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What is the Global Fund?

The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) is an independent public-private partnership that was first proposed by the United Nations' (UN) Secretary-General, Kofi Annan, back in 2001, and officially came into being in 2002. It aims to raise funds and pool money from governments, businesses and individuals around the world, and channel them into grant programmes to fight AIDS, TB and Malaria.

Please Note: The views described herein are the views of AVERT, and do not represent the views or opinions of The Global Fund to Fight AIDS, Tuberculosis & Malaria, nor is there any approval or authorisation of this material, express or implied, by The Global Fund to Fight AIDS, Tuberculosis & Malaria. To contact the Fund or find out more, please visit their official website.

Who contributes to the Fund?

Around fifty countries have pledged money to the GFATM so far. 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. Uganda for example has pledged $2,000,000 to the Fund, while Burkina Faso has given $75,000. The biggest single donor country is the US, whose donations make up around 33% of the funds pledged every year.

The biggest single donor country is the US, whose donations make up around 33% of the funds pledged every year.

As well as national governments, contributions also come from large organisations (such as the International Olympic Committee and the Bill and Melinda Gates Foundation), from individuals (Kofi Annan has personally donated $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 $112,487.

Essentially anyone can donate to the Fund. More information about how to do this can be found on the GFATM's donations page.

How is the Global Fund run?

The Fund is governed by an international board of nineteen voting members and four non-voting members. Voting members include government representatives from donor and recipient countries as well as representatives from affected communities, private sector businesses, philanthropic foundations and NGOs. Representatives of UNAIDS and the World Health Organisation (WHO) also participate as ex-officio (non-voting) members, as do the World Bank, who serve as the Global Fund's trustee. The Board is assisted by committees that advise on ethics, policy and strategy, finance and auditing, and management of the portfolio. A large group of stakeholders known as the Partnership Forum also meet twice a year to review progress and provide advice and suggestions to the Fund's board.

All Global Fund activities must conform to a comprehensive set of by-laws that set out the Fund's mission and rules. As a Swiss non-profit foundation, they must also conform to appropriate Swiss law.

The current chairperson of the Fund's Board is Rajat Gupta, former managing director of McKinsey & Company, who took over from the Chair of the National Commission for HIV/AIDS of Barbados, Dr Carol Jacobs, in April 2007. The vice-chair is Ms Elizabeth Mataka, Executive Director of the Zambia National AIDS Network (ZNAN) and the UN's Special Representative on AIDS. The Chairperson alternates between an expert from a donor country and one from a recipient country every two years.

The day-to-day running of the Fund is carried out by a Secretariat of 70 people based in Geneva, Switzerland. This secretariat is overseen by the Fund's Executive Director, Professor Michel Kazatchkine, who replaced the Fund's first Executive Director, Sir Richard Feachem, in April 2007.

A special group called the Technical Review Panel (TRP) also exists to review grant applications made by recipient countries. The TRP is made up of an independent panel of health development 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, that it is approved with conditions, that it is rewritten and resubmitted or that it is rejected altogether.¹

How does the 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.

The Fund has also now has a system based on regular periodic replenishments, which enables more accurate forecasting of available resources over the coming years. This replaces a more ‘ad hoc’ and flexible system of replenishment that was used in the early years to attract new donors who may otherwise have been wary about committing large sums to an untested scheme. To implement the new system, special 'replenishment conferences' are now held on a regular basis, facilitating debate about the Fund’s needs and encouraging potential new donors to enter into discussion and offer pledges.

Which countries receive money from the Fund?

Over 120 different nations, from Afghanistan to Zimbabwe, have benefited (or will benefit) from Global Fund money. The full list along with detailed progress reports can be found on the Global Fund website. In January 2007 about 55% of the money was going to sub-Saharan African nations, 25% to East and South Asia, the Middle East and North Africa, 10% to Latin America and the Caribbean and 10% to Eastern European and Central Asian countries.²

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 President Bush's 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 November 2007, around 58% of funding was being spent on HIV and AIDS, 24% was being used to fight Malaria and 17% was going on Tuberculosis programmes, with the remainder being spent on general health system strengthening. ³ The amount given to joint TB and HIV programmes has increased significantly over the last few years, reflecting the close link between the two diseases (those with HIV are far more likely to develop TB).

