Over 150 unilateral, bilateral and multilateral donors contribute to the financing of FAO’s field programmes and projects. In 2004, the European Union (EU) was the most substantial donor with more than US$ 50 million dollars pledged to FAO activities. The EU was followed by the Netherlands, the second largest contributor over the same period followed by the United Nations Development Programme (UNDP), Italy and Germany.

Unilateral donors fund technical assistance projects in their own countries from their own national resources or from loans, credits and grants made by international financing institutions. FAO provides technical expertise and supports leadership and ownership by the recipient country.

In recent years, there has been a major reversal in thinking in terms of what constitutes a classic target group for FAO resources. Donors now emphasize the need to focus on the recipient countries as a funding source as well as on the modality by which funding is allocated.

For bilateral and multilateral donors three distinct funding modalities have emerged. These are:

• centralized, where, following a process of active donor consultation at country-level, funding is determined at the donors’ headquarters;
• decentralized, where the funding decision is taken in the recipient country concerned, with the local donor representative;
• mixed, whereby endorsement by the local donor office in the recipient country concerned is a necessary condition for final approval by the donors' Headquarters.