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The Fund to Fight AIDS

Questions & Answers  

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A Partnership to Prevent and Treat
AIDS, Tuberculosis and Malaria

June 2003

AIDS, tuberculosis and malaria are preventable diseases that can be treated effectively. Yet, they were the cause of six million deaths in 2002. Relative to high-income countries, the burden of these diseases is thirty times greater in developing countries, resulting in tremendous economic loss, social disintegration and political instability. The Fund to Fight AIDS was created in 2002 to respond to this formidable challenge.

What is the Fund?

The Fund’s purpose is to attract and disburse additional resources to prevent and treat AIDS, tuberculosis (TB) and malaria. As a partnership between governments, civil society, the private sector and affected communities, the Global Fund represents a new approach to international health financing. The Fund works in close collaboration with other bilateral and multilateral organizations, supporting their work through substantially increased funding.

The Fund relies on local ownership and planning to ensure that new resources are directed to programs on the frontlines of this global effort. Its results-based approach to grantmaking – where grant awards are disbursed incrementally, based on measures of progress – is designed to ensure that funds are used efficiently to scale up proven interventions.

The Fund is an independent organization, governed by an international Board that consists of representatives of donor and recipient governments, non-governmental organizations (NGOs), the private sector (including business and philanthropic foundations) and affected communities. Also participating in ex-officio capacity are representatives of the World Health Organization (WHO), UNAIDS, and the World Bank. The latter also serves as the Fund’s fiduciary trustee. In January 2003, United States Secretary of Health and Human Services Tommy Thompson succeeded the Fund’s first Chair, Dr Chrispus Kiyonga of Uganda. Dr Suwit Wibulpolprasert, Deputy Permanent Secretary for Thailand’s Ministry of Public Health, serves as Vice Chair.

The Fund’s by-laws also call for the formation of a broad group of stakeholders referred to as the Partnership Forum. Beginning in 2004, the Partnership Forum will convene biannually to review progress and provide counsel to the Fund.

The staff of the Fund (referred to as the Secretariat) is based in , and consists of about seventy people. The Secretariat aspires to be as lean an operation as possible: less than 3% of annual commitments is used for central administration and management of the Global Fund each year. An additional 2% is used for local oversight of grants by Local Fund Agents (see box for description of LFAs). Dr Richard Feachem joined the Fund as Executive Director in July 2002.

Key Fund Structures

Country Coordinating Mechanisms (CCMs): Country-level partnerships that develop and submit grant proposals to the Fund, monitor their implementation, and coordinate with other donors and domestic programs. CCMs are intended to be multi-sectoral, involving broad representation from government agencies, NGOs, community- and faith-based organizations, private sector institutions, individuals living with HIV, TB or malaria, and bilateral and multilateral agencies.

Technical Review Panel (TRP): An independent panel of disease-specific and cross-cutting health and development experts that provides a rigorous review of the technical merit of applications. The TRP may recommend to the Board that proposals be funded without condition, approved conditionally, resubmitted or not approved. Thus far, the TRP has recommended 40% of the proposals reviewed for funding.

Principal Recipient (PR): A local entity nominated by the CCM and confirmed by the Fund to be legally responsible for grant proceeds and implementation in a recipient country. Once the Board approves a proposal, the Secretariat negotiates a two-year grant agreement in which disbursement of funds to the PR is based on the achievement of measurable results. There may be multiple public and/or private PRs in a country.

Local Fund Agent (LFA): Independent organizations hired by the Secretariat to assess the PR’s capacity to administer funds and provide ongoing oversight and verification of reported data on financial and programmatic progress. To date, LFAs include PriceWaterhouseCoopers, KPMG, United Nations Office for Project Services (UNOPS) and Crown Agents. A global competitive tender is underway to select additional LFAs for all of the countries in which the Fund will operate.


How does the Fund work?

