Global Health
The Global Fund to Fight AIDS, TB and Malaria Is Responding to Challenges but Needs Better Information and Documentation for Performance-Based Funding Gao ID: GAO-05-639 June 10, 2005The Global Fund to Fight AIDS, Tuberculosis and Malaria--established as a private foundation in January 2002--is intended to rapidly disburse grants to recipients, including governments and nongovernmental organizations. The Global Fund has signed over 270 grant agreements and disbursed more than $1 billion. Governments provide most of its funding; the United States has provided almost one-third of the $3.7 billion the Global Fund has received. In May 2003, the President signed legislation directing the Comptroller General to monitor and evaluate Global Fund-supported projects. GAO reviewed grants that the Global Fund began disbursing before January 2004. This report (1) describes the Global Fund's process for managing grants and disbursing funds, (2) identifies factors that have affected grant performance, (3) reviews the basis and documentation of performance-based funding, and (4) notes recent refinements of Global Fund processes.
Global Fund policy is to manage grants in a transparent and accountable manner, disbursing funds to recipients based on their demonstrated performance as measured against agreed-on targets. In implementing this performance-based funding system, Global Fund officials are to periodically assess whether the grant's principal recipient has made sufficient progress to warrant its next disbursement. After 2 years, the Global Fund is to determine whether to continue funding the grant for an additional 3 years. In making an assessment, officials consider several information sources, including the recipient's reports on its performance and expenditures and an independent agent's verification of the recipient's reports. Recipient countries' capacity to implement grants has been an underlying factor in grant performance, according to Global Fund and other knowledgeable officials. These officials, as well as principal recipients, also cited guidance, coordination, planning, and contracting and procurement as factors associated with challenges or successes in grant performance. For example, recipients in three countries reported that they could not meet their targets because they had not received national treatment guidelines. However, several grant recipients reported that, under certain circumstances, Global Fund guidance allowed them to quickly redirect funds, thereby enabling them to meet their targets. GAO found problems associated with the information sources that the Global Fund uses in making performance-based funding decisions. For example, the limited monitoring and evaluation capabilities of many recipients raise questions about the accuracy of their reporting. Moreover, the Global Fund has not consistently documented its determinations that recipients' performance warranted additional funding. For instance, the Global Fund's documentation did not explain its decisions to disburse funds to some recipients who reported that they had met few targets. Further, the Global Fund does not track or publicly document denied disbursement requests. The Global Fund is taking steps to address challenges to grant performance and improve the overall management of grants, including (1) reorganizing and strengthening its staff; (2) developing a risk assessment mechanism and early warning system to identify poorly performing grants; (3) streamlining reporting and funding procedures; (4) working with partners to strengthen recipient capacity; and (5) clarifying certain guidance for the country coordinating mechanism--the entity in each country responsible for developing grant proposals, nominating grant recipients, monitoring grant implementation, and advising the Global Fund on the viability of grants for continued funding. However, the Global Fund has not clearly defined the role of these entities in overseeing grant implementation.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-639, Global Health: The Global Fund to Fight AIDS, TB and Malaria Is Responding to Challenges but Needs Better Information and Documentation for Performance-Based Funding
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Is Responding to Challenges but Needs Better Information and
Documentation for Performance-Based Funding' which was released on June
10, 2005.
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Report to Congressional Committees:
June 2005:
Global Health:
The Global Fund to Fight AIDS, TB and Malaria Is Responding to
Challenges but Needs Better Information and Documentation for
Performance-Based Funding:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-639]:
GAO Highlights:
Highlights of GAO-05-639, a report to congressional committees:
Why GAO Did This Study:
The Global Fund to Fight AIDS, Tuberculosis and Malaria” established as
a private foundation in January 2002”is intended to rapidly disburse
grants to recipients, including governments and nongovernmental
organizations. The Global Fund has signed over 270 grant agreements and
disbursed more than $1 billion. Governments provide most of its
funding; the United States has provided almost one-third of the $3.7
billion the Global Fund has received. In May 2003, the President signed
legislation directing the Comptroller General to monitor and evaluate
Global Fund–supported projects. GAO reviewed grants that the Global
Fund began disbursing before January 2004. This report (1) describes
the Global Fund‘s process for managing grants and disbursing funds, (2)
identifies factors that have affected grant performance, (3) reviews
the basis and documentation of performance-based funding, and (4) notes
recent refinements of Global Fund processes.
What GAO Found:
Global Fund policy is to manage grants in a transparent and accountable
manner, disbursing funds to recipients based on their demonstrated
performance as measured against agreed-on targets. In implementing this
performance-based funding system, Global Fund officials are to
periodically assess whether the grant‘s principal recipient has made
sufficient progress to warrant its next disbursement. After 2 years,
the Global Fund is to determine whether to continue funding the grant
for an additional 3 years. In making an assessment, officials consider
several information sources, including the recipient‘s reports on its
performance and expenditures and an independent agent‘s verification of
the recipient‘s reports.
Recipient countries‘ capacity to implement grants has been an
underlying factor in grant performance, according to Global Fund and
other knowledgeable officials. These officials, as well as principal
recipients, also cited guidance, coordination, planning, and
contracting and procurement as factors associated with challenges or
successes in grant performance. For example, recipients in three
countries reported that they could not meet their targets because they
had not received national treatment guidelines. However, several grant
recipients reported that, under certain circumstances, Global Fund
guidance allowed them to quickly redirect funds, thereby enabling them
to meet their targets.
GAO found problems associated with the information sources that the
Global Fund uses in making performance-based funding decisions. For
example, the limited monitoring and evaluation capabilities of many
recipients raise questions about the accuracy of their reporting.
Moreover, the Global Fund has not consistently documented its
determinations that recipients‘ performance warranted additional
funding. For instance, the Global Fund‘s documentation did not explain
its decisions to disburse funds to some recipients who reported that
they had met few targets. Further, the Global Fund does not track or
publicly document denied disbursement requests.
The Global Fund is taking steps to address challenges to grant
performance and improve the overall management of grants, including
* reorganizing and strengthening its staff;
* developing a risk assessment mechanism and early warning system to
identify poorly performing grants;
* streamlining reporting and funding procedures;
* working with partners to strengthen recipient capacity; and
clarifying certain guidance for the country coordinating mechanism”the
entity in each country responsible for developing grant proposals,
nominating grant recipients, monitoring grant implementation, and
advising the Global Fund on the viability of grants for continued
funding. However, the Global Fund has not clearly defined the role of
these entities in overseeing grant implementation.
What GAO Recommends:
GAO recommends that the U.S. Global AIDS Coordinator work with the
Global Fund‘s Board Chair and Executive Director to improve the basis
for, and documentation of, the Global Fund‘s funding decisions. The
U.S. Departments of State and HHS, USAID, and the Executive Director of
the Global Fund largely concurred with the report‘s conclusions.
www.gao.gov/cgi-bin/getrpt?GAO-05-639.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact David Gootnick at (202)
512-3149 (gootnickd@gao.gov).
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Grant Management Process Has Many Participants and Occurs in Two
Phases:
Several Factors Affected Grant Performance:
Sources Informing Funding Decisions Have Limitations, and Decisions Are
Not Clearly Documented:
Global Fund Has Taken Several Steps to Refine Grant Management and
Performance:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Methodologies Used to Compare Grants' Disbursements:
Appendix III: Comments from the Global Fund:
Appendix IV: Joint Comments from the Departments of State and Health
and Human Services, and the U.S. Agency for International Development:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Global Fund Grants by Disease, Region, and Recipient Type:
Table 2: Selected Characteristics of 130 Global Fund Grants:
Table 3: Information Related to Disbursements for Different Types of
Grants, Defined by Principal Recipient Type, Disease Type, and Grant
Size:
Table 4: Regression Models Showing Effects of Various Factors on
Percentage of Grants Disbursed, Minus the Amount Disbursed in First
Disbursement:
Table 5: Percentages of Timely and Untimely Disbursements, by
Disbursement Stage:
Figures:
Figure 1: Global Fund Grant Management Process:
Figure 2: Global Fund Grant Life Cycle:
Figure 3: Global Fund Grant Rating System for Phase 2:
Figure 4: Global Fund Milestones:
Abbreviations:
CCM: country coordinating mechanism:
HHS: U.S. Department of Health and Human Services:
HHS/CDC: U.S. Centers for Disease Control and Prevention:
HIV/AIDS: human immunodeficiency virus/acquired immune deficiency
syndrome:
NGO: nongovernmental organization:
PWC: PricewaterhouseCoopers:
TB: tuberculosis:
UNAIDS: Joint UN Programme on HIV/AIDS:
UNDP: UN Development Programme:
UNICEF: United Nations Children's Fund:
UNOPS: UN Office for Project Services:
USAID: U.S. Agency for International Development:
WHO: World Health Organization:
Letter June 10, 2005:
The Honorable Richard G. Lugar:
Chairman:
The Honorable Joseph R. Biden, Jr.:
Ranking Minority Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Henry J. Hyde:
Chairman:
The Honorable Tom Lantos:
Ranking Minority Member:
Committee on International Relations:
House of Representatives:
In January 2002, the Global Fund to Fight AIDS, Tuberculosis and
Malaria (the Global Fund) was established as a private foundation to
increase spending for the prevention and treatment of the three
diseases. The Global Fund is intended to rapidly disburse grants to
recipients such as governments and nongovernmental organizations, based
on recipients' performance against agreed-on targets; the Global Fund's
policy is to make such disbursements in a transparent and accountable
manner. The Global Fund approved its first grants in April 2002; as of
April 15, 2005, it had signed 271 grant agreements with recipients in
123 countries and territories and had disbursed more than $1 billion.
The Global Fund is a public-private partnership, governed by a board of
directors representing governments, nongovernmental organizations,
private companies, and persons living with the three diseases. The
Global Fund receives most of its funding from national governments; the
United States has provided almost one-third of the $3.7 billion that it
has received, and the President's 2006 budget requests an additional
$300 million.
