Since it was created in 1977, IFAD has focused exclusively on rural poverty reduction, working with poor rural populations in developing countries to eliminate poverty, hunger and malnutrition; raise productivity and incomes; and improve the quality of their lives. The Fund has designed and implemented projects in very different natural, socio-economic and cultural environments. Many IFAD-supported programmes have been in remote areas, and have targeted some of the poorest and most deprived segments of the rural population. IFAD has recognized that vulnerable groups can and do contribute to economic growth. These groups have shown that they can join the mainstream of social and economic development, provided the causes of their poverty are understood and enabling conditions are created.

In addition, its local-level operations in 120 countries and territories keep IFAD in continuous and direct contact with the rural poor. Their perceptions of their own opportunities and constraints form the backbone of IFAD’s knowledge base. This diversity of people and contexts has led to the accumulation of a valuable body of experience and knowledge. It has also required IFAD to maintain a highly flexible and participatory approach in responding to the specificities of rural development around the world.

To build broad local ownership of the programmes it sponsors, IFAD works in partnership with others – borrowing-country governments, poor rural people and their organizations, and other donor agencies. Its focus on local development has given it a role in bridging the gap between multilateral and bilateral donors on the one side, and civil society represented by NGOs and community-based organizations (CBOs) on the other.

Extensive partnerships and global engagement enable IFAD to strengthen its catalytic role. Through careful monitoring and evaluation of the impact of its projects, the Fund identifies successful innovations for possible replication and cross-regional fertilization.

IFAD’s flexible programme approach and longer-term lending framework enhance its ability to assist governments in pro-poor policy and institutional development and to respond to the diversity of issues facing the rural poor in different regional and local contexts. These processes require a long time frame to see the changes through to their conclusion.

As mentioned ealier, IFAD's objective and raison d'être are to fund rural development projects specifically aimed at assisting the poorest of the poor — small farmers, artisanal fishermen, rural poor women, landless workers, rural artisans, nomadic herdsmen and indigenous populations — to increase their food production, raise their incomes, improve their health, nutrition, education standards and general well-being on a sustainable basis. Nine major areas are supported:

• agricultural development
• financial services
• rural infrastructure
• livestock
• fisheries
• capacity-and institution-building
• storage/food-processing/marketing
• research/extension/training
• small and medium scale enterprise development

Loans — IFAD provides loans to its developing Member States on highly concessional, intermediate and ordinary terms for approved projects and programmes. Lending terms and conditions vary according to the borrower's per capita GNI.

Grants — IFAD provides grants to institutions and organizations in support of activities to strengthen the technical and institutional capacities linked to agricultural and rural development. Grants are limited to 10% of the combined loan and grant programme.