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The Global Fund
The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM)
The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) is a multi-billion dollar international financing mechanism that aims to increase the availability of funding by directing money towards areas of greatest need. The organisation works as a partnership between governments, civil society, the private sector (including businesses and foundations) and affected communities by combining resources towards fighting HIV and AIDS, Tuberculosis and Malaria through grant programmes.
The official aim of the Global Fund is to:
“attract, manage and disburse additional resources through a new public-private partnership that will make a sustainable and significant contribution to the reduction of infections, illnesses and deaths, thereby mitigating the impact caused by HIV/AIDS, tuberculosis and Malaria in countries in need and contributing to poverty reduction as part of the Millennium Development goals." 1
In January 2000 at the G8 conference in Okinawa, Japan, it was recognised that there was a need for greater resources to fight AIDS, tuberculosis and Malaria. 2 This recognition was further supported by the United Nations (UN) former Secretary-General, Kofi Annan in 2001 3 and contributed to the Global Fund’s foundation in January 2002 in Geneva, Switzerland. Just three months later, the grant board approved the first round of grants for 36 countries.
How is the Global Fund run?
The day-to-day running of the Global Fund is carried out by the Secretariat, from its Geneva based offices. The Secretariat has the responsibility of the day-to-day operation including mobilising resources from the public and private sectors, managing grants, providing financial, legal and administrative support and reporting information on the Global Funds activities to the Board and general public. In 2012, a restructure of the Secretariat was ongoing, with staff numbers likely to change. 4 5 The Global Fund’s current Executive Director, Mark Dybul, was appointed in November 2012 after the resignation of Gabriel Jaramillo as General Manager. 6
An international Board of 20 voting members consisting of 3 ‘blocs’ 7 and 8 non-voting members governs the issuing of grants. 8 In addition, there are 3 committees of the board who have decision making, advisory and oversight functions. They are periodically assigned tasks to research by the Board. 9
The Technical Review Panel (TRP), which exists to review grant applications made by recipient countries, also assists the Board. The TRP is made up of an independent panel of health experts who thoroughly examine the technical merits of every application. They can then propose to the Board that a grant application is approved without any conditions, this it is approved with conditions, that it is re-written and resubmitted, or that it is rejected altogether.
The current Chairperson of the Global Fund’s Board is Mr Simon Bland, Head of the Global Fund department within the UK’s DFID, appointed in September 2011. The vice-chair, Dr Mphu Ramatlapeng, is the Minister of Health and Social Welfare of the Kingdom of Lesotho, and was elected in May 2011. 10 The Chairperson alternates between an expert from a donor country and one from a recipient country every two years. The Board is dedicated to operate by consensus and in the spirit of partnership. However, when this is not achievable, a two-thirds majority can pass motions.
The Global Fund Board
(8 Representatives) 11
Developing country's governments
(7 Representatives) 12
One representative based on each of the six World Health Organisation (WHO) regions and one additional representative from Africa.
- Eastern and Southern Africa (Union of the Comoros)
- West and Central Africa (Ghana)
- Western Pacific Region (China)
- South East Asia (Nepal)
- Eastern Europe and Central Asia (Moldova)
- Eastern Mediterranean Region (Sudan)
- Latin America and Caribbean (Mexico)
Civil society and private sector
(5 Representatives) 13
- NGO Developed Country ( International HIV/ AIDS Alliance)
- NGO Developing Country ( African Council of AIDS Service Organisations (AfriCASO))
- Private Foundation ( Bill and Melinda Gates Foundation)
- Private Sector (Anglo American plc.)
- Representative of Communities living with HIV/AIDS, TB and Malaria (Foundation for Professional Treatment)
Who gives money to the Global Fund?
As of March 2012 the total amount pledged to the Global Fund for the period 2002-2015 was around US$30.7 billion, of which US$22 billion had been paid. A total of fifty-four governments have pledged money to the Global Fund for the period 2002-2015. 15 Many of these are wealthy western or middle-eastern nations, although pledges have also been received from countries directly affected by AIDS, TB and Malaria. The biggest single donor country is the U.S, whose donations make up around 33 percent of the funds pledged every year. In 2009 the United States government set a record by contributing US$1.05 billion for the 2010 financial year, the highest amount ever pledged, for a single year, to the Global Fund by the US. 16
“The biggest single donor country is the US, whose donations make up around 33 percent of the funds pledged every year.”