In May 2003, we reported that the Global Fund had made progress in
establishing governance structures and had developed comprehensive
systems for monitoring grants but that the monitoring systems faced
challenges.[Footnote 1] Also in May 2003, the President signed
legislation directing the Comptroller General to monitor and evaluate
projects supported by the Global Fund.[Footnote 2] Since then, the
Global Fund has continued to refine its processes. This report reflects
our review of grants that the Global Fund began disbursing before the
beginning of 2004--that is, grants that have had at least 1 year in
which to demonstrate performance. In this report, we (1) describe the
Global Fund's process for managing grants and disbursing funds; (2)
identify factors that have affected grant performance; (3) review the
basis for, and documentation of, the Global Fund's performance-based
funding; and (4) describe the Global Fund's recent refinements for
managing grants and improving their performance.
To describe the Global Fund's process for managing grants and
disbursing funds, we reviewed Global Fund documents and interviewed
officials from the Global Fund headquarters in Geneva, Switzerland. To
identify factors affecting grant performance, we reviewed principal
recipients' progress reports for 38 grants that had a first
disbursement on or before December 31, 2003--to allow for at least 1
year of performance--and met additional criteria, and we categorized
reasons given for deviation from performance targets. Also, to
determine whether certain grant characteristics were factors associated
with the percentage of funds disbursed for each grant, we analyzed
disbursement data for 130 grants that began disbursing funds by the end
of 2003. Further, we reviewed documents obtained from field visits to
four countries--Indonesia, Kenya, Thailand, and Zambia[Footnote 3]--
and interviewed a wide variety of government, civil society, and
bilateral and multilateral development officials in those countries who
were involved in grant implementation or oversight. In addition, we
interviewed officials from the Global Fund and multilateral technical
assistance agencies. To review the basis for, and documentation of, the
Global Fund's performance-based funding, we examined Global Fund
documents--including its policy manual, recipients' progress reports,
and documents assessing the eligibility of 25 of 28 grants considered
by the Global Fund as of the end of March 2005 for continued funding
after an initial 2 years--and spoke with Global Fund staff. To describe
the Global Fund's recent refinements for managing grants and improving
their performance, we reviewed additional Global Fund documents and
conducted follow-up interviews with Global Fund and other officials. We
conducted our work from June 2004 through March 2005 in accordance with
generally accepted government auditing standards. (See app. I for
further details of our scope and methodology.)
Results in Brief:
The Global Fund's grant management process takes place in two phases.
Several entities participate in the management of each grant: the
country coordinating mechanism (CCM), representing country-level
stakeholders; the grant's principal recipient; the Global Fund
secretariat; the grant manager; the Global Fund board of directors; and
the local fund agent, the Global Fund's representative in each
recipient country, responsible for verifying grant recipients'
financial and program reporting. The Global Fund board generally
approves 5-year grants but approves a budget ceiling for only 2 years;
the secretariat then signs an initial contract with the recipient for 2
years--phase 1 of the grant--during which it is to disburse funds based
on regular reviews of the recipient's performance. Toward the end of
the 2-year period, the Global Fund decides whether to renew the grant
for up to an additional 3 years, known as phase 2. The Global Fund
bases its disbursement and renewal decisions on four sources of
information: (1) periodic progress reports submitted by the recipient;
(2) recipient expenditure data; (3) the local fund agent's verification
of the recipient's progress and spending; and (4) contextual
information, including information about mitigating circumstances that
may affect the recipient's performance.
Several factors have influenced grant performance. According to Global
Fund officials and other knowledgeable entities, recipient countries'
capacity to implement grants has been an underlying factor. In
addition, principal recipients as well as Global Fund and development
partner officials frequently cited four factors--guidance,
coordination, planning, and contracting and procurement--associated
with challenges or successes in grant performance. For example,
recipients in three countries reported that they could not meet their
targets because they had not received approved national guidelines for
treating the diseases. However, several grant recipients reported that,
under certain circumstances, Global Fund guidance allowed them to
quickly redirect funds, thereby enabling them to meet their targets.
Our analysis to determine whether certain grant characteristics were
factors associated with the percentage of a grant's funds disbursed
found no significant association between the type of grant recipient,
grant size, or disease targeted and the percentage disbursed.
We found problems with the sources of information that the Global Fund
uses to make periodic disbursement and grant renewal decisions and with
its documentation of those decisions. Regarding the information
sources, we noted that recipient progress reports vary in quality;
their expenditure data are often incomplete; local fund agents'
assessments are inconsistent, reflecting varying levels of expertise;
and contextual information for phase 1 decisions is not systematically
collected. Further, although the Global Fund's policy is to disburse
funds based on grant performance, the secretariat did not document how
it determined that grants' performance warranted additional
disbursements for the 38 grants that we reviewed. For example, the
documentation did not show why the secretariat disbursed funds to some
recipients who reported that they had met few of their targets.
Moreover, the secretariat does not track denied disbursement requests.
In addition, for about one-third of the grants that we reviewed, Global
Fund staff did not document the reasons for their recommendations
regarding continued funding after an initial 2-year grant period.
Stakeholders raised additional concerns regarding the grant renewal
process; for example, a representative of a local fund agent stated
that this process may occur too early in the life of a grant to
adequately reflect the grant's progress.
The Global Fund is taking a number of steps to address challenges to
grant performance and improve the overall management of grants,
including:
* reorganizing and strengthening its staff by increasing the number of
grant managers, adding a new position focused on documenting
disbursement decisions and other grant milestones, creating a new unit
devoted to problem grants, and taking measures to improve the
monitoring and evaluation of grants and the reliability of the
performance data that recipients report;
* developing a risk assessment mechanism and early warning system to
identify poorly performing grants and more systematically alert grant
managers when they need to intervene;
* streamlining reporting and funding procedures by allowing most
recipients to report semiannually instead of quarterly and considering
new, more efficient funding mechanisms than the current round-based
approach;
* working with partners to strengthen recipient capacity, for example,
by collaborating with the World Health Organization's (WHO) Roll Back
Malaria Department in 2004 to reprogram existing grants to incorporate
new, more effective malaria treatments; and:
* clarifying some guidance for the CCM, the body in each country
responsible for developing grant proposals, nominating grant
recipients, monitoring grant implementation, and advising the Global
Fund on the viability of grants for continued funding after 2 years.
However, the Global Fund has not clearly defined the CCMs' role in
overseeing grant implementation.
To improve the quality of the information on which the Global Fund
bases its funding decisions, and the secretariat's documentation of
these decisions, we are recommending that the U.S. Global AIDS
Coordinator work with the Global Fund's Board Chair and Executive
Director to (1) complete efforts to ensure that local fund agents have
the necessary expertise to evaluate recipients' grant performance data,
(2) continue to work with development partners to strengthen the
quality and consistency of that data by enhancing recipients' capacity
for monitoring and evaluating their financial and program-related
activities, and (3) continue efforts to clearly document the Global
Fund's reasons for periodically disbursing funds and renewing grant
agreements.
In providing written comments on a draft of this report, the
Departments of State (State) and Health and Human Services (HHS), the
U.S. Agency for International Development (USAID), and the Global
Fund's Executive Director largely concurred with our conclusions. The
Global Fund's Executive Director agreed with our recommendations and
the U.S. government agencies did not comment on them in their joint
letter. (See apps. III and IV for a reprint of their comments.)
Background:
Human immunodeficiency virus/acquired immune deficiency syndrome (HIV/
AIDS), tuberculosis (TB), and malaria, are devastating millions of
individuals and families, thousands of communities, and dozens of
nations around the world according to the UN's WHO.
* HIV/AIDS, the retrovirus that causes AIDS, is usually transmitted (1)
sexually; (2) from mothers to children before or at birth or through
breastfeeding; or (3) through contact with contaminated blood, such as
through the use of contaminated hypodermic needles. In 2004, it led to
between 2.8 and 3.5 million deaths, most of them in sub-Saharan Africa,
which is home to more than 60 percent of people living with the virus.
The number of people infected with HIV has risen in every region of the
world, with the steepest increases occurring in East Asia, Eastern
Europe, and Central Asia. In China, HIV/AIDS is now found in all 31
provinces, autonomous regions, and municipalities; and in India, as of
2003, 2.5 to 8.5 million people had been infected. In Eastern Europe
and Central Asia, the number of HIV-positive people has risen ninefold
in less than 10 years.
* TB, a bacterial infection transmitted by inhalation of airborne
organisms, ranks just behind HIV/AIDS as the leading infectious cause
of adult mortality, each year killing up to 2 million people, mostly
between the ages of 15 and 54 years. It is the most common killer of
people whose immune systems are compromised by HIV.
* Malaria, caused by a parasite, is transmitted in human populations
through the bite of infected mosquitoes. The disease kills more than
one million people per year, mostly young African children.
The Global Fund, established as a private foundation in Switzerland in
2002, was created as a partnership between governments, civil society,
the private sector and affected communities to increase resources to
fight the:
three diseases. As shown in table 1, 45 percent of the Global Fund's
271 grants, as of April 15, 2005, were focused on HIV/AIDS; 45 percent
went to recipients in sub-Saharan Africa; and 59 percent went to
government recipients.
Table 1: Global Fund Grants by Disease, Region, and Recipient Type:
Category: Disease focus: HIV/AIDS;
Number of grants: 122;
Percentage of total[A]: 45%.
Category: Disease focus: Malaria;
Number of grants: 71;
Percentage of total[A]: 26%.
Category: Disease focus: Tuberculosis;
Number of grants: 67;
Percentage of total[A]: 25%.
Category: Disease focus: Integrated;
Number of grants: 11;
Percentage of total[A]: 4%.
Category: Region: Sub-Saharan Africa;
Number of grants: 121;
Percentage of total[A]: 45%.
Category: Region: East Asia and the Pacific;
Number of grants: 38;
Percentage of total[A]: 14%.
Category: Region: Latin America and the Caribbean;
Number of grants: 36;
Percentage of total[A]: 13%.
Category: Region: Eastern Europe and Central Asia;
Number of grants: 31;
Percentage of total[A]: 11%.
Category: Region: South Asia;
Number of grants: 24;
Percentage of total[A]: 9%.
Category: Region: North Africa and the Middle East;
Number of grants: 21;
Percentage of total[A]: 8%.
Category: Type of recipient: Government: ministry of health;
Number of grants: 97;
Percentage of total[A]: 36%.
Category: Type of recipient: Multilateral organization: UN Development
Programme;
Number of grants: 51;
Percentage of total[A]: 19%.
Category: Type of recipient: Civil society: nongovernmental
organization;
Number of grants: 45;
Percentage of total[A]: 17%.
Category: Type of recipient: Government: other[B];
Number of grants: 42;
Percentage of total[A]: 16%.
