The Global Fund to Fight AIDS, Tuberculosis, and Malaria (GF) was established in 2002 as a multilateral funding institution with the mission of reducing the burden of the three diseases in low- and middle-income countries, thus helping to reach the Millennium Development Goals. The GF has disbursed $17.9 billion as of November 2012 to programs in 151 countries, and it is the world’s leading source of malaria and TB aid.
From the outset, the GF used a ‘rounds-based’ funding cycle, in which countries apply for financial support and thus compete for resources according to the quality of their proposals. While this approach encouraged country initiative, it also had possible negative consequences. The shares of Global Fund resources going to countries were not always based on their relative needs; in some cases, more effort went into building elaborate proposals rather than implementing disease control programs; and uncertainties about the outcomes of the rounds-based decisions by the GF made it hard for countries to plan ahead.
To address the drawbacks in the rounds-based funding model, the GF Board decided in early 2012 to explore new options that might lead to more strategic investment of resources, focusing on highest-impact countries and allowing for greater predictability. In evaluating such options, the GF wanted to answer the question: “What is a fair and efficient way of distributing funding between countries and diseases?” To assist the GF Secretariat, R4D was engaged along with the Boston Consulting Group (BCG) to support and inform the Secretariat team. This was a high-stakes affair that would affect the distribution of over $3 billion dollars per year, impacting millions of people receiving antiretroviral treatment, long-lasting insecticide nets, TB medicines, and other life-saving support.
R4D completed three main phases of work for the GF. The first was benchmarking: R4D reviewed funding models and the rationale for choosing these models for several peer organizations (including GAVI, the World Bank, and regional development banks). The team also participated in consultations with key persons at these peer organizations who had been involved in the development or decision-making around their funding models.
Combining the results of the benchmarking phase with consultations with the GF and key stakeholders, the R4D team then developed three main principles to guide the design of the new allocation model: need (defined by burden of disease from HIV/AIDS, malaria, and TB), ability to pay (based on income per capita), and predicted effectiveness (how well grant money would be used, (indicated by measures such as quality of country governance).
R4D constructed an excel-based model combining different variables and weighting approaches to generate shares and funding amounts for countries and groups of countries. The third phase of work involved simulating results using different model specifications, consulting with the GF Secretariat and key stakeholders on the inputs and outputs of the model, and then revising the model. Dozens of simulations were produced.
The final model, approved by the GF Board in November 2012, uses data on country disease burden and GNI per capita. Country allocations are also subject to caps (for high population countries), floors (for small population countries) and ex-post “qualitative adjustments,” to take into account additional factors such as other donor aid and predicted effectiveness. The model is already being used to determine “interim” funding for countries in 2013, and will become fully operational in 2014 following the Global Fund’s replenishment.
As a follow-on to this work, the GF requested technical advice from R4D during the first half of 2013 on approaches to splitting the overall Global Fund resource envelope among the three diseases – AIDS, TB, and malaria – in an optimal manner.