The following process used by the Fund to approve and administer grant awards is designed to maximize the participation of local stakeholders, ensure accountability and provide transparency with respect to both decision-making and operations:

  1. Developing country governments work with civil society organizations and partners through CCMs to prepare proposals that fill financing gaps in local HIV, TB and/or malaria programs.
  2. Eligible proposals submitted to the Fund are reviewed for technical merit by the TRP; recommended proposals are considered by the Fund Board and approved based on available funds.
  3. The Fund Secretariat appoints an LFA in countries with approved grants. The LFA assesses the capacity and systems of the PR that has been nominated by the CCM.
  4. The Secretariat negotiates a two-year grant agreement with the PR, after which the PR receives its first disbursement. The PR in turn makes disbursements to local implementing organizations.
  5. The PR periodically requests additional disbursements from the Secretariat, based on evidence of progress achieved, verified by the LFA.
  6. Based on verified disbursement requests, the Secretariat instructs the World Bank (as trustee) to make disbursements throughout the two-year period. The flow of funds is linked to continued progress.
  7. Two-year program performance is evaluated by the Global Fund to determine whether to renew grants through to their full term (typically 5 years).


What is the Fundís track record?

In two rounds, the Fund has approved grants to 93 countries, including those with the greatest present disease burden and those at risk of future disaster (two more countries benefit from a multi-country proposal). Two years of initial financing totaling US $1.5 billion has been committed to over 150 programs. Sixty percent of this total is for Africa; 60% is for AIDS. Half of the money will be used by governments; half by NGOs. Half is for the purchase of drugs and commodities, and half is for infrastructure and training.

In its first year, the Secretariat designed and implemented the Fund’s new results-based system of grantmaking to help ensure the most effective use of donor funds. With this infrastructure now in place, the process of negotiating and signing grant agreements is well under way and the rate of signed agreements and disbursements is expected to increase dramatically. As of June 13, 2003, progress on Rounds 1 and 2 includes signed agreements with over 50 of the 93 countries with approved proposals, valued at roughly US$ 600 million. Disbursements – including initial outflows and the first and second disbursements – have been made to 28 countries, totaling nearly US $38 million. It is expected that disbursements will total US$ 100 million by October. Round 3 approvals, scheduled to occur in October at a Board Meeting in Thailand, will be based on availability of funds and the technical review of over 200 proposals from 85 countries.


What difference will the Fund make in peopleís lives?

With Fund resources, local programs approved in Rounds 1 and 2 will support an unprecedented scale-up of HIV treatment. Over five years, an estimated 500,000 people will begin receiving antiretroviral treatment, representing a tripling of current coverage in poor countries (including over a six-fold increase in Africa). An expected 500,000 children orphaned by AIDS will receive support and an estimated two million people with infectious TB will be treated successfully using DOTS. Over this same period, the Fund will help to quadruple the coverage of treatment of multi-drug resistant TB and finance 20 million combination drug treatments for resistant malaria and 30 million insecticide-treated bed nets to prevent malaria.

Examples of approved programs include a voucher program in Tanzania where pregnant women can shop among village vendors for locally-produced malaria bed nets; a TB grant to Sierra Leone to rebuild 24 (70%) of the country’s DOTS clinics, which were destroyed during its civil war; a prevention effort in India, which will expand mother to child transmission (MTCT) prevention programs, voluntary counseling and testing, and treatment for sexually transmitted infections from 125 to 450 health care centers. Moreover, India will have trained more than two thousand health care workers.
  How Haiti is Currently Using
Fund Resources

A grant awarded to NGOs in Haiti is enabling that country to strengthen local public health infrastructure and dramatically scale up efforts to prevent and treat HIV and TB. Since August 2002, the program has reopened a public health clinic and operating room, stocked five public clinics with essential drugs, and provided basic laboratory services in four clinics. More than 600 individuals have begun antiretroviral treatment, and over 300 new TB cases have been detected. The recipient NGO also has expanded school-based prevention, access to voluntary testing and counseling and prenatal screening, and MTCT prevention five-fold. With systems now in place, the program is expected to receive additional disbursements to expand activities rapidly.

