This paper is one of a series on the experiences of European donors with the use of aid for poverty reduction and is the product of a major research programme involving ten European development research institutes.

The objective of the first stage of this research programme is to describe and assess each donor's goals as they relate to bringing the benefits of aid to poor people, and to review each donor's organisation and management to implement this objective.

Poverty reduction presents a disturbing dilemma for the Finnish aid administration. Official policy documents always define poverty reduction as the first among the three overarching goals of Finland's development co-operation. Little is known, however, about the poverty-reducing impacts of Finnish aid.