new funding model allocation external

Allocation Communication, March 2014

New Funding Model

Country Allocations

1

12 March 2014


Contents

2

Key messages

Allocation methodology

Explanation of the allocation letter

1

2

3


Total funding from Global Fund is increasing

• The total funds for allocation are 20% higher than what we have disbursed in the

past.

- The total funds to be allocated to countries, available as of January 1, 2014 (including

existing funds): US$ 14.8 billion

- Average implied funding level: US$ 3.7 billion per year

- This compares favorably vs. the average annual disbursement rates of US$ 3.2 billion.

However, this is less than the higher rate of disbursement in 2013 of US$ 3.9 billion

• In addition, the Global Fund will allocate:

- US$ 950 million of incentive funding which will be awarded to ambitious programs that

deliver impact in country – which increases the average implied funding level to above

US$ 3.9 billion per year

- US$ 200 million for new regional grants and US$ 91 million to finish existing regional

grants

This represents US$ 16 billion for countries

Key messages 1

3


On average, most countries will receive more funds

• On average, countries will receive

more funds from the Global Fund for

this Replenishment period than they did

in the past.

• In many countries, funds from the

Global Fund include (only) existing

funds that must be used for maximum

impact

• For many countries, 2013 was a peak

year for GF disbursements as the

Global Fund ‘unstuck’ grants and a

backlog of funds flowed to countries.

This means that there will be a

decrease in funding compared to 2013

levels.

0

1

2

3

4

5

2010 2011 2012 2013

Disbursements US$

in bn

Key messages for countries 1

3.1

2.6

3.3 3.7 3.9

3.2

2010-2013

(average)

2014-2017

(average)

4


Most countries are under-funded relative to need and should

be ambitious in what they plan to achieve

In most countries, the allocation amounts (regardless of whether a country is

over- or under-allocated) will still be insufficient to cover the gaps vs. real need

- Most countries are under-funded relative to their needs.

- This should not limit planning and ambition – to defeat the diseases, countries

need to think creatively on how to use all resources available

The Global Fund is committed to working in partnership with countries, civil

society, donors, technical partners to maximize impact

- By combining the skill and knowledge and determination of everyone responding to

these diseases, we will find the best solutions

- By prioritizing and focusing on maximum impact, we may be able to achieve more

in the future than seems possible today

Key messages 1

5


Grant implementation period is flexible

The Global Fund will work flexibly with countries to determine the best strategy to

invest for maximum impact, including adapting the implementation periods

• Less than 1 year on average to access funds (including country dialogue, concept note

development, TRP and GAC reviews, grant-making Board approval)

• The typical duration of a grant is three years, but the Global Fund can work with countries to

be flexible on timing, and to significantly shorten the timeline to maximize impact

• Timeline will be determined based on multiple factors including:

- Ambition to achieve increased impact and sustain gains

- Relative under-/over-allocation of countries

- Alignment with national plans and schedules

• Country dialogue will be the main mechanism to determine the optimal grant duration.

Key messages 1

6


• Funding requests are based on quality national strategies

• Resources are focused on targeting the right populations

• Decisions on the allocation of resources are based on evidence/data

• Costs can be driven down by optimizing procurement/supply chain

• Existing grants should be used as effectively as possible, ensuring that

programs are regularly evaluated and grants reprogramed when it

makes sense for maximum impact

• Any additional funding should be harmonized with existing funding;

disease programs should be viewed in a holistic manner

• Donor funding should be coordinated and aligned in-country to avoid

duplication/inefficiencies

Stronger resource prioritization is critical to achieving impact

Key messages 1

Resources

available to

countries

Strategic

investment for

maximum

impact

7


Contents

8

Key messages



1

2

3



9

HIV

(50%)

Malaria

(32%)

TB

(18%)

Band 1

Band 2

Band 3

Band 4

Apply

Allocation

Formula

+

Qual.

Factors

Apply

Qual.

Factors

(within

Band)

Country

allocation

Eligible

Components

Total

Amount

to

allocate

to

Country

Bands

Global Disease

Split

Indicative split

from Global

Fund

HIV

($25m)

HSS

($15m)

TB

($35m)

HIV

($35m)

Malaria

($30m)

TB

($35m)

Final program

split at country

level

Example: Country A

Total indicative funding

= $100m

Malaria

($25m)

Allocation methodology 2


How does the allocation formula work? (Part I)

Calculate a country

share for each

eligible disease

component

Apply qualitative

adjustments to

country share

1

2


10


How does ‘Minimum Required Level’ work?