Ghana will use a grant to build 16 voluntary testing and counseling centers, provide MTCT prevention services to 600 mothers per year, and begin antiretroviral therapy for 2,000 people with AIDS. The country’s grant will allow Ghana to treat an additional 20,000 patients using DOTS over the next two years. A quarter of these patients will be treated in private health clinics in order to strengthen the capacity of the private sector to work with the public sector to fight TB.


How is the Fund accountable?

The Board and Secretariat have incorporated a number of accountability mechanisms into the Fund’s grant review, awards and disbursement processes. The first level of responsibility lies with local CCMs, which should include in their proposals to the Fund plans for independent audits of program financial statements. In addition, prior to the signing of an agreement, the LFA certifies the fiscal and administrative capacity of the PR. Through a grant agreement with the Fund, PRs are accountable for the use of grant funds and program results. Throughout the grant period, periodic disbursements of funds are linked to progress identified in programmatic and financial updates submitted by the PR. The LFA provides an independent verification of these updates. As the governance body at the country level, the CCM oversees and monitors progress during implementation.

The Fund has adopted other decisions to ensure fiscal prudence and the efficient use of funds. For example, grant awards are made only on the basis of confirmed donor pledges, and signed agreements must be based on funds actually received. The Fund has also adopted an innovative drug procurement policy, which ensures that recipients secure the lowest available price for quality pharmaceuticals.

Finally, one of the Fund’s key operating principles is transparency. This is perhaps best illustrated by the broad content of its website. Approved proposals, signed grant agreements and recipient disbursement requests for Rounds 1 and 2 are available for review, as are documents discussed at Board meetings and information about the Fund’s structure and governance. In the future, the Fund also intends to make available grantee progress updates as well as more detailed information on CCMs.


Who are the Fundís partners?

The Fund represents one important part of a comprehensive global response to AIDS, TB and malaria. Multilateral development partners and bilateral agencies provide complementary support to countries, including technical assistance for monitoring & evaluation; support for capacity building, including human resources as well as product procurement and supply chain management; dissemination of best practices; and financial assistance. Local planning by CCMs is designed to coordinate new activities with those that already exist to ensure that Fund efforts are additive. As a financing mechanism, the Global works closely with key international allies, such as UNAIDS, the World Health Organization (WHO) and the World Bank, and major partnerships, including Stop TB and Roll Back Malaria.

The participation of NGOs and the private sector are key pieces of the Fund’s operations – on the Board and TRP and in CCMs and the Secretariat. NGOs offer constructive scrutiny of the Fund’s activities and ensure real engagement with civil society. Private sector partners and foundations provide both direct funding and in-kind assistance to the Fund. In addition, the Fund is working with businesses to encourage individual contributions from employees and customers and to co-finance the expansion of workplace programs into communities.


What are the Fundís current resource needs?

To help establish and sustain the Fund, international donors – including 39 countries, major foundations and private donors – have pledged significant new resources to the fight against the three diseases. Between 2002 and 2004, contributions to the Fund total US$ 2.6 billion, with an additional US$ 2.0 billion pledged for 2005 to 2008 or for an unspecified period. While significant, pledges through 2004 are not enough to finance Rounds 3, 4 and 5, which are scheduled to occur between October 2003 and October 2004. Given an expected increase in the number of applications in future rounds, as well as an anticipated approval rate of 50%, the projected needs of the Fund are US$ 3.0 billion by the end of 2004. With approximately US$ 700 million in pledges confirmed for 2004, the near-term resource shortfall is US$ 2.3 billion. In 2005, the expected need is USD 4.5 billion based on a sixth and seventh round of new proposals and the renewal of programs approved in Rounds 1 and 2. Confirmed pledges for 2005 currently total just over US$ 600 million. The Fund will revise these estimates as necessary based on proposals received.

The magnitude of this outstanding need means that the majority of funds must be raised from the public sector, including funding from new donors and additional contributions from developed countries that have pledged previously. However, businesses and private foundations also have important roles to play in the Fund, both as donors and partners. In addition, increased local financing and leadership among developing countries must be commensurate with new global financing. As a global responsibility, the Fund requires unprecedented commitments from all stakeholders.

Prepared June 13, 2003.

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