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New Funding Model: First Wins and Early Lessons Learned

In early 2013, the Global Fund launched the transition to the new funding model, approved by the Board in late 2012. The new model replaces the previous Rounds-based system and aims to simplify grant application and disbursement processes while improving measurable results.

Tremendous progress has been made so far this year. Country dialogues and concept note development have taken place in three early applicant countries – Myanmar, Zimbabwe and El Salvador. The Technical Review Panel (TRP) and the Grant Approvals Committee (GAC) had endorsed five concept notes -- three for HIV/AIDS, and one each from Myanmar for TB and malaria -- which were approved by the Board in June. The TRP and the GAC are expected to review concept notes from five additional early applicants (DRC, Philippines, Artemisinin Resistance Initiative, Eurasian Harm Reduction Network, Malaria Elimination initiative in Mesoamerica & Hispaniola) by November. Kazakhstan’s early applicant review is scheduled to take place in 2014. 

Throughout the transition, the Global Fund also has provided support and additional funding to interim applicants. Pakistan was approved in early May for $8 million in interim funding for a TB grant. In total, 26 of the 47 interim applicants are expected to access interim funding by the end of this year, with most others expected to access funding in the first half of 2014. Between early and interim applicants, $1.55 billion in funding under the new model is expected to be approved by the end of 2013, out of the total Board-approved upper ceiling of $1.9 billion for the 2013-2014 transition period.

However, the new framework still needs to evolve to be fully operationalized by country teams, the TRP and the GAC. Some of the challenges identified by key stakeholders – applicants, the Secretariat and technical partners – include:

Demand significantly exceeded available funding among early applicants: A total of $1 billion was requested in the five concept notes, including $205 million in existing grant funds, $391 million in indicative funding – which is allocated based on disease burden and a country’s “ability to pay” -- and $419 million (42% of total need) in the “above indicative” range, significantly more than was available in Global Fund funding. While this is evidence that, for the early applicants, the new model successfully achieves the objective of encouraging ambitious concept notes, it also poses significant challenges for setting priorities for funding within this range and illustrates on-going unmet needs in countries.

Allocation methodologies require further discussion and analysis: The Strategy, Investment and Impact Committee (SIIC) has requested additional time for analysis before recommending an allocation methodology for determining the indicative vs. incentive funding split. Indicative funding will be available for a country’s priority interventions and a range will be communicated to applicants. Incentive funding will be awarded from a separate reserve and will reward high-impact, well-performing programs. Early experiences with applicants to-date have identified a strong upward bias from Country Teams towards increases in country funding requests. Therefore, the new model in its current form is not ideal for countries that have historically been underfunded.

Division of responsibilities between the TRP, the GAC, and the Board needs to be clarified: The new model poses new challenges for TRP and GAC reviews, especially in cases where demand far exceeds available Global Fund resources, raising the possibility that the TRP’s role and/or composition may have to be changed to address the needs of the new model.

Although there was no decision related to the new funding model at the June Board meeting, the SIIC provided an update on its implementation to date – including a summary of grants ready for signature and learnings from the TRP and the GAC.  Board Members will have additional opportunities to ask questions and provide input before the SIIC puts forth a recommendation on indicative vs. incentive funding and disease splits for the Global Fund’s 30th Board Meeting in November.

In addition, countries and Country Teams continue to participate in country dialogues, internal trainings, partner consultations and information sessions to prepare for full transition in 2014.