• The last 4-year (2010-2013) disbursement data available at the end

of 2013, with a 25% reduction

• The existing grant pipeline remaining undisbursed as of 1 January

2014**

The MRL is the

greater of the

following


• A number of countries have historically received more funding than the allocation formula

provides (based on disease burden and ability-to-pay)

• MRL is a provision for ‘graduated reductions’: the countries that would receive a lower

allocation instead get their ‘Minimum Required Level’ (MRL)*

* Countries may be reduced below their MRL, due qualitative adjustments

** This includes: (1) committed funding that remains undisbursed; (2) uncommitted transition funding of the new funding model

approved by the Board; and (3) uncommitted rounds-based funding (whether or not Board approved). Any such funding not yet

approved by the Board will be adjusted by performance-based funding criteria and for Board-mandated savings.

11


Under/over allocated components

12


• Significantly over-allocated components (150% above original allocation) are not

eligible for incentive funding.

• The Global Fund will work with over-allocated countries to take steps to move

towards a more appropriate allocation in the future

Allocation after MRL

adjustment

(e.g. large Phase II

grant signed in 2013) Original allocation

formula amount

Under-allocated

country

Allocation after

MRL adjustment

(e.g. low past

disbursement, low

existing grant

pipeline)

Over-allocated

country

Original allocation

formula amount

Allocation Communication, March 2014 13

Determine country

disease allocation

Determine total

notional funding

amount per country

3

4

Aggregate all

country allocations

to their

relevant band

5

Notional funding

amount for country A

Notional funding

amount for country B

Notional funding

amount for country C

Band 1

Band 2

Band 3

Band 4

How does the allocation formula work? (Part II)



Country band composition


14

Disease Burden

Inc

om

e

Lower Higher

Lo

we

r

Band 1

Band 3 Band 4

Band 2

GNI per capita US$ 2,000

Lower-income,

higher-burden

39 countries

Higher-income,

higher-burden

11 countries

Lower-income,

lower-burden

18 countries

Higher-income,

lower-burden

55 countries

0.26

composite

score

US$ 1.1bn US$ 1.5bn

US$ 0.9 bn US$ 11.3 bn

US$ 83 million of

incentive funding

available for Band 3

US$ 825 million of

incentive funding


US$ 42 million of

incentive funding


Band 4 countries

have incentive

funding calculated

into their allocations H

igher


The notional country

disease allocation resulting

from the allocation formula

is further adjusted based

on a number of qualitative

factors

Any adjustments made have to be offset

by other adjustments in the same band.

The majority of the qualitative adjustments,

(except external financing, minimum

required level and WTP) are made within

the Band

Qualitative adjustments

The formula amount is decreased to 70%

before application of qualitative factors 1

2

3



How qualitative adjustments affect the allocation

Criteria Allocation impact

External Financing

Minimum required level

Performance

Impact

Increasing rates of infection

Risk

Absorptive Capacity

Willingness to Pay

Maximum decrease or increase in allocation of 50%

The higher of the two totals: total of past 4 years’

disbursement data reduced by 25% or total existing pipeline

Increase of up to 25% for good/exceptional implementation

Increase or decrease of up to 15%

Increase of 5%

Increase of up to US$ 1 million

Decrease (no defined amount)

15% of the allocation is conditional upon government’s

willingness to make an additional investment into the disease

program

Adjust-

ments

to

formula

Adjust-

ments

during

CD

Other considerations Decrease (no defined amount)

Adjust-

ments

within

Bands



Example: Over-allocated disease component

18.5

90.9 83.6 84.6

Allocation Based onDisease Burden / Ability toPay / External Financing

Allocation AfterAdjustments for MRL

Allocation AfterAdjustments for

Performance, Impact,Increasing Rates, and

Risk


Absorptive Capacity andOther Considerations

Allocation through allocation process ($M)