Category: Type of recipient: Government: ministry of finance;
Number of grants: 21;
Percentage of total[A]: 8%.
Category: Type of recipient: Civil society: private sector;
Number of grants: 8;
Percentage of total[A]: 3%.
Category: Type of recipient: Civil society: faith-based organization;
Number of grants: 4;
Percentage of total[A]: 1%.
Category: Type of recipient: Multilateral organization: other[C];
Number of grants: 3;
Percentage of total[A]: 1%.
Category: Type of recipient: Total: government;
Number of grants: 160;
Percentage of total[A]: 59%.
Category: Type of recipient: Total: civil society;
Number of grants: 57;
Percentage of total[A]: 21%.
Category: Type of recipient: Total: multilateral organizations;
Number of grants: 54;
Percentage of total[A]: 20%.
Total;
Number of grants: 271;
Percentage of total[A]: 100%.
Source: GAO analysis of Global Fund data.
[A] Total may not sum to 100 because of rounding.
[B] Includes national AIDS commissions and multicountry government
bodies such as the Secretariat of the Pacific Community, which
encompasses a number of islands in the Pacific.
[C] Includes one other UN organization other than UN Development
Programme and two other multilateral organizations.
[End of table]
In March 2005, the Global Fund reported that across all grants, it had:
* provided antiretroviral treatment to 130,000 people with AIDS;
* tested more than one million people voluntarily for HIV;
* supported 385,000 TB patients with directly observed short-course
therapy;[Footnote 4]
* given more than 300,000 people new, more effective treatments for
malaria; and:
* supplied more than 1.35 million families with insecticide-treated
mosquito nets.
The Global Fund's key principles are to (1) operate as a financial
instrument, not an implementing entity; (2) make available and leverage
additional resources; (3) support programs that evolve from national
plans and priorities; (4) operate in a balanced manner with respect to
geographic regions, diseases, and health-care interventions; (5) pursue
an integrated and balanced approach to prevention, treatment, care and
support; (6) evaluate proposals through an independent review process;
and (7) operate in a transparent and accountable manner and employ a
simplified, rapid, and innovative grant-making process.
Grant Management Process Has Many Participants and Occurs in Two
Phases:
Numerous entities participate in the Global Fund's processes for
managing grants. The Global Fund manages its grants in two phases,
generally over a 5-year period. During phase 1, the Global Fund signs a
2-year grant agreement with the principal recipient and periodically
reviews recipients' performance to determine whether to disburse
additional funds. Near the end of phase 1, the board reviews the
grant's progress to determine whether to renew the grant for an
additional 3 years; if the board approves continued funding, the grant
enters phase 2. The Global Fund board approved the first round of
grants in April 2002 and approved 33 grants to enter phase 2 as of
April 25, 2005.
Numerous Entities Are Involved in Managing Grants:
The following entities participate in the Global Fund's grant
management process (see fig. 1).
Figure 1: Global Fund Grant Management Process:
[See PDF for image]
[End of figure]
* A country coordinating mechanism (CCM) representing country-level
stakeholders submits grant proposals to the Global Fund and nominates a
principal recipient to be responsible for implementing the grant.
According to the Global Fund, the CCM should be made up of high-level
host government representatives, representatives of nongovernmental
organizations (NGO), multilateral and bilateral donors, the private
sector, and individuals living with HIV/AIDS, TB, or malaria. CCMs are
to develop and forward grant proposals to the Global Fund, monitor
grant implementation, and advise the Global Fund on the viability of
grants for continued funding after 2 years.
* The principal recipient is a local entity nominated by the CCM that
signs an agreement with the Global Fund to implement a grant in a
recipient country. There may be multiple public and private principal
recipients for a single grant. The principal recipient is responsible
for overseeing the activities of any subrecipients implementing grant
activities and for distributing grant money to them.
* The secretariat is responsible for the Global Fund's day-to-day
operations, including managing the grant proposal process; overseeing
and managing grant implementation to ensure financial and programmatic
accountability; and acting as a liaison between grant recipients and
bilateral, multilateral, and nongovernmental partners to ensure that
activities at the country level receive necessary technical assistance
and are well coordinated. As of April 15, 2005, the secretariat had 165
staff. Within the secretariat, the fund portfolio manager, or grant
manager, is responsible for reviewing grant progress and deciding
whether to disburse additional funds to the principal recipient.
* The secretariat reports to the Global Fund's board of directors. The
23-member board is responsible for overall governance of the Global
Fund and approval of grants. The board includes 19 voting
representatives of donor and recipient governments, NGOs, the private
sector (including businesses and foundations), and affected
communities. Key international development partners, including WHO, the
Joint UN Programme on HIV/AIDS (UNAIDS), and the World Bank,
participate as nonvoting members. The World Bank also serves as the
Global Fund's trustee.
* The local fund agent is the Global Fund's representative in each
recipient country and is responsible for financial and program
oversight of grant recipients. This oversight role includes an
assessment of recipients prior to their receiving money from the Global
Fund. To date, the Global Fund has contracted with the following
entities to serve as local fund agents: four private firms, KPMG,
PricewaterhouseCoopers (PWC), Chemonics International, Inc., and
Deloitte Emerging Markets; one private foundation that was formerly a
public corporation, Crown Agents; the Swiss Tropical Institute; and two
multilateral entities, the World Bank and the UN Office for Project
Services (UNOPS). PWC and KPMG serve as the local fund agents in 91 of
the 110 countries for which the Global Fund has contracted local fund
agents.
Global Fund Implements Grants in Two Phases:
After the board approves a proposal submitted by a CCM and vetted by an
independent, multinational technical review panel, typically for a 5-
year grant, the secretariat signs a 2-year grant agreement with the
principal recipient. This initial 2-year period represents phase 1 of
the grant; if the board approves continued funding, the grant enters
phase 2.
Phase 1:
For grants approved in 2002 and 2003, the local fund agent conducted,
or contracted with other entities to conduct, assessments of the
recipient's capacity to (1) manage, evaluate, and report on program
activities; (2) manage and account for funds, including disbursing to
subrecipients; and (3) procure goods and services and maintain a
reliable supply of drugs and other commodities. The local fund agent
initially conducted these assessments after the signing of the grant
agreement but now conducts them before the Global Fund signs an
agreement with a principal recipient. After the local fund agent
determines that the results of its assessments are satisfactory, the
Global Fund instructs the World Bank to disburse the first tranche of
funds to the principal recipient.
According to its policy, the Global Fund disburses subsequent tranches
based on performance to ensure that investments are made where impact
in alleviating the burden of HIV/AIDS, TB, and malaria can be achieved.
During the grant period, the portfolio managers are to link
disbursements to periodic demonstrations of program progress and
financial accountability. The grant agreements initially specified that
principal recipients would report their progress and request additional
disbursements on a quarterly basis. In July 2004, the secretariat
changed the default reporting/disbursement request cycle to every 6
months.[Footnote 5] As of April 15, 2005, about 20 percent of the
Global Fund's grants were on a 6-month schedule. According to the
secretariat, some grant recipients may choose to remain on a quarterly
schedule or the secretariat may decide, based on a grant's risk
profile, to disburse only one quarter at a time.
According to secretariat officials, grant managers use four sources of
information to determine whether to disburse additional funds to grant
recipients.[Footnote 6]
* Recipient progress reports. Principal recipients submit progress
reports on meeting designated targets along with requests for further
funding at the end of each disbursement period. If program results or
expenses differ significantly from plans attached to the grant
agreement, the principal recipient is to explain the reasons for these
deviations and may also provide an overview of other program results
achieved, potential issues and lessons learned, as well as any planned
changes in the program and budget. The recipient forwards its progress
report and disbursement request to the Global Fund secretariat through
the local fund agent.
* Recipient expenditure data. The progress reports contain cash-flow
information. Principal recipients are to outline expenditures for the
previous disbursement period, comparing amounts budgeted for grant
activities with amounts spent. Recipients are then to reconcile
expenditures and provide a current cash balance. Budgets may vary from
initial projections, owing to cost savings, additional expenditures, or
currency fluctuations.
* Local fund agent assessments. The local fund agent reviews and
validates the information in the progress update, performs ad-hoc
verifications of program performance and financial accountability, and
advises the Global Fund on the next disbursement. Local fund agents are
to highlight achievements and potential problems to support their
advice and may identify performance gaps to be addressed.
Representatives of one local fund agent, which covers grants in 29
countries, said that they base their disbursement recommendations on
two considerations: (1) the Global Fund's level of risk in making
additional disbursements to a recipient that uses funds ineffectively
and (2) the immediate effect of withholding disbursement on program
implementation, including the delivery of disease-mitigating services.
These representatives said that, overall, they strive to tie the
progress update to projected results in the grant agreement.
* Contextual information. The secretariat also uses additional
information relevant to interpreting grant progress, such as news of
civil unrest, political disturbance, allegations of corruption,
conflict, major currency crisis, change of principal recipient, and
natural disasters. A secretariat official said that the secretariat did
not document requirements for such information for phase-1 decisions
but did allow grant managers to consider any information that would
adversely affect grant implementation in their decisions to disburse.
This information is typically obtained through informal communications
with grant recipients, bilateral and multilateral donors, or other
development partners, according to secretariat officials.
The principal recipient is to provide the CCM with copies of its
disbursement requests and progress reports, and CCM members may comment
on the progress of implementation based on their local knowledge and
experience, either through the local fund agent or directly to the
secretariat. If the secretariat decides to approve the disbursement
request, it may specify the level of disbursement and actions that the
principal recipient must take. The secretariat then instructs the World
Bank to make the disbursement. The secretariat may also decide not to
approve the disbursement request.
Phase 2:
When a grant reaches its sixteenth month, the Global Fund invites the
CCM to submit a request for continued funding for the period following
the initial 2 years. The Global Fund refers to this period as phase 2
of the grant (see fig. 2).
Figure 2: Global Fund Grant Life Cycle:
[See PDF for image]
[End of figure]
The CCM is to submit its request to the Global Fund by month 18, and
the secretariat is to evaluate the CCM's request using the four sources
of information described earlier.[Footnote 7] Based on its assessment
of this information, as informed by its professional judgment, the
secretariat gives the grant one of four scores, as shown in figure 3.