As well as national governments, contributions to the Global Fund also come from large organisations (such as the Bill and Melinda Gates Foundation), from individuals (Kofi Annan has personally donated US$100,000), from private sector partnerships, such as (PRODUCT)RED and from fundraising events - a Real Madrid Soccer Match held in 2002 raised a grand total of US$112,487. 17
Essentially anyone can donate to the Fund. More information about how to do this can be found on the GFATM's donations page.
How does the Global Fund secure government donations?
The board of the Global Fund does not dictate who should donate money nor how much should be donated, but it does issue guidelines on how much will be needed to maintain funding and approve new grants. Major developed countries are expected to meet a proportion of this estimate dependent on their GDP, though pledges are essentially made on a 'goodwill' basis (with the obvious political kudos that this may bring). This allows the funding level estimates to be increased in the event of an emergency.
In the early years of the Fund's operation, pledges were not made to any set schedule. In the first year of the Fund's operation, most countries pledged a large amount sufficient for several years of funding. Any extra resources that were necessary were then negotiated on an ad-hoc basis. This flexible system of replenishment was used to attract new donors who may otherwise have been wary about committing large sums to an untested scheme. However, this method eventually led to the appearance of funding gaps (where the amount of money held by the Fund was less than the total needed to fully finance grants), so in 2005, a new system was implemented. 18
The Global Fund's new system was based on regular periodic replenishments, which enabled more accurate forecasting of available resources over the coming years. To implement the new system, special 'Replenishment meetings' are now held on a regular basis, facilitating debate about the Global Fund's needs and encouraging potential new donors to enter into discussion and offer pledges.
How does the 'regular' replenishment mechanism work?
The regular replenishment mechanism works by establishing regular meetings that allow donors to discuss and negotiate current funding needs for a set period, both with the Global Fund board, and with their fellow donor nations.
There have been three Replenishment meetings since they were first introduced, the First Replenishment 2006-2007, the Second Replenishment 2008-2010, and the Third Replenishment 2011-2013. Each Replenishment is usually structured around two international meetings. The latest, the Third Replenishment 2011-2013 was held in the Netherlands (first meeting) and New York (second meeting). During the first meeting donors discuss the performance and results of the Global Fund, and in the second meeting future funding is announced. In the latest Replenishment a total of US$11.7 billion was contributed to the global fund, the largest amount ever collectively pledged. 19
Why do wealthy countries not donate more money?
Just as nations have their own unique way of regulating trade to benefit their economy, so each developed country will have its own agenda when it comes to funding aid programmes. This is why most donors will fund their own bilateral (country-to-country) aid programmes for AIDS, TB and Malaria alongside their Global Fund donations. In the UK, a lot of health-related development funding goes out via bilateral programmes established by the Department for International Development (DfID).
One of the main rules about pledging to the GFATM is that this money comes with 'no strings attached'. That means that countries and organisations cannot dictate where their money goes - they have to be willing for it to be used for any purpose and in any country where it is needed. As a result of strong objections to harm reduction for drug users, and other programmes that were considered as 'endorsing' prostitution or abortion (all of which may be funded by the GFATM), the US government, under the former President George W. Bush, founded the ‘President's Emergency Plan for AIDS Relief’ ( PEPFAR) as the preferred vehicle for funding overseas HIV prevention and treatment programmes; a national scheme that did not support such initiatives.