*Note: Qualitative factor adjustments include those for performance, impact, increasing rates of infection, risk, absorptive capacity and other

considerations

396% increase to

be at 75% of past

disbursements

7% decrease for B1

performance rating and

limited / no impact

$1M increase for other

considerations


17


Example: Under-allocated disease component

35.1

16.9 17.2

25.8

Allocation Based onDisease Burden / Ability toPay / External Financing

Allocation AfterAdjustments for MRL


Performance, Impact,Increasing Rates, and

Risk


Absorptive Capacity andOther Considerations

Allocation through allocation process ($M)

~52% decrease because did not

have high past disbursements /

existing funds

~2% increase for

performance, impact,

increasing rates, etc

~8M increase for other

considerations. Results

in net 27% reduction


18


Contents

19

Key messages



1

2

3


The allocation letter

20

Explanation of the allocation letter 3

Allocation letters inform countries of their allocations

and steps to take to access funding

Notification

• The Global Fund’s new approach to investment and

distribution of resources

• Total allocation amount

Lett

er

An

nex

• Eligibility

• Counterpart financing and willingness to pay requirements

• Country Band

• Potential indicative funding (if eligible)

• Program split process

• Cross-cutting HSS investments (if eligible)

• Requirements for countries with high TB and HIV co-infection rates

• Information on start dates and duration of grants

Supporting documents:

• FAQs

• Allocation methodology


The Eligibility and Counterpart Financing Policy

Not eligible:

• UMICs with

low/moderate DB

(unless Small Island

Economy exception)

• ‘Malaria-free’ or WHO

Supplementary List

countries;

• G-20 UMIs with less

than extreme DB;

• High income Countries

Eligibility is determined by a country’s income level criteria, official disease burden

The Global Fund Eligibility List identifies which country components are eligible to

receive an allocation, but this does not mean that the Global Fund will award one



• Only deemed newly eligible once it has

maintained its eligibility for two

consecutive eligibility

determinations

• The Secretariat will seek to fund these

within their respective Bands,

subject to available funding

For a country/component that becomes

eligible during an allocation period

• Those that have not accessed their

indicative amounts will not forfeit

their allocation

• the Secretariat may adjust the level of

funding and require specific time-

bound actions for transitioning to

other sources of financing

For a country/component that becomes

ineligible during an allocation period

Eligibility determinations made on an annual basis



How does ‘Counterpart Financing’ work?

Mandatory minimum requirements

of counterpart financing

• Minimum threshold contribution (LI-

5%, Lower LMI-20%, Upper LMI-

40%, UMI-60%)

• Increasing government contribution

to disease programs and health

sector

• Reliable disease and health

expenditure data

‘Willingness-to-Pay’ commitment

to further incentivize

• Additional co-investments by

government in disease programs

in accordance with ability to pay

• Realization of planned government

commitments

• 15% of allocation is contingent

upon meeting WTP

commitments

Core Global Fund principles:

Sustainability, Additionality, Country Ownership


23


What counts towards Willingness to Pay commitments?

Counterpart financing in the next phase, which is

– Beyond current levels of government spending or over minimum threshold

requirements, whichever is higher

– Committed to strategic areas of the national disease programs supported by the

Global Fund and/or health systems strengthening to address bottlenecks in

management and service delivery of programs supported by the Global Fund

– Not less than already planned spending: Additional investments should not be

lower than already existing government commitments for the next phase

– Verifiable through budgets or equivalent official documentation on an annual basis

• A country must demonstrate it has met its minimum counterpart

financing requirements and WTP commitments on an annual basis

• Funding from the Global Fund will be adjusted downwards

proportionately if a government fails to meet these requirements and

commitments

Key

take-away


24


Ineligible

25

What is incentive funding?

• A separate reserve of funding designed to reward high impact, well-performing

programs and encourage ambitious requests

• It is made available, on a competitive basis (per component) to applicants within their

own Country Bands

Band 1

Band 2

Band 3

Significantly over-allocated components

Band 4

Regional applicants

Eligible



How is incentive funding awarded?

Awarding of incentive funding is based on the TRP recommendation. The GAC decides on

incentive funding, which will be included in the upper-ceiling of the grant

Strategic focus

Sustainability/

WTP/Co-financing

Ambition Foster quality expressions of

full demand

Potential for impact

Leverage contributions from

domestic & other sources

Strategically focused

Well performing

Based on robust NSP

Board criteria Relevant elements in Board

criteria


26


Global Fund provides one allocation amount across all eligible disease

components.

