The name, World Bank, is somewhat misleading. It is not a bank, or even a single organization. The World Bank is the overarching name for a group of organizations that work together to promote the welfare of people in developing countries. Each piece of the World Bank structure plays a role in working toward this goal.
The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) form the main body of the World Bank. The IBRD was founded during the Bretton Woods summit in 1944. It works with countries that receive loans from the IDA to ensure the funds are used efficiently. The IBRD constructs financial plans and development strategies for borrowing countries using the Bank's past experience with development. It works with the countries to implement the strategies, and the knowledge line of the IBRD collects information about each country to aid in later development projects.
The IDA was founded in 1960. It is the branch of the World Bank Group that provides loans to developing countries. Developing countries qualify for IDA loans based on measurements of their poverty. The IDA loans are interest-free, although there is a service fee. Countries do not have to begin repaying the loan for 10 years, and payments can be made over decades. The IDA loans about $13 billion a year to developing countries to fund development projects.
The International Finance Corporation (IFC) finances investments in countries that borrow from the World Bank, and it provides advice to their governments and major businesses. It was created in 1956. The IFC is independent from the World Bank both financially and legally, but it is still part of the World Bank Group. It is led by its own board of governors, which consists of representatives from each country. Usually, the country's equivalent of a Minister of Finance represents the country's interests at the IFC.
The Multilateral Investment Guarantee Agency (MIGA), established in 1988, tries to direct foreign direct investment to borrowing countries. Because the countries that borrow from the World Bank are economically troubled and often unstable, they have problems attracting funds from international investors. MIGA attempts to overcome the hurdles of the countries' credibility problems by offering insurance products to international investors. By alleviating some of the risks of foreign direct investment, they promote investment in borrowing countries.
The International Center for Settlement of Investment Disputes (ICSID) maintains autonomy, but it works closely with World Bank organizations and borrowing countries. Its purpose is to arbitrate disputes that arise as a result of foreign investment in countries that borrow from the World Bank. It provides a forum for parties to discuss problems that is removed from the possibly biased or corrupt judicial fora of individual countries.