A New Funding Model for the Global Fund
November 27, 2012
Senior Advisor, Global Health Policy Center
At its 28th meeting November 14 - 15, 2012, in Geneva, the Global Fund’s board approved a fundamental change in its funding model that’s designed to be flexible, focused, and fast. While significant details remain to be worked out, the basic approach has been agreed as has a plan to implement it rapidly.
This was a critical component to the Fund’s new five-year strategy, approved last November, which called for an end to the old rounds-based system that had countries applying annually for funding that was subsequently vetted – and recommended, or not -- by an independent technical review panel. Those approved still faced a lengthy process to agree on implementation terms and negotiate a final grant agreement, stretching the average time from proposal to signature to about 18 months. For those not approved, they had to wait another year before submitting anew for the next round. Over time, this system resulted in a winners and losers dynamic that heavily advantaged those especially adept at writing proposals, leaving out some countries with weaker capacity but equally compelling needs.
Under the old approach, proposals were recommended based on technical merit, an important threshold to ensure consistency with existing normative guidance, but which was not sufficient to take account of whether the project was to have a maximum health impact. Proposals to the Global Fund were also often packaged as discreet projects, leaving the Global Fund (and the countries themselves) disconnected from other efforts already underway. It was difficult to discern from the application what other funders were doing, and how the Global Fund-supported work fit into a country’s broader strategy.
All these problems were compounded by rules that required Global Fund grant managers to remain disconnected from the development of proposals so as to preserve objectivity and to avoid collisions with technical partners. For countries struggling to get money, this left the Global Fund unable to organize technical support needed to help them put together compelling requests. For countries struggling to implement approved grants, Global Fund staff was often prevented from recommending that new funding be delayed until the country was ready to implement existing grants more effectively. In some instances, the board was asked to approve grants to countries even before negotiations had been completed on previous proposals.
The new funding model comes as welcome relief. Core attributes include:
The process is now intended to fit into existing country processes and schedules. Proposals are explicitly meant to be based on national health or disease strategies rather than on narrower project-based approaches. This should incentivize countries to invest more time in taking a long-term strategic approach, and coordinating efforts funded by other donors and domestic resources.
The new funding model is also designed to allow countries to seek funding when they need it, rather than fitting into annual rounds scheduled (increasingly erratically) by the Global Fund. This has been accomplished by adopting an allocation-based model that distributes shares of available funding calculated using each country’s disease burden and economic status (measured using gross national income).
A big concern of this approach, however, is that countries might just restrict their funding requests to fit their allocations rather than articulating what they really need, losing the Global Fund’s distinction as a demand-based financing model. To mitigate against this risk, the new funding model also withholds a substantial portion of funding from the allocation system to be awarded as an incentive for well-designed, ambitious proposals that present what countries need – and can effectively spend – to fight the three diseases and address underlying health and community systems weaknesses.
The allocation-based approach focuses money on those countries with the highest disease burden and the least ability to finance an aggressive response. With funding from donors tightening, this approach was a key feature of the new Global Fund strategy.
Grant managers are now also expected to be more engaged in proposal development and review, though the board’s Technical Review Panel (TRP) will be retained to provide independent recommendations on funding. This, combined with a more flexible schedule, should allow time for dialogue with countries about the content of the proposals, ensuring that financing requests focus on high-impact, proven interventions and that systemic barriers are addressed, including procurement and supply chain management, health data, and human rights.
In the previous approach, most of the discussions with countries about implementation arrangements were taken up only after the Global Fund board had approved proposals. This often caused lengthy delays in moving to signed grant agreements and payments. It also left the TRP recommending proposals that couldn’t easily be implemented or funding levels that were too low or too high based on effective capacity to deliver results.
Under the new approach, countries are being asked to submit concept notes early in the process to present the basics of their approach and budget, as well as their arrangements for implementation. This allows for simultaneous and integrated reviews of both the technical response to the diseases and to the plans for bringing that response rapidly to scale. This should could months of the process, especially for countries that come in with well-designed national strategies and clear plans for successful implementation.
Many other important aspects of the new funding model remain to be worked out, and some larger questions remain. I’ll try to highlight some of these in upcoming blogs, but would love to hear from you where you see problems, questions, or concerns.
The Global Fund board also approved an implementation plan that allows for ramping up the new approach over the coming year, with the model operating at full speed starting early in 2014. This will allow for some of the bugs to get worked out while still keeping the funding flowing. Thankfully, the latest financial projections show that over $1 billion might be available to invest, some to continue existing grants and some to increase funding, especially to countries that have historically gotten less in comparison to their disease burdens.
At the CSIS Global Health Policy Center, we’ll be helping raise some of the key issues for the Global Fund, especially in its relationship to U.S. bilateral programs, other multilateral organizations, and Congress. If you have suggestions, post them in the comments section –we’re interested in the feedback!