Another problem lies in the way that funding is shared out between wealthy nations. In the US, congress has insisted that this amount is capped at 33 percent of the overall total of pledges received (33 percent being the US percentage of global GDP). 20 This means that if other countries give less, theoretically so does the US. 21
Other sources of funding
(PRODUCT)RED is an initiative that was launched by the singer Bono in the UK in January 2006, and in the USA in October 2006. Its aim is to engage various commercial partners by getting them to theme some of their products with special Global Fund (RED) branding. A proportion of the proceeds from sales of these items then goes to combat HIV and AIDS in several selected countries being supported by the Global Fund. Emporio Armani, GAP, Converse and Apple are some of those signed up to the scheme, and American Express has launched a (RED) credit card that donates 1 percent of the value of all purchases to the Fund. 22 23
By 2012, (PRODUCT)RED had generated more than US $180 million for the Global Fund with 100 percent of that money going towards grants for Ghana, Lesotho, Rwanda, Swaziland, South Africa and Zambia. 24
Despite its success, the scheme has proved controversial, with some saying that the percentage of (RED) profits that actually go to the Global Fund is too small. Others have criticised the amount spent on promoting (RED) - as early as March 2007, some estimated that the advertising outlay had already reached US $100 million. 25 An organisation - BUY (LESS) - has since been set up to discourage people from seeing shopping as the answer to the world's problems, and to encourage direct giving as a preferable solution. 26
What is Debt2Health?
Debt2Health is a scheme whereby poor country debts will be cancelled, providing the government of that country agrees to invest the money saved in Global Fund health programmes. 27 Germany and Australia are the two main creditor countries, with Indonesia, Pakistan and Côte d’Ivoire as the main beneficiaries. 28 To date, of Euro 163.5 million, Euro 81.8 million has been paid to the Global Fund to be used in the beneficiary countries, whilst the remaining amount has been unconditionally written off debts, by the creditor countries. 29
How is the money distributed?
In its first ten years (2002-2011) the Global Fund has disbursed almost US$16.2 billion for HIV/AIDS, malaria and tuberculosis out of grant agreements totaling US$20.3 billion. 30 Over 150 different nations, from Afghanistan to Zimbabwe, have benefited (or will benefit) from Global Fund money. 31 The full list along with detailed progress reports can be found on the Global Fund website. The US$20.3 billion total of grant agreements, since Round 1, have been distributed across six regions. An estimated 14 percent went to the East Asia and Pacific region, 8 percent to Eastern Europe and Central Asia, 7 percent to the Latin America and Caribbean region, 6 percent to North Africa and the Middle East, and 55 percent to sub-Saharan Africa (24 percent went to East Africa, 15 percent to Southern Africa and 16 percent went to Western and Central Africa). 32
How do these countries gain access to funding?
To receive money, a country's government (or even an individual organisation) will need to make a grant application. The GFATM has a policy of only giving money to those who apply for it, unlike some other funding programmes (such as the American PEPFAR scheme) who actively seek out suitable recipients and offer them money. This means that in theory, funding is available to anyone that needs it. The only restriction the Fund has is the amount of money available in their central bank account. There are for example no 'quotas' as such on how much money is spent on each disease - this is governed strictly by need, allowing greater flexibility in tackling the most urgent crises. In Round 9, US$ 1,198 million of funding was spent on HIV and AIDS in 36 countries, US$ 666.6 million was spent on Tuberculosis in 35 countries and US$ 783.1 million was spent on Malaria in 19 countries. 33
An important part of any country's funding application process is the negotiations that take place with their Country Coordinating Mechanism ( CCM). In every country that wishes to receive funding from the Global Fund, a CCM will be set up to help organise and submit grant applications to the Fund and monitor their implementation. A CCM will generally be made up of a broad range of representatives from government agencies, NGOs (Non-Governmental Organisations), local community and faith-based organisations, individuals working in the field and private sector institutions.
When the grant is approved and the money arrives, it is given to the Principal Recipient ( PR), which is basically the body that is legally responsible for distributing it or using it to tackle HIV, Malaria or TB in the country. The PR is often a government department or agency but it can be a local public or private organisation, and several different PRs may exist within one country.
For how long do grants last?
Once a grant has been approved, funding is disbursed every three to six months throughout the grants life span. Each grant disbursement is based on performance. Initially, all grants are made on a two-year basis, referred to as 'Phase 1'. If sufficient progress is made at the end of this two-year period (Phase 1), and it is confirmed that the money has been used wisely, the grant will be renewed and extended for an additional 3 years, referred to as 'Phase 2'.
What structures are there in place to make sure that money goes to the people that need it?
