The issue of the cost-effectiveness of bilateral aid budgets has become increasingly important over the past ten years or so. A key element in the debate has been the extent to which bilateral agencies should fund the activities of multilateral agencies, and which out of more than 230 that are currently operating to fund. In order to aid these decisions, donors have developed different methodologies for assessing the effectiveness of organisations within the system. In this paper we focus on approaches to assess multilateral effectiveness. We note that the term effectiveness has a number of different meanings and we provide some key definitions.