to which earmarked funding affects IO project performance, and the interaction of institutional design features within that effect. It does so by relying on data on institutional design, project performance, and resourcing in a sample of IOs between 1990-2012. The findings expand our understanding of not only the factors that explain variation in the effects of earmarked funding across IOs, but also the specific institutional conditions that ameliorate or exacerbate those effects.