One of the most important parts of the funding process is ensuring that the money given out in grants actually reaches the people who need it.
One of the most important parts of the funding process is ensuring that the money given out in grants actually reaches the people who need it. To ensure this happens, every Principal Recipient is assigned a Local Fund Agent ( LFA). The LFA is an independent organisation contracted by the Secretariat to administer and verify the correct distribution of funds, and provide an ongoing analysis of financial and overall progress. There are currently a very wide range of different LFAs in operation worldwide (both public and private) including PricewaterhouseCoopers, Chemonics International, the United Nations Office for Project Services (UNOPS) and Crown Agents.
How does the grant making process work?
Every nine to twelve months, the board will hold a funding 'Round'. The round begins when the Global Fund invites all countries and organisations in need of funding to submit a grant proposal. It ends when all proposals have been processed and all eligible grants have been approved. So far there have been ten funding rounds.
To explain the funding process more fully, we are going to use the example of a fictitious country called Losimba.
The Governmental Health Authority in Losimba identifies a need for AIDS prevention and treatment work to be done. There are a number of organisations already tackling HIV and AIDS in the country, but they are severely under-funded. The Losimbian Health Authority works with these organisations through their Country Co-ordinating Mechanism (CCM) to prepare a proposal to the Global Fund for help.
The CCM submits the proposal to the Technical Review Panel (TRP), who thoroughly assess it. They find it to be satisfactory, and pass it on to the Global Fund's board with the recommendation that it be funded without condition.
The Global Fund approves a grant based on available funds, and appoints the Losimbian Health Authority as the Principal Recipient (PR) . The Secretariat then contract a Local Fund Agent (LFA) to oversee progress and ensure that the Health Authority have sufficient systems to administer funding properly.
The secretariat negotiates a two-year grant agreement (Phase 1) with the Health Authority and both parties sign the grant. The secretariat then instructs the World Bank (as trustee) to make the first disbursement.
The Health Authority receives the first portion of the grant and, overseen by the LFA, distributes it to the agreed organisations in the country.
After a few months more money is needed, so the Health Authority apply to the secretariat for the next portion of their grant. As sufficient progress has been made and the LFA are in agreement, the next disbursement is made.
The initial two-year period (Phase 1) comes to an end and the Global Fund's board make a full assessment of progress. They find that the Losimbian Health Authority has been using the money wisely and that the organisations receiving it are making good progress in combating AIDS. The grant is therefore renewed for a further three years (Phase 2), to the full five-year period.
The Global Fund 2012-2014
It was announced 34 at the end of November 2011 that the Global Fund would not accept applications for Round 11 grants until 2014. This marked a drastic break from previous years of unbroken grant funding and will have large implications for the provision of HIV services in many countries reliant on the Global Fund. To ensure essential services are uninterrupted during the period January 2012 to March 2014 an initiative called the Transitional Funding Mechanism has been implemented.
Whilst an initial resource forecast indicated sufficient funds to continue funding grants for the period 2012-2013, at the 25th Global Fund Board meeting it was concluded that, whilst there was sufficient funding to maintain existing grants, certain changes to the current funding process would have to be implemented to ensure, that in the absence of Round 11 grants, funding continues to be available to maintain all essential services until March 2014. 35 This was the result of decreasing donor contributions, delayed donor contributions, back-loaded contributions as well as some donors not making contributions, to the Global Fund. 36
- Funding to higher-income countries, non-priority or lower impact interventions were cut and G20 member countries are ineligible for funding (except South Africa due to their 'extreme disease burden').
- Funding for ‘upper-middle income countries’ is limited to a ‘targeted funding pool’.
- Unspent funds and funds for non-priority and low-impact interventions will be reclaimed rather than reprogrammed in countries.
Cutting and reclaiming funding from non-essential and under-performing programmes enabled the Global Fund to create a contingency fund. This fund is called the Transitional Funding Mechanism and according to the Global Fund, will enable them to maintain essential services until 2014. The Transitional Funding Mechanism replaced Round 11, which has been effectively cancelled.
