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-05-639: Published: Jun 10, 2005. Publicly Released: Jun 10, 2005.

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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.

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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the quality of the information on which the Global Fund bases its funding decisions and the documentation explaining these decisions, the U.S. Global AIDS Coordinator work with the Global Fund's Board Chair and Executive Director to complete efforts to ensure that local fund agents have the necessary expertise to evaluate performance data on disease mitigation that recipients submit.

    Agency Affected: Department of State: Office of the U.S. Global AIDS Coordinator

    Status: Closed - Implemented

    Comments: Department of States Office of the Global AIDS Coordinator (OGAC) worked with the Global Fund Secretariat and through its seat on the Global Fund Board to improve the transparency and rigor of Global Fund policies and procedures. According to OGAC officials, the Global Fund has taken several steps to strengthen the ability of Local Fund Agents (LFAs) to evaluate performance data submitted by recipients. In 2007, after the initial LFA contracts expired, the Global Fund undertook a competitive bidding process, pursuant to guidance issued by the Global Fund Board, to select new LFAs for countries with grants. The Boards guidance stipulated, among other things, that the Secretariat evaluate LFA performance mid-way through a funding agents 4-year contract, and that such contracts preserve the Secretariats' right to terminate a contract based on this mid-term review. LFAs were expected to provide or ensure recipients? initial capacity assessments and ongoing implementation oversight. The Global Fund has also developed a sizable body of guidance and training materials covering the duties of the LFAs. These documents cover the LFAs' expected actions at every step of the grant lifecycle and include baseline training materials for use prior to grant signature. All LFAs now have a single set of standards and operating procedures, which strengthens their ability to evaluate performance data in a consistent way. These documents are available on the Global Funds website.

    Recommendation: To improve the quality of the information on which the Global Fund bases its funding decisions and the documentation explaining these decisions, the U.S. Global AIDS Coordinator work with the Global Fund's Board Chair and Executive Director to 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.

    Agency Affected: Department of State: Office of the U.S. Global AIDS Coordinator

    Status: Closed - Implemented

    Comments: According to the Department of State?s Office of the Global AIDS Coordinator (OGAC), the Global Fund undertook efforts to improve the quality and consistency of data from implementing partners by: 1) developing and implementing a new financial data reporting system, and 2) conducting in-country capacity building efforts. According to a June 2009 OGAC report to Congress, the Global Fund began implementation of Enhanced Financial Reporting (EFR) system in January 2008 to collect standardized and detailed financial information from grant recipients. Principal recipients are now required to report annually on budgets, expenditures, and variances by cost category (e.g. technical assistance, training, health products and health equipment, and monitoring and evaluation), Service Delivery Area, and implementing entity at both the principal recipient and sub-recipient level. The budget and expenditure data also disclose sub-recipient identity and type (governmental, civil society, faith-based, etc.), relationship to principal recipient, and dollar amounts of all sub-recipient grants. The OGAC report states that the EFR system marks a significant step forward in the Global Fund's ability to account for grantee expenditures at the principal and sub-recipient levels. In terms of capacity-building, the Global Fund supported significant monitoring and evaluation strengthening activities for Global Fund implementing partners under the auspices of the Health Impact Evaluation (HIE) component of the Global Fund Five-Year Evaluation. The U.S. government provided significant funding to support these efforts, which included capacity-building workshops to train in-country HIE analysts, development of country-level programmatic diagnostic plans, and creation of a data depository that will include all tools and protocols used during the Five-Year Evaluation.

    Recommendation: To improve the quality of the information on which the Global Fund bases its funding decisions and the documentation explaining these decisions, the U.S. Global AIDS Coordinator work with the Global Fund's Board Chair and Executive Director to continue efforts to clearly document the Global Fund's reasons for periodically disbursing funds and renewing grant agreements.

    Agency Affected: Department of State: Office of the U.S. Global AIDS Coordinator

    Status: Closed - Implemented

    Comments: In 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) GAO found problems associated with the information sources that the Global Fund uses in making performance-based-funding decisions. Specifically, GAO pointed out that the Global Fund was not consistently documenting its determinations that grant recipients warrant continued funding nor did it track denied disbursement requests. To address these problems, GAO recommended that the U.S. Global AIDS Coordinator work with the Board Chair and Executive Director to improve the basis for, and documentation of, the Global Fund's funding decisions. In 2007, GAO completed a follow-up review of the Global Fund and reported that since the 2005 review, the Global Fund improved its documentation for decisions to disburse funds and renew grants. The Global Fund, since 2006, now requires that fund portfolio managers more consistently document factors, such as the grant ratings and contextual information that support disbursement and grant renewal decisions. GAO's 2006 review of 80 grant disbursements and 45 grant renewal decisions confirmed that Global Fund grant files consistently contained explanations of the information used in its funding decisions. In 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) GAO found problems associated with the information sources that the Global Fund uses in making performance-based-funding decisions. Specifically, GAO pointed out that the Global Fund was not consistently documenting its determinations that grant recipients warrant continued funding nor did it track denied disbursement requests. To address these problems, GAO recommended that the U.S. Global AIDS Coordinator work with the Board Chair and Executive Director to improve the basis for, and documentation of, the Global Fund's funding decisions. In 2007, GAO completed a follow-up review of the Global Fund and reported that since the 2005 review, the Global Fund improved its documentation for decisions to disburse funds and renew grants. The Global Fund, since 2006, now requires that fund portfolio managers more consistently document factors, such as the grant ratings and contextual information that support disbursement and grant renewal decisions. GAO's 2006 review of 80 grant disbursements and 45 grant renewal decisions confirmed that Global Fund grant files consistently contained explanations of the information used in its funding decisions.

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