Earmarked funding and the performance of international organizations: evidence from food and agricultural development agencies

How do funding structures affect the performance of international organizations (IOs)? Considering the rapid growth of earmarked funding over the past decade, the need to address this question has become a matter of urgency. To answer this question, I divide IO performance into outcome performance (i.e., achieving results that are relevant and sustainable) and process performance (i.e., having systems, rules, and practices that enable IOs to achieve self-defined goals effectively, efficiently, and responsively). Drawing on the principal−agent framework and studies of organizational behavior, I derive expectations about how earmarked funding can affect those performance dimensions. To empirically examine these expectations, I rely on qualitative case studies of three major IOs in food and agricultural development—Food and Agricultural Organization, International Fund for Agricultural Development, and World Food Program—using semi-structured interviews with IO staff and evaluation reports from multiple sources. I find that earmarked funding undermines performance, albeit not uniformly across performance areas and organizational contexts. I highlight the need for future research that considers how funding structures, institutional structures, and organizational behavior interact to affect organizational performance