In times of limited budget funds, modern development cooperation calls for their efficient and accountable use, good coordination with other donors, even greater ownership on the part of partner countries and the broadest possible range of financial instruments. Austria also attaches priority to these principles.

The new aid architecture, as defined in the Paris declaration of 2005 and the Accra Agenda for Action of 2008, aims at achieving higher aid effectiveness and efficiency. Accordingly, new aid modalities are being employed: budget support, for example, is seen as a concrete instrument to reduce poverty and thus reach the Millennium Development Goals. Consequently, Austria began to systematically disburse budget support, primarily sector support, in several priority countries in 2005.

Another major innovation is stepping up efforts to incorporate the measures of Austrian Development Cooperation into partner country strategies. More use is also made of joint funding with other donors to reduce transaction costs.

Besides the issue of what to finance, modern development funding is now also concerned with the best way to transfer financial aid to the recipient countries and the role played by local governments.