The cancellation of Round 11 has left some countries without the essential financial support needed to combat growing disease epidemics, such as the intersecting TB and HIV epidemic in Eastern Europe and Central Asia. A TB Coalition report recommended that the Global Fund should re-evaluate the criterion that allocates support based on income, in recognition that this distinction is not always useful or practical. This is particularly true for middle-income countries that have grown financially, but have not been able to match this with an improvement in access to healthcare. 40
Transitional Funding Mechanism (TFM)
Under this new system, in countries where Phase 2 of a previous funding grant is coming to an end between January 2011 and March 2014, countries must apply for funding from the TFM. 41 42 Strict criteria surrounds what TFM funding can be used for; firstly, funding can only be used to maintain existing services, but cannot be used to scale-up existing services. One of the major implications of this is that Global Fund funding can not be used to increase antiretroviral treatment coverage levels. Secondly, only those existing services that are deemed to be performing well and that are considered to be essential will be funded. The essential services eligible for TFM funding are those listed by the UNAIDS Investment Framework 43 44:
- Treatment, care and support
- Condom promotion
- Male circumcision
- Behaviour change and communication
- Services for key populations
However, maintaining access to treatment for those already taking antiretroviral’s is widely agreed to be a priority.
Additionally, grants that have reached the end of Phase 1 and are due for a Phase 2 renewal will also only receive funding for essential services. Moreover, funding from grants that are cancelled for under-performing and funding acquired through cuts to under-performing grant elements will not be reprogrammed but reclaimed instead.
Problems with the grant process
How quickly do Global Fund grants reach the people that need them?
One major area of concern is the amount of time that elapses between a grant being signed and the money arriving where it is needed.
Part of the problem is the rigorous checking that takes place to ensure that money will be going where it is supposed to and that proper systems are in place for its distribution. In some instances, this can cause problems in countries that don't have the administrative capacity to cope with the large amounts of monitoring and paperwork involved. It is also a problem in countries that already have highly bureaucratic governmental processes in place. In June 2004 for example, India was allocated $ 140 million for HIV and AIDS treatment, yet for over a year the grant remained unsigned and no money was disbursed. During this time, around 80,000 people are believed to have died from AIDS in India. 45 The problems have since been resolved, but for this to happen, funding had to be cut, and a new management team brought in to administer the money.
Unfortunately the problems encountered in India are not unique, and a number of other countries, including Kenya and Uganda, have struggled to quickly and efficiently distribute the large sums they have received from the Global Fund.
Is there nothing the Global Fund can do to help with the distribution process?
The Global Fund is not designed as an implementing organisation, and as such, it cannot intervene directly to facilitate the distribution of funds. However, in August 2005, the GFATM did announce the launch of a new Early Alert and Response System (EARS) 46 to help overcome some of the problems with slow implementation. EARS is designed to be a support mechanism that will alert everyone involved in a particular grant project to any potential hold-ups. Action can then be taken by the government of the country concerned, or another 'facilitator'.
What other reasons are there for slow distribution of the money?
Many of the countries that receive Global Fund grants, are also countries that are covered by the World Bank and International Monetary Fund's Heavily Indebted Poor Countries (HIPC) scheme. HIPC was set up in 1996 as a way of helping countries out of the crippling external debt they acquired by accepting extensive loans from the World Bank and IMF in the 1970s, 80s and 90s. The scheme works on a conditional basis - in order to receive debt relief, a country has to agree to meet certain economic and financial criteria as outlined by a personalised 'Poverty Reduction Strategy Paper' (PRSP). The problem lies in the fact that this PRSP contains 'targets' for spending on public services that can effectively become 'limits' if more money than is budgeted comes into a country.
One such example is Uganda. When the country received several large grants from the Global Fund a few years ago, it sparked arguments between the health and finance ministries, who not wishing to go against IMF guidelines, refused to increase the country's healthcare budget to take into account the value of the grants. Had the Ugandan Health Ministry agreed to accept the full value of the grants at the rate intended, it would have effectively pushed a massive amount of money out of the department's existing budget for healthcare. Although this does not sound like a problem in principal, the money given by the Fund was specifically intended for AIDS, TB and Malaria, meaning all other areas of healthcare would have suffered extensive budgetary cuts. 47 The World Bank and IMF have officially denied the active limitation of healthcare budgets in Uganda and elsewhere.