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.

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.

For how long do grants last?

All grants are initially made on a two-year basis. If sufficient progress is made at the end of this two-year period, and it is confirmed that the money has been used wisely, the grant will be renewed and extended to the full validity period of 5 years. At the end of this period, a grant may be renewed for a further five years if it continues to produce good results.

How does the grant making process work?

Every nine to twelve months, the board will hold a funding 'round'. The round begins when the 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 seven funding rounds, with the next expected in 2008.

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 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 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, to the full five-year period.

How much money has been pledged so far?

A grand total of US $17.8 billion has been pledged to date (13 November 2007) of which US $9 billion has actually been paid into the Fund's central account. Pledges vary in duration, with some being valid for just one year and others valid for five or six years. Countries will normally make new pledges once all the previously pledged money has been donated to the Fund. This is why not all pledges have been paid in full yet. For the most part, countries and organisations that have made pledges have delivered on their promise.

How much money has the Fund distributed so far?

The table below shows the grants that have been approved by the Global Fund so far, and the money that has actually been distributed (accurate as of 13 November 2007)⁴

ROUND	INVITE ISSUEDi	GRANTS DECLAREDii	LIFETIME BUDGETiii US $	APPROVEDiv US $	SIGNEDv US $	DISTRIBUTEDvi US $
1	January 2002	April 2002	1,316,375,215	1,313,159,027	1,261,060,495	977,033,846
2	July 2002	January 2003	1,858,429,428	1,796,546,667	1,762,118,664	1,244,599,415
3	March 2003	October 2003	1,458,396,291	1,375,666,629	1,185,645,774	774,688,044
4	January 2004	June 2004	2,899,304,466	2,569,914,375	1,380,957,801	995,966,040
5	March 2005	September 2005	1,994,642,526	776,490,026	776,490,026	433,797,491
6	April 2006	November 2006	2,112,424,848	871,391,983	830,193,075	194,354,338
7	March 2007	November 2007	2,762,195,911	1,118,712,357	0	0
TOTALS			14,401,768,685	9,821,881,064	7,196,465,835	4,620,439,174

ⁱ The month in which the Global Fund first invited potential recipients to apply for funding ⁱⁱ The month in which the grants to be approved were announced by the Technical Review Panel ⁱⁱⁱ The total amount in grants that will be awarded if all criteria are met and they are funded for the full five year period ^iv The total amount in grants that have been approved by the Global Fund board so far ^v The total amount in approved grants signed by the recipient nation ^vi The total amount in grants actually distributed to Principal Recipients within recipient countries

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.

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. 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. The first three "Voluntary Replenishment Conferences" were held in Stockholm, Rome and London. These conferences enabled donors to see the extent to which the Fund would need to be replenished in 2006 and 2007, and pitch their pledges accordingly. Donations for 2008 and beyond were negotiated in three similar meetings in 2007.

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.

The US has pressurised the Global Fund to bring its policies in line with the Bush Administration's sensibilities in the past, but with little success.

In the UK, a lot of health-related development funding goes out via bilateral programmes established by the Department for International Development (DfID) In the USA, PEPFAR (the President's Emergency Plan For AIDS Relief) is the preferred vehicle for funding overseas HIV prevention and treatment programmes. One of the main rules about pledging to the GFATM is that this money comes '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 the current US government strongly objects to harm reduction strategies amongst drug users and programmes seen as 'endorsing' prostitution or abortion (all of which may be funded by the GFATM), a national scheme that does not support such initiatives is seen as preferable recipient of federal funds.

The US has pressurised the Global Fund to bring its policies in line with the Bush Administration's sensibilities in the past, but with little success - the Global Fund is now officially excluded from USAID 'moral' aid donation restrictions.

One other problem lies in the way that funding is shared out between wealthy nations. While the US has increased donations to the Global Fund (the 2007 allocation was a third higher than the previous year), Congress has dictated that this amount is capped at either US$ 1000 m per year, or 33% of the overall total of pledges received (33% being the US percentage of global GDP). This means that if other countries give less, theoretically so does the US.