It then provides its assessment and recommendation--called a grant
scorecard--to the board regarding approval of the request, and the
board decides on the request by month 20. If the board approves the
request, the principal recipient and the Global Fund negotiate and sign
a grant agreement extension over the next 2 months. At month 22, the
Global Fund instructs the World Bank to make the first phase-2
disbursement.
Figure 3: Global Fund Grant Rating System for Phase 2:
[See PDF for image]
[End of figure]
Note: The grant's performance rating is combined with contextual
considerations to yield a decision as to whether the grant should be
continued under phase 2. For example, a performance rating of A
combined with no or minor contextual issues would likely result in a
"go" decision, whereas the same performance rating combined with more
significant contextual issues could result in a "conditional go,"
revised go," or even a "no go" decision. Similarly, a lower performance
rating could result in any of the four possible decisions, depending on
contextual considerations. (This explanation is based on information
provided to us by the Global Fund in April 2005. The Global Fund's
previously available guidance indicated a simpler decision-making
process.)
The secretariat sends its recommended scores to the board members, who
vote on the recommendations via e-mail.[Footnote 8] A "go" decision
means that the Global Fund approves proceeding to phase 2. "Conditional
go" means that the Global Fund approves proceeding to phase 2 after the
principal recipient undertakes specific actions within the time frame
specified. "Revised go" means that the principal recipient must
reprogram the grant and substantially revise the targets and budgets
for phase 2. "No go" means that the Global Fund does not approve the
grant's proceeding to phase 2.[Footnote 9] Currently, recipients denied
further funding ("no go") cannot formally appeal the board's decision.
However, a board subcommittee may consider a formal appeal process. If
the "no go" decision affects patients on lifelong treatment, the
principal recipient may be eligible to receive funding to sustain
treatment for 2 more years.
As figure 4 shows, the Global Fund board approved the first round of
grant proposals in April 2002. The second, third, and fourth rounds
were approved in January 2003, October 2003, and June 2004,
respectively. The board is expected to approve a fifth round of
proposals in September 2005. As of April 25, 2005, the secretariat had
reviewed 36 grants that became eligible for continued funding under
phase 2. The board approved 20 grants, conditionally approved 13,
denied 1, and is still considering 2. The board will continue to
evaluate grants for phase 2 on a rolling basis as they become eligible.
Figure 4: Global Fund Milestones:
[See PDF for image]
[End of figure]
Several Factors Affected Grant Performance:
According to Global Fund officials and other knowledgeable entities,
recipient countries' capacity to implement grants was an underlying
factor in grant performance. In addition, principal recipients for the
38 grants[Footnote 10] as well as Global Fund and development partner
officials frequently cited four factors associated with challenges or
successes in grant performance: (1) guidance, (2) coordination, (3)
planning, and (4) contracting and procurement. We found no significant
association between the type of principal recipient, grant size, or
disease targeted and the percentage of a grant's funds disbursed to the
principal recipient.
Limited Capacity in Recipient Countries Affected Performance, but Some
Governments Have Strengthened Health-Sector Capacity:
Global Fund and development partner officials cited limited capacity in
recipient countries as an underlying factor that can negatively affect
grant performance.[Footnote 11] Global Fund grant managers said that in
many cases, grants experienced early delays because of weaknesses in
recipients' financial, procurement, and monitoring and evaluation
systems. For example, Indonesia's local fund agent found the principal
recipient's management and financial plans to be insufficient and asked
the recipient to rework them seven times before the local fund agent
recommended grant disbursements. Also in Indonesia, TB spending
increased fivefold, greatly straining capacity, particularly for
monitoring and evaluating activities at the district level. In Kenya, a
lack of designated, adequately trained staff at the principal recipient
(the ministry of finance) and immediate subrecipients (the ministry of
health and the National AIDS Control Council) slowed disbursements from
the principal recipient and from the immediate subrecipients to
implementing organizations. Ethiopia has been slow in implementing its
first three grants, particularly those for TB and malaria, owing to
lack of monitoring and reporting capacity within the ministry of
health, delays in recruiting staff to manage financial systems, slow
decision-making processes, delays in starting the procurement process,
and cumbersome procurement procedures.
Despite limited overall capacity in recipient countries, we found
instances where recipient governments had worked with development
partners to strengthen capacity in the health sector, thus facilitating
grant performance. For example, according to the Indonesian government
and WHO officials, the Global Fund grant in Indonesia is building on a
strong foundation, using the country's 5-year strategic plan for TB, a
joint effort of the Indonesian government and WHO. Between 2000 and
2003, the Dutch government helped train TB "soldiers" in Indonesian
provinces, which improved outreach and case-detection efforts under the
Global Fund grant; Indonesia's ministry of health had already
established mechanisms to quickly disburse funds to districts. In
addition, the Zambian government has worked with donors and other
development partners to strengthen its health sector financing
mechanisms. As a result, donors, including the Global Fund, contribute
directly to an existing mechanism, the pooled health sector "basket,"
and use the health sector donor group overseeing these funds to monitor
and evaluate grant progress in meeting targets. Zambia's health sector
also has mechanisms in place to quickly channel funds to the country's
more than 70 districts. In Mongolia, the local fund agent reported that
the principal recipient and subrecipients had adequate financial
management systems in place to account for funds and that the principal
recipient could immediately start implementing the program with little,
if any, technical assistance. Some countries and grant recipients are
also seeking to strengthen their capacity through Global Fund grants,
according to the Global Fund and principal recipients.
Lack of Clear Guidance Impeded Performance, but in Some Cases Guidance
Helped Recipients Meet Targets:
Grant recipients frequently reported that a lack of guidance from the
recipient country's government or the Global Fund caused them to fall
short of grant targets. For example, recipients in three countries
reported that they could not meet their targets because they had not
received approved national treatment guidelines. Indonesia's ministry
of health did not have guidelines ready for the voluntary counseling
and testing component of its HIV grant, delaying distribution of
information to the provinces. Senegal's ministry of health, another
principal recipient, did not have treatment plans needed for
implementing its malaria grant, preventing the principal recipient from
receiving antimalarial medication. In addition, some stakeholders
reported that guidance from the Global Fund was lacking or unclear or
that they encountered difficulties with Global Fund grant policies. For
example, in at least one instance, U.S. government officials reported
that spending delays in Kenya resulted from unclear guidance from the
Global Fund regarding altering programs to allow the use of newer, more
effective but expensive malaria drugs. The Global Fund recognized that
procedures for early grants were unclear and that this lack of clarity
caused program delays. Further, WHO officials and at least one
recipient voiced concerns over lack of flexibility when recipients
sought to modify grant activities. For example, one subrecipient in
Thailand expressed concern that it could not use Global Fund money to
build or maintain a shelter for HIV-positive women because this type of
activity was not written into the grant. Grant recipients also said
that continued staff turnover in the Global Fund's grant management
teams made it difficult to receive clear, consistent guidance. For
example, recipients in Thailand said that they had worked with four
different grant managers over the life of their grants and that this
turnover had complicated communication.
However, several grant recipients reported that, under certain
circumstances, Global Fund guidance allowed them to quickly redirect
funds to meet existing targets. For example, the principal recipient in
Indonesia cited grant flexibility as a factor positively affecting
performance in both its TB and HIV/AIDS round-1 grants, because this
flexibility allowed it to adjust its funding priorities in line with
its targets. Similarly, in Thailand, one subrecipient stated that the
Global Fund allowed it to change training modules to meet educational
needs, contributing to success.
Poor Coordination Slowed Grant Implementation, but Good Coordination
Facilitated It:
The Global Fund secretariat reported that, in some cases, poor
coordination negatively affected grant implementation. For example, in
Ghana, internal rivalries between ministry of health units with
different responsibilities in the program are slowing implementation.
In Senegal, the Global Fund reported that the principal recipient did
not meet its target for coordinating and developing partnerships to
promote community-based programs for combating malaria.
However, effective coordination between grant recipients and local
community groups or development partners sometimes contributed to
recipients' meeting or exceeding their goals. Zambia's HIV/AIDS grant
exceeded its targets for training and provision of services because of
development partner, NGO, and private sector contributions. Similarly,
in Kenya, one NGO principal recipient leveraged the activities of other
groups providing HIV care kits. Another recipient in Kenya exceeded its
targets for condom distribution by working with local intermediaries to
increase demand by approaching new types of clients, such as shoe
shiners, open vehicle cleaners, security officers, staff at petrol
stations, and young men at salons. In Indonesia, a grant subrecipient
was able to provide treatment to a larger number of TB patients by
partnering with private physicians, because a significant number of
patients sought treatment at private clinics.
Planning Difficulties Made It Hard to Meet Targets, but Adept Planning
Made Them Attainable:
Planning difficulties affected some recipients' ability to meet grant
targets. Recipients reported that they sometimes did not achieve
targets for a variety of reasons, including not budgeting sufficient
time or money to complete targets, or scheduling activities for the
wrong time period. One recipient in Zambia underestimated the time
needed to analyze baseline data on constituent needs prior to the
planned distribution of educational materials on malaria prevention to
1,000 households. The recipient eventually printed the materials but
did not reach the targeted households within the planned time frame. In
Sri Lanka, a malaria grant recipient underestimated the cost of
establishing a community center and had to redesign its program plan to
remain within the grant budget. According to the progress report, the
principal recipient established new targets to use the funds originally
budgeted to build the center, delaying grant implementation. Further, a
recipient in Kenya did not conduct 3,000 planned community education
skits aimed at preventing HIV during one disbursement period and
attributed the shortfall to a conflict with annual school examinations.
The Global Fund recognized that recipients' difficulty in setting
targets for the initial grants derived in part from the fact that it
was developing procedures and guidelines at the same time that it was
approving and signing round-1 and round-2 grants.
Conversely, in some cases, adept planning positively affected grant
performance. In Indonesia, several grant recipients reported that
effective planning for TB treatment allowed various districts to
complete work plans early in the grant, in turn allowing the provinces
that oversee those districts to meet their target of developing budgets
on time. In Haiti, one principal recipient exceeded its targets by
planning activities around World AIDS Day, increasing the demand for,
and the principal recipient's provision of, AIDS-related services such
as condom distribution.
