The Netherlands supports developing countries through various channels. These range from small-scale individual initiatives to World Bank development activities. Generally speaking, the money is channelled in four ways:

1. Multilateral cooperation (such as the World Bank and the United Nations).
2. Bilateral cooperation with governments of developing countries.
3. Support via Non-Governmental Organisations.
4. The private sector.

In light of the global nature of sustainable development and the fading of frontiers, the Dutch government considers multilateral channels important for carrying out development cooperation. More than a quarter of the development budget is allocated through programmes of specialised UN bodies (UNDP, UNEP, WHO, FAO, UNFRA, UNHCR, and others), the World Bank, the IMF and the regional development banks. Another key partner is the European Union (EU) and its institutions. EU development policies will be given more attention in the future to ensure they will become far more effective.

The multilateral component of Dutch development cooperation has declined in recent years. The government nevertheless aims to maintain its status as a key donor to those organisations that deliver results, focus on the Millennium Goals, enable the Netherlands to provide added value, and make a tangible contribution to the Netherlands’ policy goals. Other considerations include how well these organisations operate, how much they are contributing to reforms, and the added value they are generating at country level.

The multilateral channel is considered to be effective, especially due to benefits of scale and the pooling of knowledge and resources (donor coordination). Management is thought to be easier, transaction costs lower, and the burden on the capacity of individual donor and recipient countries less.

The Netherlands donates substantial sums to UN organisations. In addition to its mandatory contributions, it also makes general contributions to funds and programmes as well as incidental payments for special purposes, usually in the form of partnership programmes.

Over the next few years, the Netherlands will continue to contribute to rescheduling developing country debt through the World Bank’s HIPC initiative (Heavily Indebted Poor Countries) and other channels. Although not officially regarded as multilateral spending, debt relief is quite similar, given its international coordination, scope and effectiveness. Although it is coordinated in a multilateral fashion, debt relief is not classified as multilateral aid under the OECD-DAC regulations.

Bilateral cooperation refers to Dutch government development aid that is channelled via the government of a developing country. The Netherlands has a long-term aid relationship with 22 countries, known as structural development partners1. It works on specific themes with a further 30 countries (this is not a fixed number nor a structural group), the so-called policy theme countries.

In selecting countries for long-term bilateral aid relations, the Netherlands focused initially on three factors: (1) the degree of poverty: the Netherlands wants to use its resources as effectively as possible, and therefore gives priority to the poorest countries in greatest need of aid; (2) socio-economic policy of a country; and (3) good governance. The last two factors are closely related. The decisive factor for the Netherlands is whether a government is willing to create a society where development is possible.

In countries receiving aid, the Dutch embassies play an important part in organising and carrying out development activities. They help formulate a general approach, which is further worked out in multiyear regional or country policy plans. Furthermore the embassies play an important part in implementing and monitoring development projects. They are well placed to mobilise local capacity and expertise, and they benefit from having local knowledge, important for instance in deciding whether a proposed project should be implemented by the host country government or an NGO.

In the field of the environment, embassies work closely with the Ministry of Housing, Spatial Planning and the Environment. Their main task is to help develop an international environment policy, which requires painstaking preparation and wide-ranging international discussions.

Every Dutch embassy used to have the possibility to assist financially small projects directly benefiting the poorest groups in the community. However this Small Projects Programme (SEP) has de facto been abandoned in recent years. Embassies still have funds for small-scale operations but these are very restricted. Allocating these funds depends on the available expertise and the character of the bilateral relationship with a certain country. Only with regard to Central and Eastern Europe embassies still play an important role in funding initiatives through the MATRA Small Embassy Projects Programme (MATRA-KAP).

MATRA-KAP offers financial support for various projects. Interest groups and community organisations, which meet the criteria, may apply to the Dutch embassy for a grant of up to € 11,500. The decision as to whether to provide funding is taken by the embassy itself, thus speeding up the application process. The MATRA-KAP programme covers Belarus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Russian Federation, Slovakia, Slovenia and Ukraine. In general projects that promote social change are eligible for funding. Such change should affect civil society organisations, institutions and social relations; in short, anything which promotes social reform and the creation of a pluralistic democratic constitutional state. The support of environmental organisations and institutions is one of the main priorities.

Much of the actual development work on the ground is done by Non-Governmental Organisations (NGOs). Initiated in 2004, grants to NGOs are assessed and administered within the framework of Theme-Based Co-financing (TMF) scheme. Both international NGOs and Dutch NGOs can apply for TMF grants. Some of the support to NGOs in developing countries also goes directly through the Dutch embassies there. The NGO channel encompasses all support to NGOs in the developing world. It accounts for around a quarter of the total development budget.

The main flow of private development cooperation for NGOs is the so called co-financing scheme (MFP) in which the Dutch government assigns a percentage of the total budget to six co-financing organisations (CFOs): Cordaid, ICCO, Hivos, Novib, PLAN, and Terre des Hommes (see chapter 5.1).

A lot of people in the Netherlands are committed to helping developing countries. Usually organised in local groups and organisations, they try to start up projects together with project partners in developing countries,. In order to support these activities the Programme for Small-Scale Local Activities (KPA) was set up. (see chapter 5.2)

Other organisations receiving government contributions for their programmes on international cooperation include trade unions, employers' organisations, universities, development service organisations and the National Committee for International Cooperation and Sustainable Development (NCDO). The NCDO, among others, allocates subsidies to Dutch NGOs working on education and awareness-raising on themes related to North-South and Central and Eastern European countries (CEE).

The Netherlands cooperates with some 30 countries through a Private Sector Development Programme. The aim of the programme is to promote private sector employment in developing countries. Joint investments by Dutch and local businesses can receive financial support provided they contribute to a country’s development.

At present, the private sector programmes incorporate the Emerging Markets Cooperation Programme (PSOM) and programme for Development Related Export Transactions / Industry and Environment (ORET/MILIEV). In the near future the Public Private Partnerships Programme will be put in place and will involve collaborative efforts by the private sector, civil society organisations and government (see chapter 1.6 Special agencies).

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