Allocation announcement contains:

• A breakdown by disease component for information only (countries may propose a

different split)

• Calculation methodology used for disease funding share allocation

• Existing funding and identified over/under allocated disease components

• Band allocation, for the respective country, based on disease burden and income

level

• Amount of potential incentive funding available for band

CCM proposes a program split between eligible diseases & HSS

$

HIV

Allocation

$

TB

Allocation

$

Mal

Allocation

Overall

allocation

for country x


27


The Global Fund will provide no guidelines / limits on how funds should be split

among the 3 diseases and HSS.

Cross-cutting HSS investment guidance is differentiated by bands.

• Band 1: Investment strongly encouraged

• Bands 2,3: Investment encouraged

• Band 4: Investment will be considered on a case-by-case basis, in line with the

ECFP

For information, the historic levels of disbursements for HSS are provided, but

CCMs should invest what is needed for their country:

• Band 1: historical average of 11%

• Bands 2,3: historical average of 8%

• Band 4: historical average of 5%

How much can the country invest in HSS?


28


HIV and TB programs

HIV

TB

2014 2015 2016 2017

Existing funding re-programmed

to achieve aligned start date

Existing Funding

prior to concept note

Start of activities

from consolidated

concept note

TB/HIV single concept note: How do I align 2 programs that

have different start/end dates?

Same end dates

for all programs


New

funding

29

TB and HIV

Collaborative activities


Time required for new funding model stages also depends

on country context

2 months

1.5 months*

• Up-to-date and costed national strategic plan or

investment case with agreed priorities

• Strong CCM and PRs that meet minimum standards

2 months

3 months*

3 months

3 months*

NSP development

8 months

11 months

3 months

Concept note writing

TRP and GAC review

Grant making

Time from dialogue to 1st disbursement

Pre-concept note country dialogue

From Board approval to 1st disbursement

1 month

1 month

• Need time for country dialogue to agree on priorities and consult stakeholders

• PRs and implementation arrangements are satisfactory

• Lack clear strategy or viable extension plan through grant period

• Weak CCM and/or implementers

• Weak technical partners in-country

1 month

Accele

rate

d

Avera

ge

L

on

g

Note: TRP reviews will be scheduled to accommodate the most programs. If there is no TRP scheduled in the month the concept

note is submitted, the “TRP and GAC review” stage may take longer, up to 3 months

* This is the anticipated average scenario – it may take longer in some countries.

17 months

2 months

2 months

2 months

7 months

Timing of concept note submission has to be aligned to one of the TRP / GAC windows


30


Submission dates for each component

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec



1 2 3 4

5 6 7 8

9

2014

2015

2016

TRP TRP TRP TRP

TRP TRP TRP TRP

TRP

# Submission deadline on 15th of the month

TRP review meeting (approx.) TRP

Submission deadline for EoI (regionals only)

EoI

EoI


31


Appendix


Parameters for disease burden indicators


Indicator Proposed specification

HIV

burden

[People with HIV]

data from 2012

TB

burden

[1 * HIV negative TB incident cases],

[1.2 * HIV positive TB incident cases],

[8 * estimated MDR-TB incidence],

[0.1 * 50% of estimated number of people with

known HIV positive status]

data from 2012

Malaria

burden

[1 * cases],

[1 * deaths],

[0.05 * incidence rate],

[0.05 * mortality rate]

data from 2000, indicators normalized

33


Ability-to-pay factor


LIC

s

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Ability-to-pay factor Eligible countries as of 2013

Counterpart Financing Thresholds

GNI per capita,

Atlas method

Ability-to-pay factor

0.95

LMICs UMICs

34


What does a consolidated request look like?

Disease/HSS Program

PR1

PR2

Consolidated request includes:

- Continuation of existing & new

activities for PR1 & PR2

- Introduction of new PR3

2014 2015 2016 2017

PR3

Start of activities

from consolidated

concept note

Existing

funding

New

funding


35

new funding model allocation external

Government & Nonprofit

allocation communication

allocation of resources

allocation letter

allocation formula

allocation methodology2

countries key messages1

total funding

maximum impact