Delays in Contracting and Procurement Hindered Grant Performance, While
Efficient Procurement Helped:
Recipients frequently reported that contracting delays with
subrecipients, vendors, or other service providers caused them to miss
quarterly targets. For example, UNDP, a principal recipient in Haiti,
was unable to hold a planned HIV conference because of delays in
signing a contract with a subrecipient. Delays in selecting and
reaching contracts with subrecipients caused the Argentine grant to
start slowly, the Global Fund secretariat reported. In Thailand, the
ministry of public health recipient could not establish TB treatment
services because of a subrecipient delay in selecting a site and
contract. Grant recipients and the Global Fund secretariat also cited
procurement delays as reasons for missing quarterly targets. For
example, recipients of malaria grants in Tanzania and Zambia reported
that they did not distribute the targeted number of bed nets due to
lengthy government procurement processes. In addition, during our visit
to Zambia, we found that local spending restrictions also affected
recipients' ability to meet and report on targets. A district health
director explained that spending restrictions delayed her purchase of a
new hard drive for her office's computer, which slowed the district's
grant activities and reports to the principal recipient.[Footnote 12]
In Kenya, we found that the limited capacity of the Kenyan health
ministry's procurement agency and the ministry's reluctance to contract
with outside procurement experts led to delays and, as a result, to
gaps in the supply of HIV test kits, which bilateral donors had to
fill. In Ghana, according to the Global Fund secretariat, the
government's slow, bureaucratic procurement processes caused delays
that contributed to the grant's poor performance in reaching people
with HIV/AIDS and opportunistic infections.
However, the Global Fund secretariat reported that some principal
recipients' efficient procurement helped them meet their targets. For
example, a principal recipient in Madagascar managed procurement
exceptionally well throughout the grant and, as a result, exceeded its
targets for distributing bed nets. The Global Fund disbursed this
grant's phase-2 funding early, because the recipient had implemented
the program rapidly and was therefore able to use the additional funds.
Another recipient in Madagascar consistently met targets, and its
disbursements to subrecipients accelerated. The Global Fund also
reported that, after initially strengthening its capacity, the
principal recipient in Moldova made substantial progress with
procurement activities, thereby lowering treatment costs per patient
and realizing significant savings due to lower acquisition costs.
No Significant Association Found between Grant Characteristics and
Percentage of Funds Disbursed:
To determine whether certain grant characteristics were factors
associated with the percentage of funds disbursed,[Footnote 13] we
analyzed 130 grants with first disbursements on or before December 31,
2003. We found no significant association between the type of principal
recipient, grant size, or disease targeted and the percentage of a
grant's funds disbursed, after taking into account the time elapsed
since the first disbursement.[Footnote 14] (See app. II for details of
our analysis.) For example, the Global Fund disbursed a smaller
percentage of grants to government recipients than to recipients in the
private sector and faith-based organizations, but these differences do
not incorporate other factors such as grant size or time elapsed since
the first disbursement. We also considered whether disbursements were
made in a timely manner, that is, within 135 days (a 90-day quarter
plus a 45-day grace period allowed by the Global Fund for reporting).
Overall, we found that 35 percent of the disbursements were made within
135 days and that later disbursements were more timely than earlier
ones. The number of timely disbursements was too small at any given
disbursement stage to determine whether timeliness varied according to
recipient or disease type, or grant size.
Sources Informing Funding Decisions Have Limitations, and Decisions Are
Not Clearly Documented:
We noted problems associated with the four information sources that the
secretariat draws on for periodic disbursement and renewal decisions.
In addition, although the Global Fund's stated policy is to disburse
funds based on performance and to operate in a transparent and
accountable manner, we found that the secretariat did not document its
reasons for periodic disbursement decisions during phase 1. Similarly,
some of the secretariat's recommendations regarding grant renewals for
phase 2 have not been fully documented, and stakeholders have raised
additional concerns regarding the timing of the phase-2 renewal
process, dated information, low grant expenditure, and potential
politicization of disbursement decisions.
Information Sources for Disbursement and Renewal Decisions Have
Limitations:
We found the following problems associated with the sources of
information that the secretariat uses in making periodic disbursement
decisions during phase 1 and determining whether to renew grants during
phase 2.
* Recipient progress reports vary in quality. Some reports do not
explain why recipients missed targets, and the limited monitoring and
evaluation capabilities of many recipients raise questions about the
accuracy of their reporting. Secretariat officials acknowledged that
guidance for planning program activities, setting indicators, and
monitoring and evaluating progress was not available when initial
grants were signed. However, Global Fund secretariat and other
officials have raised questions about the ability of principal
recipients to discharge their responsibility for reviewing and
monitoring the activities of subrecipients to which they disburse
funds. According to the Global Fund official in charge of grant
operations, many early grant proposals were overly ambitious and
hurriedly assembled; he said more recent proposals were more realistic
and better designed. UNAIDS officials also stated that when principal
recipients' progress updates show poor performance, it is not always
clear whether grants are underperforming or recipients are failing to
effectively report performance. For example, when a progress update
shows failure to achieve targets, the principal recipient and
subrecipients may have actually completed the activities but not
understood how to record them.
* Recipient expenditure data are incomplete. Recipients' cash-flow
reports do not include data on expenditures below the level of the
principal recipient. In addition, principal recipients may not always
document their disbursal of money to subrecipients. Moreover, Global
Fund and other officials have questioned whether some principal
recipients have the expertise needed to monitor subrecipients'
expenditures. Further, secretariat officials stated that although the
achievement of program targets and cash flow are closely linked,
recipients' expenditures do not necessarily indicate that they are
meeting their targets. The officials stated that utilizing this source
of information is essential to guard against treatment interruptions or
irreparable harm to struggling programs that are not yet viable but
show strong potential.
* Local fund agent assessments are inconsistent. According to Global
Fund secretariat officials and others, the ability of local fund agents
to effectively verify program activities varies widely. A secretariat-
commissioned assessment reported that the current local fund agent
system does not provide grant managers with a sufficient level of risk
assurance for continued funding.[Footnote 15] The study, as well as
Global Fund and development partner officials, reported that although
most local fund agents are competent to assess and verify financial
accountability, they often lack the knowledge and experience needed to
assess and verify recipients' performance--specifically, recipients'
ability to meet program targets, monitor and evaluate progress, and
procure and manage drugs and other medical supplies. The study also
stated that local fund agents' assessments of financial and program-
related capacity and verifications of activities are limited and rarely
include site visits to implementing subrecipients.
* Contextual information is systematically collected for phase 2 but
not for phase 1. To better understand why recipients received phase-1
disbursements when they did not meet many of their performance targets,
we requested full disbursement dossiers from the secretariat; however,
the dossiers contained very little contextual information supporting
the disbursement decisions. The contextual information provided was
often in the form of hand-written notes or e-mail correspondence that
had been collected ad hoc. Secretariat officials acknowledged that
while they collect contextual information through detailed questions on
the scorecards for phase-2 decisions, they have no systematic method
for collecting such information for phase-1 decisions. Although the
Global Fund considers contextual information in its funding decisions,
it does not document the extent to which it uses such information.
Little Documentation Provided to Support Phase 1 Disbursement
Decisions:
Although the files for the 38 grants we reviewed contained information
on progress toward targets and cash flow, they contained little or no
documentation explaining why the Global Fund approved the
disbursements.[Footnote 16] Overall, for the 38 grants we reviewed, we
determined that recipients met, on average, 50 percent of their
targets; partially met 21 percent; and failed to meet 24
percent.[Footnote 17] For 6 percent of the targets, the information in
the progress reports was insufficient to determine whether the target
had been met, partially met, or not met. In some of these cases, the
Global Fund disbursed funds to recipients even though they reported
that they had met few or none of their targets. For example:
* The principal recipient for Sri Lanka's second malaria grant received
disbursements for its third and fourth quarters, although it had
submitted two progress updates showing that it met only 2 of its 14
targets for the third quarter and 4 of 13 targets for the fourth
quarter. The secretariat provided no written information explaining its
approval of the third-quarter disbursement and provided only a one-
sentence declaration of agreement regarding the fourth-quarter
disbursement. In both cases, the local fund agent had recommended that
the recipient receive less than the amount requested, citing cash-flow
considerations but not mentioning performance against targets. In each
case, the secretariat disbursed the amount that the local fund agent
recommended.
* The principal recipient for Thailand's TB grant received its second
disbursement although it had met only 1 of 29 performance targets. The
secretariat approved the full amount requested, stating that the
recipient had not requested sufficient funds in its previous
disbursement request, although the grant manager did not provide
documentation to validate this assessment. The local fund agent had
noted the grant's poor performance and, acknowledging the grant's low
cash reserves, suggested a disbursement of 25 percent of the
recipient's request.
Further, the Global Fund secretariat does not systematically track
denied disbursement requests or publicly document denials. Secretariat
officials acknowledged that they currently have no mechanism for
tracking or documenting these instances. According to these officials,
the denial may eventually be documented in a memorandum on the grant's
disbursement request history once a disbursement is approved or, if the
grant is ultimately canceled without further disbursement, in a grant-
closing memorandum.
Some Renewal Recommendations Were Not Clearly Documented:
According to grant management officials, the secretariat is to
unequivocally demonstrate satisfactory performance of all grants
recommended to the board for continued funding under phase 2. However,
we found that the secretariat did not always clearly explain the
overall score it assigned each grant when it recommended the grant for
continued or conditional funding. Although a substantial part of the
score is to be based on recipients' performance against agreed-on
targets (e.g., the number of people to be reached by disease mitigation
services), the final score can also reflect grant managers'
professional judgment, contextual information from multilateral and
bilateral donors, and past disbursement rate data. Secretariat
officials said that decisions based on these information sources should
be documented when an overall score does not seem to reflect
recipients' achievement of individual targets. However, we did not find
such documentation in the grant scorecards for 8 of 25 early grants
that the Global Fund has considered for continued funding after an
initial 2-year period. The secretariat gave 3 of the grants an overall
score of B2 yet recommended "conditional go," which corresponds to a B1
score. For another grant, the secretariat gave a B1 score for three
indicators, two of which concern the number of people reached by
treatment, care, or other disease mitigation services, yet made an
overall recommendation of "go," which corresponds to an A score. Such
discrepancies between scores and recommendations are significant,
because the recommendations determine the levels of action that
recipients are to undertake before receiving phase-2 funding. Seven of
the scorecards also raised concerns about the quality of recipients'
data and their monitoring and evaluation capabilities. Of the 25
grants, the Global Fund decided to cancel one, and the secretariat's
scorecard clearly explained the reasons for recommending that the board
cancel the grant.