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. Of the $1.32 billion worth of grants approved in the first funding round in 2002 for example, $55 millon worth have not yet been signed by the recipient nation, and just $977m worth have actually been distributed.⁵ In theory, all of these grants should have been distributed by the middle of 2007.

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 dollars 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.⁶ 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 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)⁷ 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'. In the case of India (mentioned above) this facilitator was the Clinton Foundation.

What other reasons are there for slow distribution of Funds?

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.⁸

The World Bank and IMF have officially denied the active limitation of healthcare budgets in Uganda and elsewhere. However, many governments still impose restrictions because they believe it is the only way to maintain a good relationship with their debtors. The reasoning behind this strategy is that rapid exchanges of foreign cash can quickly increase the value of a nation's currency and therefore the price of its exports. This, say many finance ministers, could adversely affect competitiveness and displease the IMF. But, as the 2004 UNAIDS report on the Global AIDS epidemic states, "The short-term inflationary effects of increased and additional resources applied in tackling the HIV epidemic pale in comparison with what will be the long-term effects of half-hearted responses on the economies of hard-hit countries."⁹

What is (PRODUCT)RED™ ?

(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. So far, Emporio Armani, GAP, Converse, Apple, Hallmark, Motorola, Dell and Microsoft have all signed up to the scheme, and the financial services provider American Express has launched a (RED) credit card that donates 1% of the value of all purchases to the Fund.¹⁰. Profits from the sale of several special UK (RED) Independent newspapers, one edited by Bono himself, have also gone to the charity, and a (RED) edition of the medical journal The Lancet was produced in August 2006¹¹ (See our AIDS History 2003 - 2006 page for more).

In November 2007 it was announced that (PRODUCT)^RED had raised US $50 million for grants to Rwanda, Swaziland and Ghana.¹² In February 2008, an art auction at Sothebys in New York raised US $42 million for (RED) in a single day, taking the total to more than US $100 million.¹³

Despite this moderate 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.¹⁴ 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.¹⁵

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.¹⁶ The programme is still in its infancy, but the German government has already agreed to cancel € 50 million worth of debt owed by Indonesia, providing the country invests half of this in domestic Global Fund programmes.¹⁷

The Global Fund has suspended some of its grants – why is that?

The Global Fund has suspended grants in several countries since it first began distributing funds, but the most notable are Uganda, Myanmar (Burma) and Ukraine.

In Uganda, grants were stopped in August 2005 after the country’s Local Fund Agent discovered financial irregularities within the Ministry of Health’s special Programme Management Unit (PMU). It is believed that around $280,000 was misspent by individuals within the PMU over a period of several months. The Ugandan government quickly disbanded the PMU and brought in the international accounting and auditing firm Ernst & Young to temporarily oversee grant administration. Grant disbursement was restarted once Uganda had launched an enquiry into the case, but the failure to come up with a satisfactory long-term plan for Global Fund grant distributions meant the country failed to have two Round Two grants for TB and Malaria renewed beyond the initial two-year phase.¹⁸ It also failed to receive new grants for HIV/AIDS and Malaria during the Round Six grant approval process, although a grant for TB was allocated.¹⁹

In Myanmar, the Fund announced they would be cancelling all grants and withdrawing entirely in 2005, due to increasingly strict travel restrictions imposed on foreign workers by the governing military junta. The Fund had agreed to spend $100 million over five years in the country, which has an HIV+ population of around 360,000 and is thought to have one of the highest rates of tuberculosis in the world.²⁰ A "Three Diseases" (3D) fund has since been set up by the European Commission, Britain's DfID, Australia's AusAID, Sweden's Sida, the Netherlands and Norway to fund work on AIDS, Tuberculosis and Malaria in the country.²¹

In Ukraine, a grant for HIV and AIDS was suspended in January 2004 following serious reservations about the way the programme was being governed. Subsequently, the International HIV/AIDS Alliance, a global NGO, became the sole recipient of the grant, and funding was restarted a month later.²²

Other countries that have failed to have grants renewed for phase two funding include Nigeria, Senegal, South Africa and Pakistan.²³

Representatives from the Fund have described the cancellation and suspensions of grants as deeply regrettable, but have insisted that such action is always necessary to uphold the Fund's reputation as a transparent and fairly managed organisation that works with, rather than against the countries it supports.

