UNDEF was created by UN Secretary-General Kofi A. Annan in 2005 as a United Nations General Trust Fund to support democratization efforts around the world. It was welcomed by the General Assembly in the Outcome Document of the 2005 World Summit (A/RES/60/1, paragraphs 136-137).  UNDEF funds projects that empower civil society, promote human rights, and encourage the participation of all groups in democratic processes. The large majority of UNDEF funds go to local civil society organizations. In this way, UNDEF plays a novel and unique role in complementing the UN's other, more traditional work -- the work with Governments -- to strengthen democratic governance around the world. UNDEF subsists entirely on voluntary contributions from Governments; in 2021, it reached almost 220 million dollars in contributions and counts more than 45 countries as donors, including many middle- and low-income States in Africa, Asia and Latin America. In 15 Rounds of Funding so far, UNDEF has supported over 880 two-year projects in more than 130 countries. 

Grants ranging from US$100,000 to US$300,000 support initiatives in the areas of: 
- Community Activism
- Support for Electoral Processes
- Women's Empowerment
- Media and Freedom of Information
- Rule of Law and Human Rights
- Strengthening Civil Society Interaction with Government
- Tools for Knowledge
- Youth Engagement

Process, as UNDEF receives an average of about 2,000-3,000 proposals a year and only some 50 are selected.