Stakeholders Also Raised Concerns Regarding Phase-2 Renewal Process:
According to the Global Fund, the phase-2 renewal process is a critical
checkpoint to ensure that grants show results and financial
accountability. However, some stakeholders raised concerns about the
process that the Global Fund used to review the first set of grants
eligible for renewal. For example, a representative of a local fund
agent stated that this process may occur too early in the life of a
grant and that progress may be better evaluated when a grant approaches
the 3-year mark. Further, officials representing a Global Fund board
member stated that data provided to the board during the first round of
renewal decisions did not contain expenditure data. These officials
stated that when they sought expenditure data (i.e., amounts spent by
grant recipients on program activities) on the Global Fund's Web site
in March 2005, the most recent information for their grants of concern
had been posted in June 2004. Subsequent data submitted to the board
for phase-2 renewal decisions contained expenditure information. In one
case, a recipient applying for phase-2 funding and recommended by the
secretariat for continued funding had received more than 75 percent of
its 2-year grant amount yet had transferred only 12 percent of this
money to subrecipients for program activities. These officials also
raised concerns over the potential for the politicization of board
decisions because the board had returned three "no go" recommendations
to the secretariat for further consideration after some recipients and
NGOs lobbied board members.
Global Fund Has Taken Several Steps to Refine Grant Management and
Performance:
The Global Fund's secretariat is launching a range of initiatives to
address challenges to grant performance and improve the overall
management of grants. Systemwide, the secretariat is (1) reorganizing
and strengthening its units, (2) developing a risk assessment mechanism
and early warning system, (3) streamlining reporting and funding
procedures, (4) working with partners to strengthen recipient capacity,
and (5) clarifying guidance for CCMs. However, the board has not
clearly defined the CCMs' role in overseeing grant implementation. The
Global Fund has also responded to country-specific challenges in Kenya
and Ukraine.
Secretariat Reorganizing and Increasing Its Staff to Better Manage
Grants:
To improve grant management and documentation of funding decisions and
to better support underperforming grants, the Global Fund took the
following actions in 2004:
* Reorganized the secretariat's operations unit and increased the
number of staff from 118 to 165.[Footnote 18] For example, it added
eight grant manager positions and established regional teams, each with
a team leader, so that more than one grant manager is responsible for a
set of grants in the countries within a regional team. To better
document periodic disbursement decisions, the secretariat added a new
position, known as a program officer, to its grant management
structure. The secretariat is currently recruiting program officers for
each regional team, who are to be responsible for documenting
disbursement and other decisions and keeping track of grant milestones.
Further, secretariat officials said that the Global Fund is planning to
recruit additional grant management staff to conduct increased day-to-
day recipient monitoring and assistance. The program officers and the
additional grant management staff accounted for most of the increase in
staff at the secretariat between 2004 and 2005, according to a Global
Fund administrative official.
* Created the Operational, Partnerships and Country Support Unit to
focus on problem grants. According to secretariat officials, this unit-
-which also includes new positions to liaise with development and
technical assistance partners, local fund agents, and CCMs--will enable
the secretariat to address grant performance issues before they become
serious problems and will thereby better manage risk exposure. For
example, the unit could mobilize intervention by high-level recipient
government officials, solicit technical assistance from partners, or
engage the United Nations Children's Fund (UNICEF) to procure health
commodities until the recipient government can set up a viable
procurement system.
* Strengthened its strategic information and evaluation unit to improve
monitoring and evaluation, data reliability, and quality assurance.
* To enhance the quality and consistency of the data that recipients
report, in June 2004 the secretariat issued a monitoring and evaluation
"toolkit" developed in cooperation with other donors and development
assistance partners.[Footnote 19] This toolkit guides grant recipients
to select consistent indicators to measure progress toward key program
goals, such as the number of people with AIDS who were reached with
drug treatment or the number of people given insecticide-treated bed
nets to prevent malaria. The secretariat has also required attachments
to each grant agreement that outline program indicators and the
specific activities that enable recipients to meet these indicators and
overall program goals. According to Global Fund officials, progress
will more easily and consistently be measured when all grants have
aligned their indicators and activities to this toolkit. Grant managers
are currently working to accomplish this goal with the recipients they
cover.[Footnote 20] According to the Global Fund, these developments
have been important in harmonizing monitoring and evaluation approaches
among partners at national and international levels and will help
simplify country-level reporting to multiple donors by ensuring the use
of a common set of indicators to measure interventions. Partners
provided training on the toolkit in 2004. According to the secretariat,
training is to continue in 2005. Recipients we met with in Thailand
confirmed that they had received the toolkit. However, they said that
it was not in their native language and therefore was not
useful.[Footnote 21]
* In March 2004, the board approved establishing a Technical Evaluation
Review Group with members from UNAIDS, WHO, and other partners to
develop a system for assessing and ensuring data reliability. The group
first met in September 2004. According to Global Fund officials, these
efforts will result in more systematic reporting and analysis by
recipients, the Global Fund, and partners and, consequently, in better
comparisons of grants.
* To strengthen strategic information for monitoring grant performance,
in fall 2004, the secretariat created a "data warehouse" that contains
information from recipients' progress reports and disbursement
requests, donors, CCMs, and local fund agent assessments. Secretariat
staff use the database to prepare "scorecards" that rank grants for the
phase-2 renewal process.
Secretariat Is Implementing a Risk Assessment and Early Warning System
to Identify Potential Nonperforming Grants:
The secretariat has devised a risk-assessment model and early warning
system to identify poorly performing grants and to more systematically
alert grant managers when they need to intervene. Because the Global
Fund disburses grants to recipients in countries with varying levels of
economic development and capacity, its risk-assessment model will
incorporate grant size and performance as well as country development
and corruption indicators.[Footnote 22] By tracking key events in the
context of grant and country risk, the grant portfolio managers can
determine whether recipients have missed important milestones. The
early warning system is to generate reports using indicators--for
example, time elapsed between disbursements--to flag problems and
trigger possible interventions. The system will also incorporate
contextual information from country-based partners. When the system
identifies slow-moving grants, staff from the secretariat's
Operational, Partnerships and Country Support unit will be able to
assess and follow up with the appropriate level of intervention. For
example, if a grant recipient in a high-risk country does not submit a
progress report and disbursement request at the expected time, the
system will alert staff that follow-up is needed.
Although the system has not been fully implemented, secretariat
officials said that their recent intervention in Tanzania exemplifies
the way the system should work. The Tanzania malaria grant was not
demonstrating progress after 1 year, as measured by the amount of funds
disbursed compared with the amount that the secretariat expected to
disburse. After following up with the principal recipient, secretariat
staff realized that political infighting--rather than technical
limitations--were inhibiting progress of the malaria program: competing
groups were vying for control of grant funds and uncertain of how to
procure and distribute bed nets to vulnerable groups, such as pregnant
women or women with young children. The government decided to give
vouchers to members of vulnerable groups to enable them to purchase bed
nets at a lower price;[Footnote 23] however, the ministry of health did
not print or distribute the vouchers or specify where they should be
distributed. The Director of the Operational, Partnerships and Country
Support Unit traveled to Tanzania and met with development partners and
high-ranking host government officials to encourage the government to
take action. The Global Fund brought in UNICEF, a key development
partner in Tanzania, to work with the government's malaria advisor as
well as experts from the Swiss Tropical Medicine Institute to resolve
the problems and get the program back on track.
Secretariat Is Streamlining Procedures:
In response to concerns that grantee reporting requirements are
difficult and time consuming for recipients, grant managers, and local
fund agents, the secretariat instituted a new policy that changes the
default for reporting from quarterly to every 6 months. In addition,
the secretariat is considering new, more streamlined funding mechanisms
than the current round-based approach. However, the board has not
endorsed these changes, and some board members, including the United
States, are opposed to them at this time.
To decrease the administrative burden on grantees and to bring its
practice more in line with other donor agencies, the secretariat
instituted a semiannual reporting policy in July 2004. Some recipients
still report quarterly, such as those implementing grants that the
secretariat identified as high risk--for example, in countries with
limited human resource capacity--while others have the option of using
quarterly disbursements to meet their needs--for example, as a hedge
against currency fluctuations. However, this policy change did not
require board approval, and some board members, including the United
States, do not support it.
Although the Global Fund strives to be a funding mechanism that
seamlessly fits into many country programs by providing additional
funding where needed, it recognizes that its current practice of
financing grants through rounds can disrupt countries' planning and
time lines and strains recipient capacity. In addition, some associated
with the Global Fund said that rounds might lead CCMs and recipients to
concentrate their energy on developing new proposals rather than
implementing existing grants and that repeated rounds add greatly to
the secretariat's workload. A document submitted to the board by the
secretariat stated that although the round-based grant approval system
worked well for launching the Global Fund and identifying countries
that submitted strong proposals,[Footnote 24] this system forced
recipients to adapt their planning cycles to those of the Global Fund
(rather than building on preexisting planning cycles), encouraged the
submission of smaller proposals, and left a considerable amount of time
between proposal submission and approval. This document presented
several options for the board, such as creating two continuous funding
streams--one for governments and another for civil society recipients.
For example, government applicants could submit their national
strategic plans for the coming years, highlighting financing gaps and
facilitating integration of Global Fund financing with existing
planning and budgeting systems, such as sectorwide approaches.
According to the document, this approach would create incentives for
CCMs to improve and accelerate the disbursement of funds and would ease
the secretariat's workload, allowing secretariat staff to spend more
time managing grants and less time negotiating grant agreements. The
board has not set time frames for further discussing this issue.
According to U.S. board members, the board has not yet fully discussed
or approved these changes, and a majority of board members oppose them
at this time.
Global Fund Is Working with Partners to Improve Technical Capacity at
the Country Level:
Because most grant performance problems are associated with limited
capacity at the country level, where the Global Fund has no presence
and plays no part in program implementation, the Global Fund relies on
its technical partners to provide technical expertise to grant
recipients.[Footnote 25] Although the partners we spoke with expressed
their strong support for the Global Fund, they also voiced concern that
they have not received additional resources to provide the technical
support that grant recipients have requested.[Footnote 26]
The Global Fund and partners reported that partners provided essential
support that strengthened recipients' capacity to prepare applications
for Global Fund financing and helped address the underlying problems
that affected grant performance. For example:
* UNAIDS, a key technical partner, has added about 30 monitoring and
evaluation officers in various countries who are available to support
CCMs in preparing grant performance reports for phase-2 renewals.
