Reimagining Multilateral Financial Institutions

Multilateral development banks (MDBs) such as the World Bank, and multilateral climate and development funds such as the Green Climate Fund (GCF), channel hundreds of billions of dollars annually to low- and middle-income economies. Beyond the funding itself, these institutions wield significant influence over recipient countries' policies and government programmes, and hold immense convening power.

Yet there is growing debate about how that power is exercised, and a pressing need to reimagine these institutions' operational models to better address our interlinked ecological and social crises.

In June 2026, a small group of practitioners came together for a DEAL policy peer-learning session to explore how MDBs and funds could be reimagined to accelerate the transition to economies that are regenerative and distributive by design. Three key themes emerged.

1. How can funds managed by these institutions better reach local communities and grassroots efforts?

Participants kept returning to the image of an inverted triangle: the largest volumes of money sit at the top with global institutions, while the smallest amounts reach the communities, grassroots organisations and regenerative businesses doing the work that helps people and the planet thrive. The core question is not how to make existing channels more efficient, but how to redesign capital flows so that those closest to the problem have greater agency over resources.

Three shifts were highlighted:

• Reduce barriers to access. Some funds, including the GCF, channel money mainly through accredited entities. The process to obtain accreditation is so complex that even established commercial banks are reluctant to engage with it, let alone NGOs, regenerative businesses and civil society organisations. Simplified accreditation pathways for smaller organisations and grants are one solution. The GCF's current work on locally-led climate action offers valuable lessons as well. These funds can also learn from more innovative funding models tried by philanthropies and purpose-driven investors that build genuine partnerships between funders and recipients — moving away from box-ticking and top-down gatekeeping.
• Rethink the financial instruments on offer. Low-interest loans remain the dominant tool of global and regional development banks, with grants and technical assistance often tied to a borrower's capacity to take on debt. Yet many community-led projects tackling social and ecological challenges — delivering secure jobs, resilient communities, restored ecosystems — are simply not suitable for debt-based financing, regardless of their real economic value.
• Support aggregation models. There is a need to develop diverse models that connect community and grassroots work to larger pools of capital. Examples include: farmers' associations and cooperatives; Social Stock Exchanges; and other aggregation platforms like COAXIS that connect like-minded funders with those in need of funds. Governments and multi-lateral funds could do more to support and scale such models. 

2. How could these institutions enable rather than hinder diverse pathways to regenerative and distributive economies?

Drawing on  Doughnut Economics for Policy Makers guide, which maps the key levers within governments that enable or hinder policies for people and planet: in many countries, especially indebted low- and middle-income ones, the IMF and World Bank can influence each of these levers. They shape public finance and government operations, including the metrics and tools used to design policy. They shape culture within governments through advice and capacity-building. And they influence who governments are ultimately accountable to: international creditors, or their own citizens. 

Three areas for reform were discussed:

• Culture and mindset. Even well-intentioned staff within MDBs and funds operate within systems with the wrong incentives: for example, some funds prioritise disbursement volume and indicator harvesting over genuine impact. More fundamentally, tackling climate change, reducing poverty and ensuring financial stability all require these institutions to challenge the economic growth logic and neoliberal mindsets that currently govern how they themselves are measured and managed. For example, the IMF's structural adjustment programmes, which have historically demanded spending cuts and tax rises from indebted countries, illustrate how misaligned incentives can deepen social and ecological harm rather than address it.
• Governance. The IMF and World Bank have long been criticised for governance structures that reflect the interests of wealthier nations. Multilateral funds like the GCF were partly conceived to address this, ensuring greater majority world representation on the board. In practice, however, operational models can still reproduce the same structural dynamics.
• Metrics and data. The forecasts and indices MDBs publish shape how governments, investors and media understand economic health, entrenching GDP as the dominant measure of progress. The IMF's growth forecasts and the World Bank's Business Ready Report are key examples. Beyond this, the assessment tools these institutions use tend to focus on symptoms rather than the systemic drivers behind them, incentivising measuring and delivering against what is easiest to count and box-tick rather than driving transformative system change. 

3. What would a genuinely regenerative and community-led approach to financing look like?

Participants noted that MDBs and funds are an important but small part of a much larger financial system that needs transformation. If billions are still spent daily on wars and speculative finance continues to channel hundreds of trillions toward short-term high financial returns, even a thoroughly reformed MDB sector cannot make the dent needed to help humanity thrive within planetary boundaries.

At the level of individual projects and communities, participants explored what it would mean to move from transactional donor-recipient relationships toward genuinely reciprocal partnerships. A holistic, community-led approach can address environmental, cultural and social challenges at once — as illustrated by efforts in Sierra Leone to restore indigenous sacred forests shared by Biocultural Resilience Network, where ecological and cultural loss are so deeply intertwined that neither can be addressed without the other. Current assessment frameworks, built around measurable indicators, cannot easily capture this kind of value.

This points to a deeper question: who defines what counts as progress, and whose knowledge systems are treated as the starting point for "development"? Reforming MDBs and funds requires not just new metrics or governance rules, but a different mindset- one that begins with community agency rather than top-down imposed targets and outdated economic models. 

Further Reading and Resources

Shifting the wider finance system: 

• Triodos Bank: Call for Fundamental Overhaul of Financial System (2025) 
• Examples of government actions and policies shifting the finance system

Learn more about MDBs: 

• Bretton Woods Projects
• Books:  
  • The Shock Doctrine — Naomi Klein
  • Adults in the Room — Yanis Varoufakis

Learn more about GCF:

• GCF Independent Evaluation Unit - which publishes self-critique including Foresight Studies  
• Climate Home News - covers GCF regularly, including insights into its governance and projects 

To host future peer-learning sessions 

The session is part of policy peer-learning series designed to connect those curious about how Doughnut Economics can shape government policies and governance systems. They draw inspirations from and help enrich our Doughnut Economics for Policymakers' guide. 

If you have a topic or question related to governments and policies that you wish to discuss with the broader DEAL community, please get in touch via this google form. 

Thank you for your interests and participation!