Why have grants been cancelled or postponed?
In late 2010, it was revealed that the Officer of the Inspector General at the Global Fund had uncovered cases of defrauding of Fund grants in four countries (Zambia, Cameroon, Mali and Mauritania), amounting to at least $25 million in 'missing funds'. 50 The findings caused Sweden, and later Germany, 51 to suspend their annual pledges to the Fund. In January 2011, these cases of misappropriation were widely publicised by the Associated Press 52 prompting the Global Fund to release statements regarding its 'zero tolerance' to corruption, and clarifying the steps it was taking to recover the funds and prevent future misuse of grant money. 53 54
In Russia, harm reduction programmes were put at risk when a programme funded by the Global Fund came to an end in August 2009. New funding was not approved as under the Global Fund's income eligibility policies Russia was no longer eligible for HIV and AIDS funding. However, while the Russian Government took over funding for other prevention methods such as PMTCT and general population prevention, this did not include injecting drug users. UNAIDS urged Russia to reconsider its policy with Michel Sidibe saying that: "UNAIDS is very concerned that Eastern Europe and Central Asia is the only region of the world where HIV prevalence clearly remains on the rise,” 55 However, Russia did not take over and the prevention programme for injecting drug users was in political limbo from August-November 2009 until the Global Fund reversed their previous decision and granted $24 million. 56 The Global Fund took this decision "on an extraordinary basis, to extend the grant to the Open Health Institute in recognition of the emergency situation that would have arisen if funding had been discontinued." However, as Russia is considered a rich country and national HIV prevalence does not exceed 10 percent, it was announced at the end of 2011 that due to the financial constraints of the Global Fund 57, Russia would no longer receive Global Fund funding. 58 Whilst Russia has committed around $600 million towards addressing HIV and AIDS in 2012, concerns remain around the availability of harm reduction programmes, as only 3 percent of funds will be used for HIV prevention.
Over the last ten years, countries that have failed to have grants renewed for 'Phase 2' funding include Nigeria, Senegal, South Africa and Pakistan. 59 Representatives from the Global Fund have described the cancellation and suspensions of grants as deeply regrettable, but have insisted that such action is always necessary to uphold the Global Fund's reputation as a transparent and fairly managed organisation that works with, rather than against the countries it supports.
What about the future of the Global Fund?
Since the formation of the Global Fund, grant money has produced many practical and positive results:
- Funding antiretroviral treatment for 3.3 million people
- PMTCT for 1.3 million HIV-positive pregnant mothers
Despite this progress, certain issues have arisen over the ten years of grant making and distribution. These have included the slow disbursement of funds in countries that don’t have the staff, health system capacity or bureaucratic structures to absorb and distribute large grants. The Global Funds monitoring and reporting requirements have also been reported to be complicated and inconsistent, which may also exacerbate delays. 60
Crucially, the issue of how the Global Fund can maintain and increase donations has been a central concern for a number of years. The September 2007 replenishment meeting saw a notable drop in donor pledges from some governments 61, while others (such as the UK pledge) were substantially less than many had hoped for. 62 In October 2010, donor governments pledged $11.7 billion over three years at the replenishment meeting, which was less than the $13 billion ‘lowest funding level’ identified by the Global Fund as necessary to continue to expand its work and far less than the ‘ideal’ $20 billion objective. 63
In a move that aimed to transform the Global Fund from an emergency funder to a sustainable and strategic funder, the new Global Fund Strategy 2012-2016 was announced in November 2011. 64 Based on five strategic objectives the strategy’s underlying model is to “invest for impact” in order to sustain and build upon gains made in previous years, with an overarching target to save 10 million lives by 2016. 65
Whilst this strategy has been placed on hold until 2014, if the required level of donor funding is achieved, with this new approach the Global Fund has the potential to make an even greater impact on the international HIV/ AIDS epidemic.
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37. The Global Fund (2011) '
FINANCING AND PRIORITIZATION INFORMATION NOTE'
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