Multilateral organisations are increasingly central to addressing global challenges, with their share of official development assistance rising significantly. At the same time, the mid-term results for the Sustainable Development Goals paint a concerning picture, with many targets showing insufficient progress or even regression. Meanwhile, the multilateral development system is under major pressure as several donors, including the US, recently have made major cuts to development aid budgets.

Against this backdrop, it is critical to understand the effectiveness of different financing modalities in multilateral development cooperation. The literature on this topic, however, remains fragmented, employing diverse methodologies, concepts of “effectiveness,” and levels of analysis. As a result, empirical evidence is scattered, and findings are difficult to compare, limiting the overall clarity and soundness of existing research. This lack of a clear overall picture highlights the need for a structured synthesis of current knowledge.

Drawing on a structured literature search, quality assessment, and detailed analysis of 36 publications, this systematic review applies a nuanced, three-dimensional conceptualisation of effectiveness (process, outcome, and cost) across three intervention levels (project, organisation, and system). Findings suggest core funding generally offers greater flexibility and appears more effective at the project and organisational levels than earmarked funding. However, earmarked funding can provide flexibility in crisis contexts and reduce administrative burdens under specific conditions. The review highlights a limited empirical evidence base, particularly at the system level, and identifies significant research gaps regarding the effectiveness of multilateral financing modalities.