UNAIDS has also intensified its capacity-building support at the
country level.
* Several WHO departments have provided critical technical support. For
example, WHO's Stop TB unit supported 50 countries when they developed
their applications for Global Fund financing. The Global TB Drug
Facility worked with recipients in eight countries to identify and
resolve procurement and supply management bottlenecks. WHO's HIV/AIDS
Department helped to develop comprehensive technical support plans for
accelerating the scale-up of antiretroviral therapy and prevention
services in 15 to 20 countries.[Footnote 27] In addition, according to
the Global Fund, it collaborated closely with WHO's Roll Back Malaria
Department in 2004 to incorporate into existing grants new, more
effective malaria treatments that use artemisinin-based combination
therapy.
* USAID and the U.S. Centers for Disease Control and Prevention (HHS/
CDC) are assisting grantees in a number of countries. For example,
USAID is supporting TB grants in numerous ways, including providing
training on procuring and managing medical supplies, addressing country-
level financial management constraints, and conducting human resource
assessments to determine existing capacity needs. In another instance,
HHS/CDC is assisting one grantee in reporting and monitoring activities
and revising project funds to improve grant implementation. HHS/CDC has
also coordinated the implementation and monitoring of activities under
another country's TB grant, participating in supervisory visits to
districts to assess their progress and compiling and submitting
quarterly reports for the TB grant to the ministry of health.
UNAIDS and WHO officials in Geneva and in the field expressed strong
support for the Global Fund but consistently raised concerns about
their organizations' ability to respond to increasing numbers of
requests from grant recipients for help in addressing issues underlying
performance problems. For example, although UNAIDS recently added about
30 monitoring and evaluation officers in its country and regional
offices, officials said that the agency's resources are being stretched
thin and that it cannot provide assistance to all Global Fund grant
recipients. Likewise, WHO officials said that its regional and country
staff are dedicated to providing technical assistance, but because WHO
is not funded to support Global Fund grants it is often unable to
respond to all recipients' requests for help. According to officials
from WHO's HIV/AIDS, Stop TB, and Roll Back Malaria departments, the
Global Fund works under the assumption that UN agencies have a mandate
to provide technical assistance. However, unless it gets more money
from its member countries for this purpose, WHO does not have the
resources to keep up with the massive increase in need for technical
assistance owing to Global Fund grants. In addition, WHO officials
pointed out that the Global Fund does not encourage recipients in
African countries to take advantage of WHO's Global Drug Facility to
procure quality-assured TB drugs at the cheapest prices available;
instead, the Global Fund encourages competition and reliance on local
industry.
Global Fund Has Clarified Guidance and Taken Steps to Strengthen CCMs,
but Some Issues Remain:
To strengthen accountability in recipient countries, the board has
clarified some roles and responsibilities for the CCMs. The board has
stated that CCMs are responsible for overseeing grant implementation
and are therefore to play an important role in deciding whether grants
should be renewed for phase-2 funding. In March 2005, to enhance and
clarify CCM functioning, the secretariat convened regional workshops on
CCM best practices in Zambia and India. In addition, to improve
communication between the Global Fund and CCMs, the secretariat is
compiling contact information for all CCM members. This information
will enable it to communicate directly with the members instead of
relying on the CCM chairperson to disseminate information. Secretariat
officials acknowledged that no formal studies conclusively demonstrate
a link between CCM functioning and grant performance. However, the
Global Fund's March 2005 report stated that many of the (then) 27
grants eligible for phase-2 funding benefited from several factors,
including full levels of participation by CCM members in that body.
Further, the report stated that low levels of participation and
involvement by CCM members were a key factor in poor
performance.[Footnote 28] Secretariat officials stated that they plan
to initiate a study at the end of 2005 to systematically investigate
links between CCM functioning and grant performance, given that a
number of additional grants will then have neared the 2-year mark and
gone through the phase-2 decision process.
In response to findings from several earlier studies commissioned by
the Global Fund on CCM functioning, in November 2004, the board agreed
on specific requirements for CCMs.[Footnote 29] However, it has not
clearly defined CCMs' role in monitoring grant implementation.[Footnote
30] In April 2005, the board directed CCMs to develop tools and
procedures for overseeing grants, stating generally that these tools
and procedures "should include but need not be limited to" a list of
five activities such as recording key oversight actions and developing
a work plan that "could include" site visits. The board noted that
because CCMs vary from country to country, these guidelines can be
adapted and their application paced as needed. According to secretariat
staff, the board has not reached consensus regarding CCMs' oversight
role because some members want clear, specific requirements for CCMs
while others prefer the more general guidelines. In addition, in 2004,
the board agreed on a checklist for measuring CCM performance that
focuses mostly on the makeup of the CCMs, participation and
communication among members, and governance and management. However,
the checklist did not include parameters for measuring the
effectiveness of CCMs in overseeing grant performance. Participants at
the Zambia workshop recommended that the secretariat develop more
specific guidelines defining the oversight role of the CCM.
Global Fund Intervened in at Least Two Countries to Address Grant
Performance:
The Global Fund secretariat intervened in at least two countries in
response to grant performance problems. For example, in Kenya, the
secretariat intervened in 2004 at the request of donors and board
members to encourage the principal recipient to hold regular meetings
with subrecipients and designate staff to administer and monitor the
grants. The secretariat also intervened in Kenya to improve
coordination by facilitating new CCM procedures, such as designating
multiple minute-takers to ensure the accuracy of the minutes and making
sure that minutes are circulated promptly. According to one CCM member,
two additional people now take notes at each meeting; however, the
minutes are not being circulated in advance of the next meeting. In
commenting on a draft of this report, U.S. government officials said
that, despite these interventions, problems persist. For example, they
said that CCM meetings in Kenya are too infrequent and poorly prepared;
decisions are made outside of the meetings; and the minutes are often
inaccurate.
In Ukraine, the Global Fund suspended three HIV/AIDS grants in January
2004 after investigating irregularities in the principal recipients'
procurements that development partners had brought to its attention a
month earlier. The secretariat had also found that after nearly 12
months of a 24-month program, the recipients had spent less than 4
percent of the total 2-year amount for the three grants. The Global
Fund had disbursed a total of $7.1 million to the principal recipients,
from whom it obtained $6.3 million in reimbursements. In March 2004,
the secretariat signed an agreement with a new principal recipient to
continue the HIV/AIDS mitigation activities specified in the original
grants; in addition, it transferred $300,000 to this entity to avoid
interrupting ongoing programs.[Footnote 31]
Conclusions:
The Global Fund's mandate reflects inherent tensions. On the one hand,
the Global Fund is to function solely as a funding entity with no
implementing role and to encourage recipient country bodies such as the
CCM to be responsible for implementing and overseeing grants. On the
other hand, it is to disburse funds rapidly while also ensuring that
recipients are able to account for expenditures and produce measurable
results in addressing the three diseases.
In seeking to balance these tensions and further improve its
performance, the Global Fund has revised--and continues to revise--its
processes. Some systemwide changes require board approval or will take
time to fully implement, whereas others can be implemented relatively
quickly. Capacity in recipient countries, guidance, coordination,
planning, and contracting and procurement are pivotal to grant
performance and therefore merit continued attention. However, local
fund agents' frequent lack of expertise in assessing these factors, and
many recipients' limited monitoring and evaluation capabilities, raise
questions about the accuracy and completeness of the information that
the secretariat uses to make its periodic disbursement and funding
renewal decisions. In addition, despite recent improvements, the Global
Fund's lack of consistent, clear, and convincing documentation of its
funding decisions may hamper its ability to justify these decisions to
donors and other stakeholders, in accordance with its principles of
transparency and accountability. To ensure that all funding decisions
are clearly based on grant performance and reliable data, it is
critical that the Global Fund resolve these issues in a timely manner.
Recommendations for Executive Action:
To improve the quality of the information on which the Global Fund
bases its funding decisions and the documentation explaining these
decisions, we recommend that the U.S. Global AIDS Coordinator work with
the Global Fund's Board Chair and Executive Director to take the
following three actions:
* complete efforts to ensure that local fund agents have the necessary
expertise to evaluate performance data on disease mitigation that
recipients submit,
* continue to work with development partners to strengthen the quality
and consistency of that data by enhancing recipients' capacity for
monitoring and evaluating their financial and program-related
activities, and:
* continue efforts to clearly document the Global Fund's reasons for
periodically disbursing funds and renewing grant agreements.
Agency Comments and Our Evaluation:
We requested comments on a draft of this report from the Executive
Director of the Global Fund, the Secretaries of State and HHS, and the
Administrator of USAID, or their designees. We received formal comments
from the Global Fund as well as a combined formal response from State,
HHS, and USAID (see apps. III and IV). The Global Fund concurred with
the report's conclusion and recommendations and noted steps it is
taking to improve documentation of grant performance such as organizing
regional training of principal recipient staff to improve the quality
of their reporting; defining universal and detailed performance
indicators for each grant to more systematically track performance; and
tailoring grant oversight and terms of reference for local fund agents
based on grant risk. State, HHS, and USAID largely concurred with the
report's conclusions but did not comment on the recommendations in
their formal response. Both the Global Fund and the U.S. agencies also
submitted informal, technical comments, which we have incorporated into
the report as appropriate.
We are sending copies of this report to the Global Fund Executive
Director, the U.S. Global AIDS Coordinator, the Secretary of HHS, the
Administrator of USAID, and interested congressional committees. Copies
of this report will also be made available to other interested parties
on request. In addition, this report will be made available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3149. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this
report are listed in appendix V.
Signed by:
David Gootnick, Director:
International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
In May 2003, the President signed a law directing the Comptroller
General to monitor and evaluate projects supported by the Global
Fund.[Footnote 32] This report reflects our review of grants that the
Global Fund began disbursing before the beginning of 2004--that is,
grants that have had at least 1 year to perform. In this report, we (1)
describe the Global Fund's process for managing grants and disbursing
funds, (2) identify factors that have affected grant performance, (3)
review the basis for, and documentation of, the Global Fund's
performance-based funding, and (4) describe the Global Fund's recent
refinements for managing grants and improving their performance.
