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 messages1
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 countries1
3.1
2.6
3.3
3.73.9
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 messages1
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 messages1
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 messages1
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 methodology2

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
Income
Lower Higher
Lower
Band 1
Band 3Band 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
Higher

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 on
Disease Burden / Ability to
Pay / External Financing
Allocation After
Adjustments for MRL
Allocation After
Adjustments for
Performance, Impact,
Increasing Rates, and
Risk
Allocation After
Adjustments for
Absorptive Capacity and
Other 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 on
Disease Burden / Ability to
Pay / External Financing
Allocation After
Adjustments for MRL
Allocation After
Adjustments for
Performance, Impact,
Increasing Rates, and
Risk
Allocation After
Adjustments for
Absorptive Capacity and
Other 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 letter3
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
LetterAnnex
• 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
AcceleratedAverageLong
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
201420152016
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
LICs
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

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