What progress has been made?

Despite the problems, Global Fund money has produced many practical and positive results. According to the Global Fund's 5-year results report,²⁴ by 1 December 2006 an estimated 1.25 million lives had been saved thanks to the $3.2 billion of grants disbursed by the GFATM since its inception. Seventy-five percent of all the Fund's grants were performing adequately or excellently, and ninety-four percent of the GFATM's programmatic targets had been achieved.

...by 1 December 2006 an estimated 1.25 million lives had been saved thanks to the $3.2 billion of grants disbursed by the GFATM since its inception.

The report also places the average time between grant approval and the first disbursement of cash at 9.3 months, a clear decrease from the baseline figure of 11.2 months. However, this is still longer than the Fund's ultimate goal of eight months.

In regards to HIV and AIDS, the report showed that 1.2 million orphans had been provided with basic care and support, and 770,000 people had been placed on antiretroviral AIDS therapy as a result of Global Fund money. An update from May 2007²⁵ boosted the figure for people antiretroviral therapy to 1.1 million, and also reported that 2.8 million people had received treatment for tuberculosis under the Directly Observed Therapy Scheme and 30 million insecticide treated bednets had been distributed to help prevent the spread of malaria.

Such progress is very good news for both recipients and donors, although contributions from all sectors will need to increase if the Fund is to keep up with demand.

How does the Global Fund compare overall to other funding initiatives such as PEPFAR?

Much has been made of the apparent rivalry between the UN backed Global Fund and the US fronted PEPFAR, and there have been many arguments about which scheme has been more successful at tackling global health problems. Some say PEPFAR is better because it is more specific in its targets, distributes more money and gets faster results. However as well the debatable wisdom of allocating money on a 'moral' basis, there remain questions over how thoroughly the whole process is being checked to ensure the money actually reaches those in need. Others champion the Global Fund, insisting its independence, wide remit, systematic vetting process and insistence on organisational 'transparency' guarantees every penny reaches people in need. As we have seen, all this can be at the cost of speedy distribution of funds however, and levels of donor investment in the Fund remain critically low.

The reality is that PEPFAR and The Global Fund are both important in the global fight against disease. Trying to imply that one is intrinsically 'better' than the other is perhaps misguided, because ultimately, a life saved is a life saved no matter which scheme supplies the means to do it.

What does the future hold for the Global Fund?

As the Global Fund matures, there are three key issues that it will need to address. Firstly, there is the issue implementation. As already discussed, the Global Fund is not designed to be an implementing agency, and is unlikely to change this remit. Despite the introduction of EARS, slow disbursement of funds is an ongoing problem in countries that don't have the staff, health system capacity or bureaucratic structures to absorb and distribute large grants. The delays may be exacerbated by problems with the Global Fund monitoring and reporting requirements, which some countries have reported to be complicated and inconsistent.²⁶

... perhaps the most vital issue is how to maintain and increase donations to the Global Fund.

Secondly, there is a ongoing debate about whether the Global Fund should only be giving money to AIDS, Tuberculosis and Malaria, when many countries are in need of much wider funding for health, and in particular, for strengthening their basic health systems. There have even been calls for medical staff salaries to be paid directly by the Fund.²⁷ In the fourth round of funding, grants for general health system strengthening were permitted, though this practice was cancelled in round 5 after protests that such grants exceeded the Global Fund's remit. Many are now calling for general health system strengthening grants to be reinstated to allow countries to expand health services for all, and not just those with HIV, TB or Malaria. Some may be included in round 7, although they will likely be tightly tied to the implementation of the three core disease programmes.²⁸

Finally, perhaps the most vital issue is how to maintain and increase donations to the Global Fund. The September 2007 replenishment meeting saw a notable drop in donor pledges from some governments²⁹, while others (such as the UK pledge) were substantially less than many campaigners had hoped for.³⁰ In the long-term, this could seriously restrict the number of grants the Fund are able to approve, and consequently affect the health and survival of tens of thousands.

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