Methodology for Describing the Global Fund's Process for Managing
Grants and Disbursing Funds:
To describe the Global Fund's process for managing grants and
disbursing funds, we reviewed Global Fund documents, including The
Global Fund Operational Policy Manual and related guidance documents; A
Force for Change: The Global Fund at 30 Months; The Global Fund to
Fight AIDS, Tuberculosis and Malaria: Annual Report 2002/2003; and
Investing in the Future: The Global Fund at Three Years. We also
interviewed Global Fund officials in Washington, D.C., and in Geneva,
Switzerland.
Methodology for Identifying Factors That Affected Grant Performance:
To identify factors affecting grant performance, we conducted three
types of analysis. First, we selected 13 countries that had grants with
a first disbursement on or before December 31, 2003, to allow for at
least 1 year of performance, and that had grants covering more than one
principal recipient. In addition, all but 4 of these countries had
grants covering more than one disease. We reviewed Global Fund dossiers
for 38 grants to recipients in these countries and categorized reasons
given for deviation from performance targets. (Our initial scope
included the 45 grants to these countries, but for 7 of the grants
there were no disbursement requests available during the period of our
review.) We found 75 progress reports/disbursement requests and 51
local fund agent assessments associated with 24 of the 38 grants. These
38 grants represent 29 percent of the 130 grants that had received a
first disbursement by the end of 2003.
Starting with the grant's second disbursement, we included all
disbursement requests from each grant that were available on the Global
Fund Web site as of November, 2005, and a few that we received
subsequently from the Global Fund. We requested full disbursement
dossiers from the Global Fund. These dossiers contained principal
recipients' progress reports and cash-flow/expenditure data, local fund
agents' reviews of the recipients' information and recommendations
about further disbursements, and, in most cases, additional documents
such as correspondence between the Global Fund secretariat and the
principal recipient. Using this information, we coded reasons given for
deviation from grantees' agreed-upon performance targets into 1 of
about 30 categories. We grouped this information into 5 major
categories--resources or capacity; coordination; programmatic problems,
needs, or changes; procurement; and factors beyond recipients' control.
Within these categories, we developed specific subcategories such as
guidance, decisions or plans not made, done, or available; signing of
contracts or agreements delayed or not done; and limited trained human
resources.
As in any exercise of this type, the categories developed can vary when
produced by different analysts. To address this issue, two GAO analysts
reviewed a sample of the progress reports and independently proposed
categories, separately identifying major factors and then agreeing on a
common set of subcategories. We refined these subcategories during the
coding exercise that followed. We then analyzed the reasons for
deviations from all of the recipients' progress reports and placed them
into one of the subcategories. When information in the progress reports
was insufficient to determine how to code a reason, we consulted the
local fund agents' reports. We tallied the counts in each subcategory
and identified the subcategories mentioned in the greatest number of
grants.
The information in the disbursement requests varied in detail and
quality. The two analysts, together with a methodologist, therefore
discussed and documented categorization criteria and procedures
throughout the analysis, and the methodologist reviewed the entire
analysis as a final step. As a validity check on our document analysis
and to identify frequently cited factors that affected grant
performance, we compared the information in the subcategories mentioned
in the most grants to information available from our fieldwork (see
below) and determined that both sources of information reported similar
findings.
In addition, we reviewed the 75 progress reports/disbursement requests
associated with these 38 grants and tallied the total number of targets
in each request. We ranked each target using the same numeric rating
system:
the Global Fund uses for phase 2 (see fig. 3).[Footnote 33] Because
many of the total 1,125 targets were nonnumeric (e.g., developing a
monitoring and evaluation plan), we did the following: (1) if the
principal recipient clearly met the target, we ranked the target as met
("meeting or exceeding expectations") and included it with the numeric
targets that fell into that category; (2) if the principal recipient
clearly showed no progress toward meeting the target, we ranked it as
not met ("unacceptable") and included it with the numeric targets in
that category; and (3) if the principal recipient partially met the
target, we gave it a separate ranking--"partially met nonnumeric
target," and characterized it as partially met, along with the
partially met numeric targets. To arrive at percentages for the targets
in each category, we first calculated the percentage for each progress
report/disbursement request and then averaged the percentages for the
category from all the reports. Because the number of targets in each
report varied greatly, we averaged the percentages rather than the
numbers of targets to ensure that each report was given equal weight.
We excluded from our calculations those few targets for which the
information available was not adequate to determine whether or to what
extent the target was met.
Second, we reviewed documents obtained from field visits to four
countries--Indonesia, Kenya, Thailand, and Zambia--and interviewed a
wide variety of government, civil society, and bilateral and
multilateral development officials in these countries involved in grant
implementation or oversight. All four of these countries received more
than $36 million in committed funds for several grants that covered
more than one disease, and three of them (Kenya, Thailand, and Zambia)
also have grants that cover both government and civil society
recipients. In addition, we interviewed officials from the Global Fund,
World Health Organization (WHO), and the Joint UN Programme on HIV/AIDS
(UNAIDS) in Washington, D.C., and Geneva, Switzerland.
Finally, to determine whether the percentage of funds disbursed for
each grant (after the first disbursement) and the timeliness of the
disbursements were associated with grant characteristics such as type
of principal recipient, grant size, or disease targeted, we analyzed
130 grants with first disbursements on or before December 31, 2003.
(See app. II for a more detailed discussion of this methodology.) To
assess the reliability of the Global Fund's data, we (1) posed a set of
standard data reliability questions to knowledgeable agency officials,
(2) performed basic electronic reasonableness tests, and (3)
interviewed officials about a few small anomalies that we found during
our analysis. We found only one minor limitation, namely that
disbursement dates were not reported for less than 5 percent of the
disbursements. Based on our assessment, we determined that the data
were sufficiently reliable to generate descriptive statistics about the
program, and to be used for advanced statistical modeling work.
Methodology for Reviewing the Basis for, and Documentation of, the
Global Fund's Performance-Based Funding:
To review the basis for, and documentation of, the Global Fund's
performance-based funding, we examined Global Fund documents--
including The Global Fund Operational Policy Manual and related
guidance documents, the dossiers for the 38 grants that had a first
disbursement on or before December 31, 2003, and documents supporting
Global Fund decisions to continue or discontinue funding 25 of 28
grants that had reached their phase-2 renewal point and been reviewed
by the secretariat as of March 31, 2005.[Footnote 34] We also analyzed
local fund agents' assessments to determine how often grant managers
documented disbursement decisions. In addition, we interviewed Global
Fund officials in Washington, D.C., and in Geneva, Switzerland, and
officials from the Departments of State and Health and Human Services
(HHS), and the U.S. Agency for International Development (USAID).
Methodology for Describing the Global Fund's Recent Refinements for
Managing Grants and Improving Their Performance:
To describe the Global Fund's recent refinements for managing grants
and improving their performance, we reviewed Global Fund documents
including The Global Fund Operational Policy Manual and related
guidance documents and organization charts, and job descriptions for
the positions of local fund agent officer, country coordinating
mechanism (CCM) coordinator, program officer, and fund portfolio
manager (grant manager). We also examined Global Fund papers, including
the Discussion Paper on the Core Business Model for a Mature Global
Fund; Update on New Measures of Performance and Early Warning System;
Update on the Global Fund Information Management Platform; Revised
Guidelines on the Purpose, Structure and Composition of Country
Coordinating Mechanisms and Requirements for Grant Eligibility; and
Performance Standards and Indicators for CCM Monitoring. In addition,
we reviewed the report Investing in the Future: The Global Fund at
Three Years and the Monitoring and Evaluation Toolkit for HIV/AIDS,
Tuberculosis, and Malaria. We also reviewed documents from a March 2005
CCM workshop conducted in Zambia. Further, we reviewed documents
obtained during fieldwork in Kenya, conducted follow-up correspondence
with CCM members in Kenya, and reviewed Global Fund documents
concerning grants to Ukraine. Additionally, we interviewed officials
from the Global Fund, the Departments of State and HHS, USAID, UNAIDS,
and WHO.
We conducted our work from June 2004 through March 2005, in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Methodologies Used to Compare Grants' Disbursements:
This appendix provides descriptive information related to the 130
grants that had received their first disbursements from the Global Fund
on or before December 31, 2003, and the results of analyses we
undertook to determine whether some types of grants had disbursed a
larger percentage of their 2-year funds than others and to estimate the
number of disbursements that were made in a timely fashion.
Disbursements refer to those from the Global Fund to the principal
recipient, not from the principal recipient to subrecipients. Data were
current as of February 4, 2005.
Grant Characteristics:
Table 2 shows selected characteristics of the 130 grants we reviewed.
Table 2: Selected Characteristics of 130 Global Fund Grants:
Category: Principal recipient type: Civil society (private sector and
faith-based organizations);
Number: 20;
Percentage[A]: 15.4%.
Category: Principal recipient type: Civil society (NGO);
Number: 7;
Percentage[A]: 5.4%.
Category: Principal recipient type: Ministry of finance;
Number: 11;
Percentage[A]: 8.5%.
Category: Principal recipient type: Ministry of health;
Number: 52;
Percentage[A]: 40.0%.
Category: Principal recipient type: Government entities other than
ministries of health or finance;
Number: 20;
Percentage[A]: 15.4%.
Category: Principal recipient type: Multilateral organization[B];
Number: 20;
Percentage[A]: 15.4%.
Category: Disease type: HIV/AIDS;
Number: 70;
Percentage[A]: 53.8%.
Category: Disease type: Malaria;
Number: 32;
Percentage[A]: 24.6%.
Category: Disease type: Tuberculosis;
Number: 28;
Percentage[A]: 21.5%.
Category: Grant size[C]: $10 million;
Number: 35;
Percentage[A]: 26.9%.
Category: Number of disbursements: 1;
Number: 10;
Percentage[A]: 7.7%.
Category: Number of disbursements: 2;
Number: 34;
Percentage[A]: 26.2%.
Category: Number of disbursements: 3;
Number: 34;
Percentage[A]: 26.2%.
Category: Number of disbursements: 4;
Number: 34;
Percentage[A]: 26.2%.
Category: Number of disbursements: 5;
Number: 6;
Percentage[A]: 4.6%.
Category: Number of disbursements: 6;
Number: 8;
Percentage[A]: 6.2%.
Category: Number of disbursements: 7;
Number: 4;
Percentage[A]: 3.1%.
Category: Percentage of grant disbursed:
