a

GAO

United States Government Accountability Office

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

GAO-05-639
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

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). 

Highlights of GAO-05-639, a 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 

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. 

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 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. 
Page i GAO-05-639 Global Health

Contents

Letter 1

Results in Brief 3

Background 5

Grant Management Process Has Many Participants and Occurs in 

Two Phases 8

Several Factors Affected Grant Performance 18

Sources Informing Funding Decisions Have Limitations, and 

Decisions Are Not Clearly Documented 24

Global Fund Is Taking Several Steps to Refine Grant Management 

and Performance 29

Conclusions 38

Recommendations for Executive Action 39

Agency Comments and Our Evaluation 39

Appendixes

Appendix I: Objectives, Scope, and Methodology 41

Appendix II: Methodologies Used to Compare Grants’ Disbursements 46

Appendix III: Comments from the Global Fund 53

Appendix IV: Joint Comments from the Departments of State and Health 

and Human Services, and the U.S. Agency for International 

Development 58

Appendix V: GAO Contact and Staff Acknowledgments 61

Tables Table 1: Global Fund Grants by Disease, Region, and Recipient 

Type 6

Table 2: Selected Characteristics of 130 Global Fund Grants 46

Table 3: Information Related to Disbursements for Different Types 

of Grants, Defined by Principal Recipient Type, Disease 

Type, and Grant Size 47

Table 4: Regression Models Showing Effects of Various Factors on 

Percentage of Grants Disbursed, Minus the Amount 

Disbursed in First Disbursement 49

Table 5: Percentages of Timely and Untimely Disbursements, by 

Disbursement Stage 52

Figures Figure 1: Global Fund Grant Management Process 9

Figure 2: Global Fund Grant Life Cycle 14

Figure 3: Global Fund Grant Rating System for Phase 2 16
Contents

Page ii GAO-05-639 Global Health

Figure 4: Global Fund Milestones 18

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 

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Page 1 GAO-05-639 Global Health

United States Government Accountability Office

Washington, D.C. 20548

A

June 10, 2005 Letr

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.1

 Also in May 2003, the President signed legislation directing the 

Comptroller General to monitor and evaluate projects supported by the 

1

GAO, Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced in Key 

Areas, but Difficult Challenges Remain, GAO-03-601 (Washington, D.C.: May 7, 2003).
Page 2 GAO-05-639 Global Health

Global Fund.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 Zambia3

—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 

2

U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, (P.L. 108-25), 

section 202(f). 

3

These four countries received more than $36 million in committed funds for several grants 

that covered more than one disease. Three of these countries, Kenya, Thailand, and Zambia, 

also have grants that cover both government and civil society recipients.
Page 3 GAO-05-639 Global Health

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. 
Page 4 GAO-05-639 Global Health

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 
Page 5 GAO-05-639 Global Health

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. 
Page 6 GAO-05-639 Global Health

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 

Categories

Number of

grants

Percentage of

totala

Disease focus

HIV/AIDS 122 45

Malaria 71 26

Tuberculosis 67 25

Integrated 11 4

Region

Sub-Saharan Africa 121 45

East Asia and the Pacific 38 14

Latin America and the Caribbean 36 13

Eastern Europe and Central Asia 31 11
Page 7 GAO-05-639 Global Health

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.

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;4

• given more than 300,000 people new, more effective treatments for 

malaria; and

South Asia 24 9

North Africa and the Middle East 21 8

Type of recipient

Government: ministry of health 97 36

Multilateral organization: UN Development 

Programme 51 19

Civil society: nongovernmental organization 45 17

Government: otherb 42 16

Government: ministry of finance 21 8

Civil society: private sector 8 3

Civil society: faith-based organization 4 1

Multilateral organization: otherc 3 1

 Total: government 160 59

 Total: civil society 57 21

 Total: multilateral organizations 54 20

Total 271 100

4

TB patients are typically prescribed a regimen of antibiotics for 4 to 6 months. If patients 

fail to take their pills regularly, they may develop resistant strains of the disease, which are 

much more difficult to treat and require additional, expensive drugs.

(Continued From Previous Page)

Categories

Number of

grants

Percentage of

totala
Page 8 GAO-05-639 Global Health

• 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).
Page 9 GAO-05-639 Global Health

Figure 1: Global Fund Grant Management Process 

• 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 

Government

Progress 

updates/ 

disbursement 

requests

Principal 

recipient

Global Fund 

trustee

(World Bank)

Local fund 

agent

Disbursement 

denied

Data verification 

and 

recommendations

Secretariat

Instructions 

to disburse

Board of directors

Disbursements

In-country structures The Global Fund

Country 

coordinating 

mechanism

Multi-/bilateral 

development 

partners

Nongovernmental 

organizations

Affected 

communities

Faith-based 

organizations

Academic 

institutions

Private 

sector

Source: GAO, based on information from the Global Fund.
Page 10 GAO-05-639 Global Health

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 
Page 11 GAO-05-639 Global Health

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.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.6

5

Some board members, including the United States, disagreed with this change.

6

Secretariat officials stated that they apply this information with varying weight on a 

case-by-case basis, that partial achievement of the quarterly program goals may be 

acceptable, and that no single information source is critical to the approval of continued 

funding. For example, if other mitigating circumstances exist, such as the risk of treatment 

interruption, the secretariat may accept partial achievement of program goals. 
Page 12 GAO-05-639 Global Health

• 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 
Page 13 GAO-05-639 Global Health

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). 
Page 14 GAO-05-639 Global Health

Figure 2: Global Fund Grant Life Cycle

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.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 

0 16 18 20 22

Global Fund 

invites 

country 

coordinating 

mechanism 

to submit 

request for 

continued 

funding

Grant program month

Principal 

recipient and 

Global Fund 

negotiate and 

sign grant 

agreement 

extension if 

board approves 

request

Country 

coordinating 

mechanism 

submits its 

request for 

continued 

funding

Global Fund 

instructs 

trustee to 

make first 

phase 2 

disbursement

Board approves proposal 

for up to 5 years and 

commits funds for the 

first 2 years

Prinicipal recipient 

receives first 

disbursement

Global Fund and 

principal recipient 

sign grant agreement Principal recipient is 

to receive 

subsequent 

disbursements based 

on performance

Phase 1

Phase 2

Source: GAO, based on information from the Global Fund.

Year 1 Year 2 Year 3 Year 4 Year 5

Principal recipient is 

to receive 

subsequent 

disbursements based 

on performance

7

Under phase 2, contextual considerations include financial and program management 

issues; CCM functioning; major changes in the political or technical environment in which 

the program operates; data quality; and any indication that the grant is not advancing the 

Global Fund’s operating principles of promoting broad and inclusive partnerships, 

sustainability, and national ownership. The secretariat reports these considerations in a 

standard format for each grant.
Page 15 GAO-05-639 Global Health

months. At month 22, the Global Fund instructs the World Bank to make 

the first phase-2 disbursement. 
Page 16 GAO-05-639 Global Health

Figure 3: Global Fund Grant Rating System for Phase 2

Phase 2 grant committed for the 

remaining proposal period (years 3-5)

Decision

category

Phase 2 grant committed conditional upon 

time-bound actions to be taken

Reprogramming of grant (targets and 

budget substantially revised for phase 2) 

subject to Global Fund approval

Phase 2 grant not committed

GO

CONDITIONAL GO

REVISED GO

NO GO

Grant

performance rating

Lower level indicators

Grant performance rating system

A Meeting or 

exceeding 

expectations

B1 Adequate

B2 Inadequate but 

demonstrating 

potential

C Unacceptable

Targets met 

or exceeding 

80 percent

Significant progress 

toward targets

(50-80 percent)

Some progress 

toward targets 

(30-50 percent)

Marginal or no 

progress toward 

targets

(<30 percent)

If the program has achieved at least 

significant progress toward targets in terms 

of numbers of persons reached, the Global 

Fund does not need to consider lower-level 

indicators for the phase 2 decision

Significant progress 

toward targets 

(>30 percent)

Marginal or no 

progress toward 

targets 

(<30 percent)

Significant progress 

toward targets 

(>30 percent)

Marginal or no 

progress toward 

targets 

(<30 percent)

Meeting or 

exceeding 

expectations

Adequate

Inadequate 

but 

demonstrating 

potential 

Unacceptable

Actual results 

compared with 

targets for key 

coverage 

indicators

Number of 

persons reached 

with services

Number of 

service centers 

established/

strengthened

Number of persons 

trained to deliver 

services

A

B1

B2

C

Contextual 

considerations

Source: GAO, based on information from the Global Fund.

No or minor 

contextual issues

Major contextual 

issues that can be 

addressed

Major recent 

improvements in program 

supporting environment 

Critical contextual 

risks
Page 17 GAO-05-639 Global Health

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.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 2.9

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. 

8

Four objections from board members to a recommendation trigger an additional vote, and 

four further objections elevate the decision to the next formal board meeting, at which the 

decision is final.

9

When the secretariat recommends a “revised go” or “no go” decision, the board may refer 

the proposal back to the CCM, which must then deliver a revised request for continued 

funding to the secretariat. The secretariat then passes the request to the technical review 

panel, which provides a recommendation to the board. If the panel recommends to 

discontinue funding, the grant is terminated; if it recommends to continue funding, the 

board votes by e-mail on whether to continue funding.
Page 18 GAO-05-639 Global Health

Figure 4: Global Fund Milestones 

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 grants10 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. 

2002 2003 2004 2005 2006

1/02

Global Fund 

begins 

operations.

4/02

Board 

approves first 

round of grant 

proposals.

1/03

Board 

approves 

second round 

of grant 

proposals.

10/03

Board 

approves 

third round of 

grant 

proposals.

6/04

Board 

approves 

fourth round 

of grant 

proposals.

2-4/05

Secretariat reviews 36 

grants that become eligible 

for continued funding under 

phase 2; board approves 33. 

From this point on, board is 

to continue to evaluate 

grants for phase 2 on a 

rolling basis as they become 

eligible.

9/05

Board 

expected to 

approve a 

fifth round 

of grant 

proposals.

Source: GAO, based on information from the Global Fund.

10Our initial scope included 45 grants, but 7 of these grants lacked progress reports or 

disbursement requests during the period of our review. We found 75 progress reports or 

disbursement requests associated with the 38 grants, which represent 29 percent of the 130 

grants that had received a first disbursement as of December 31, 2003. 
Page 19 GAO-05-639 Global Health

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.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. 

11Country capacity refers to a country’s human, scientific, technological, organizational, 

institutional, and resource capabilities.
Page 20 GAO-05-639 Global Health

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 
Page 21 GAO-05-639 Global Health

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 
Page 22 GAO-05-639 Global Health

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
Page 23 GAO-05-639 Global Health

the principal recipient.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,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

12The District Health Director reported that the hard drive crashed because of a power 

outage and that the frequency of such outages could result in the need to replace the hard 

drive repeatedly. The Director of the Central Board of Health acknowledged this problem 

and stated that spending ceilings have since been raised at the provincial level but not at the 

district level. 

13We analyzed the percentage of funds disbursed after the initial disbursement.
Page 24 GAO-05-639 Global Health

account the time elapsed since the first disbursement.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. 

14Using a different methodology, the Global Fund concluded that NGO recipients had a 

slightly higher disbursement rate than government recipients [see The Global Fund to Fight 

AIDS, Tuberculosis and Malaria, Investing in the Future: The Global Fund at Three Years

(Geneva, Switzerland: 2005)]. The Global Fund’s methodology differed from ours in several 

ways. For example, the Global Fund’s analysis assumed that the time elapsed since the first 

disbursement on the residual amount disbursed had a linear effect, while we estimated the 

effect of time directly and found it to be nonlinear. In addition, the Global Fund did not 

simultaneously estimate the effects of time, principal recipient type, grant size, and disease 

targeted, as we did.
Page 25 GAO-05-639 Global Health

• 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
Page 26 GAO-05-639 Global Health

assurance for continued funding.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.16 Overall, for the 38 grants we reviewed, we determined 

that recipients met, on average, 50 percent of their targets; partially met 21

15Global Fund to Fight AIDS, Tuberculosis and Malaria: Review of the Roles, Functions 

and Performance of Local Fund Agents, Final Report, August 2004, Stein-Erik Kruse, 

Centre for Health and Social Development (HeSo), and Jens Claussen, Nordic Consulting 

Group (NCG). This report has not been shared with the board. 

16The Global Fund provided 51 local fund agent reports associated with 24 of the 38 grants. 

Thirty-five of the local fund agent reports provided no information on why funds should be 

released. 
Page 27 GAO-05-639 Global Health

percent; and failed to meet 24 percent.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 

17We reviewed 75 progress reports with a total of 1,125 targets associated with the 38 grants. 

For 116 (6 percent when the percentages for each report are averaged) of these targets, the 

information available was not adequate to determine whether or to what extent the target 

was met. For the rest, we used the Global Fund’s system for ranking target attainment. The 

Global Fund considers a numeric target—for example, the number of health workers 

trained—to be met if the recipient achieves over 80 percent of it; partially met if the 

recipient achieves between 30 and 80 percent of it; and not met if the recipient achieves less 

than 30 percent of it. We placed partially met nonnumeric targets, for example, developing a 

monitoring and evaluation plan, in a separate category and added the targets in that 

category to the partially met numeric targets to arrive at the 21 percent figure for partially 

met targets. The percentages add up to 101 percent due to rounding. See appendix I for a 

more detailed description of our methodology.
Page 28 GAO-05-639 Global Health

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 
Page 29 GAO-05-639 Global Health

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 Is Taking 

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 Is 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:
Page 30 GAO-05-639 Global Health

• Reorganized the secretariat’s operations unit and increased the number 

of staff from 118 to 165.18 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.19 This toolkit guides grant 

recipients to select consistent indicators to measure progress toward 

18According to the Global Fund secretariat, its staffing review indicates that it should be able 

to manage the volume of grants foreseen by 2007 with no more than 200 staff.

19Monitoring and Evaluation Toolkit, HIV/AIDS, Tuberculosis and Malaria, June 2004.
Page 31 GAO-05-639 Global Health

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.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.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. 

20Because grant agreements from the earlier rounds were signed prior to the launch of the 

toolkit, the strategic information team worked with grant managers to draft or revise 

monitoring and evaluation plans and add these plans to grant agreements and ensure the 

application of the toolkit’s standard monitoring and evaluation framework. 

21The toolkit was published in the official UN languages of Arabic, Chinese, English, French, 

Russian, and Spanish. 
Page 32 GAO-05-639 Global Health

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.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;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 

22The Global Fund secretariat has assessed several sources for the information on country 

development and corruption indicators and plans to use readily available information. 

23The government decided to use a voucher system instead of distributing the bed nets free 

of charge in order to develop a local bed-net industry and thereby help to make the supply of 

bed nets more sustainable. 
Page 33 GAO-05-639 Global Health

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 roundbased grant approval system worked well for launching the Global Fund
Page 34 GAO-05-639 Global Health

and identifying countries that submitted strong proposals,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.25

Although the partners we spoke with expressed their strong support for the 

Global Fund, they also voiced concern that they have not received

24At the request of the executive director, secretariat staff prepared a discussion paper, 

outlining some of the challenges facing the Global Fund and including several options for 

changing the core aspects of the current business model, and introduced it to the eighth 

board meeting in June 2004. According to Global Fund officials, the paper was updated and 

presented at the ninth board meeting in November 2004 and discussed at a retreat after the 

official meetings. However, the board has not formally endorsed the paper.

25According to the Global Fund, it has intensified dialogue on coordination, information 

exchange, and assistance in program countries with British, Canadian, French, German, 

Swedish, and U.S. bilateral partners.
Page 35 GAO-05-639 Global Health

additional resources to provide the technical support that grant recipients 

have requested.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.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 

26UNAIDS allocated additional resources to help support harmonized monitoring and 

evaluation at the country level, which will benefit Global Fund grantees in these countries. 

In commenting on a draft of this report, U.S. government officials noted that grant proposals 

can and, in many cases, should, contain a line item for improving technical capacity at the 

country level.

27According to WHO, its “3 by 5” initiative sets the global target to provide three million 

people living with HIV/AIDS in developing and middle income countries with life-prolonging 

antiretroviral treatment by the end of 2005.
Page 36 GAO-05-639 Global Health

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. To enhance and clarify CCM functioning, the 

secretariat in March 2005, convened regional workshops in Zambia and 

India on CCM best practices. 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 
Page 37 GAO-05-639 Global Health

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.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.29 However, it has not clearly defined 

CCMs’ role in monitoring grant implementation.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 

28In one case, the secretariat cited poor CCM governance (acute coordination problems and 

frequent turnover in the CCM chair) as a factor in its recommendation to discontinue 

funding.

29Specifically, the board voted to require all CCMs to have a written plan to mitigate against 

conflict of interest when principal recipients and CCM chairs or vice chairs are from the 

same entity; establish and maintain a transparent, documented process to solicit and review 

proposal-related submissions, nominate principal recipient(s) and oversee grant 

implementation, and ensure input from a broad range of stakeholders in proposal 

development and grant oversight; show evidence of membership of people living with or 

affected by the three diseases; and have NGO representatives selected by their own sectors 

based on a documented, transparent process. 

30The board has also considered the funding of basic CCM operations. Some board members 

prefer the Indonesia model, where a key bilateral partner funds the CCM secretariat. Others 

prefer the Thailand model, where the host government houses the CCM secretariat in a 

ministry and funds administrative positions. At its tenth meeting in April 2005, the board 

requested the secretariat to work with multilateral and private partners to support CCM 

operations. In countries where partner support of CCMs is not available, the board approved 

limited use of grant funds to support CCMs.
Page 38 GAO-05-639 Global Health

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.31

31The new principal recipient, an international NGO, had been a subrecipient under one of 

the original grants. 
Page 39 GAO-05-639 Global Health

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 
Page 40 GAO-05-639 Global Health

• 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 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.

David Gootnick, Director

International Affairs and Trade 
Page 41 GAO-05-639 Global Health

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

In May 2003, the President signed a law directing the Comptroller General 

to monitor and evaluate projects supported by the Global Fund.1

 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 

1

U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, (P.L. 108-25), 

Section 202(f).
Appendix I

Objectives, Scope, and Methodology

Page 42 GAO-05-639 Global Health

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
Appendix I

Objectives, Scope, and Methodology

Page 43 GAO-05-639 Global Health

the Global Fund uses for phase 2 (see fig. 3).2 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 

2

The Global Fund also distinguishes between types of targets such as number of persons 

reached with services versus number of service centers established or strengthened, or 

number of persons trained to deliver services. In our analysis of the targets, we did not make 

this distinction.
Appendix I

Objectives, Scope, and Methodology

Page 44 GAO-05-639 Global Health

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 PerformanceBased 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, 2005.3

 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 

3

As of that date, the secretariat had provided us with documentation for 25 grants, which 

went to recipients in Argentina, Benin, Burundi, China, Cuba, Ghana, Haiti, Honduras, India, 

Laos, Madagascar, Moldova, Mongolia, Morocco, Panama, Rwanda, Senegal, Tajikistan, and 

Tanzania/Zanzibar.
Appendix I

Objectives, Scope, and Methodology

Page 45 GAO-05-639 Global Health

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. 
Page 46 GAO-05-639 Global Health

Appendix II

Methodologies Used to Compare Grants’ 

Disbursements ApendxiI

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 Number Percentagea

Principal recipient type

Civil society (private sector and faith-based 

organizations) 20 15.4

Civil society (NGO) 7 5.4

Ministry of finance 11 8.5

Ministry of health 52 40.0

Government entities other than ministries of health or 

finance 20 15.4

Multilateral organizationb 20 15.4

Disease type

HIV/AIDS 70 53.8

Malaria 32 24.6

Tuberculosis 28 21.5

Grant sizec

<$2 million 25 19.2

$2-$5 million 43 33.1

$5-$10 million 27 20.8

>$10 million 35 26.9

Number of disbursements

1 10 7.7

2 34 26.2

3 34 26.2
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 47 GAO-05-639 Global Health

Source: GAO analysis of Global Fund data.

a

Percentages may not add to 100.0 due to rounding.

b

The UN Development Program and other UN organizations.

c

Grant size refers to the 2-year, or phase 1, amount. The grants ranged in size from roughly $221,000 

to more than $55 million.

No Significant Differences 

between Grant Type and 

Percentage of Grant 

Disbursed

Table 3 shows the performance of different grant types with respect to 

receiving disbursements. Some of these characteristics varied by type of 

grant, although many of the differences were not significant.

Table 3: Information Related to Disbursements for Different Types of Grants, Defined by Principal Recipient Type, Disease Type,

and Grant Size

4 34 26.2

5 6 4.6

6 8 6.2

7 4 3.1

Percentage of grant disbursed

<50 40 30.8

70-74 46 35.4

75-99 27 20.8

100 17 13.1

Total 130 100.0

(Continued From Previous Page)

Category Number Percentagea

Grant category

Number of

observations

Average days

since 

first 

disbursementa

Average number

of

disbursements

Average

percent of

grants

disbursed

Average percentage

of grants disbursed

 (of grants remaining 

after first

disbursement)b

Percent of

grants fully

disbursed

Principal recipient 

type

Civil society (private 

sector and faith 

based) 20 575.70 3.95 71.94 65.96 10.0

Civil society (NGO) 7 560.86 3.29 76.39 72.23 42.9

Ministry of finance 11 463.73 2.09 56.84 45.46 9.1

Ministry of health 52 557.58 3.35 62.52 50.59 7.7
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 48 GAO-05-639 Global Health

Source: GAO analysis of Global Fund data.

a

A larger number of days since the first disbursement implies an earlier first disbursement.

b

The percentage of grants disbursed (of grants remaining after first disbursement) was calculated 

based on 128 grants, rather than 130, because two grants were completely disbursed after a single 

disbursement.

Ministries of finance, on average, made a smaller number of disbursements 

and disbursed a lower percentage of their grants, although they also had 

made their first disbursements later and therefore had less time to make 

disbursements. Similarly, larger grants disbursed lower percentages of 

their grant amounts than smaller grants; but again, differences in the time 

elapsed make it difficult to know whether these differences reflect 

anything more than the time they had to make disbursements. Differences 

in disbursements, percentages disbursed, and average days since the first 

disbursement were insignificant across grants dedicated to the different 

types of diseases. 

Methodologies Used To determine whether the differences in the percentage disbursed varied 

by type of grant, we used ordinary regression techniques. The Global Fund 

also analyzed grant disbursements, reporting in March 2005 that 

disbursements are indicative of performance. Our analysis differed from 

the Global Fund’s in that we looked at the percentage of the 2-year grant 

amount disbursed since the first disbursement, whereas the Global Fund 

Other government 20 548.85 2.60 64.86 50.33 20.0

Multilateral 

organization 20 579.70 3.55 68.67 62.92 15.0

Disease type

HIV/AIDS 70 548.93 3.19 64.65 51.52 14.3

Malaria 32 559.59 3.06 65.11 58.18 9.4

Tuberculosis 28 563.36 3.61 68.28 62.22 14.3

Grant size

<$2 million 25 590.20 3.24 80.89 59.27 32.0

$2-$5 million 43 549.37 3.33 64.93 58.90 14.0

$5-$10 million 27 535.26 3.30 58.16 50.16 0.0

>$10 million 35 550.74 3.11 61.03 53.07 8.6

Total 130 554.66 3.25 65.54 55.53 13.1

(Continued From Previous Page)

Grant category

Number of

observations

Average days

since 

first 

disbursementa

Average number

of

disbursements

Average

percent of

grants

disbursed

Average percentage

of grants disbursed

 (of grants remaining 

after first

disbursement)b

Percent of

grants fully

disbursed
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 49 GAO-05-639 Global Health

looked at the percentage that was disbursed relative to the percentage that 

was expected to be disbursed since the first disbursement. Because the 

actual effect of time turns out to be nonlinear—meaning that although time 

elapsed since the first disbursement has a significant effect on the 

percentage disbursed, that effect decreases over time—we estimated the 

effect of time directly before estimating differences in the percentage 

disbursed across different types of grants.1

We fit bivariate regression models (models 1-4 in table 4) to estimate and 

test the significance of the gross effects of time since first disbursement, 

principal recipient type, disease type, and grant size2

 (or the effects of each 

of these factors, ignoring all others) and a multivariate regression model 

(model 5) to estimate the net effects of each (or the effects of each after 

controlling for the effects of the others). Table 4 shows these results. 

Table 4: Regression Models Showing Effects of Various Factors on Percentage of 

Grants Disbursed, Minus the Amount Disbursed in First Disbursement

1

Further, the expected disbursement, as the Global Fund calculates it, is a straight-line 

function of the time since the first disbursement rather than a “stair step” function reflecting 

the discrete points in time at which each disbursement was made.

2

In our regression models, we categorize grant size rather than treat it as a continuous 

variable. We did this in part to simplify the interpretation of results, since preliminary 

analyses (not shown) revealed that the effect of grant size was not linear or monotonic. For 

example, while grants of $2 to $5 million disbursed a lower percentage of the residual grant 

amount than grants of less than $2 million, and grants of $5 to $10 million disbursed a lower 

percentage of the residual grant amount than grants of $2 to $5 million, grants greater than 

$10 million did not disburse a lower percentage of the residual amount than grants of $5 to 

$10 million. 

Model

12345

Time (in days) .785a .830 a

Time-squared -.001a -.001a

Principal recipient type

Civil NGO 6.27 12.20

Ministry of finance -20.50 .68

Ministry of health -15.37b -10.67

Other government -15.63 -10.09

Multilateral -3.04 -.24
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 50 GAO-05-639 Global Health

Source: GAO analysis of Global Fund data.

Note: The reference (and omitted) categories for the principal recipient type, disease type, and grant 

size variables are other civil society grants, HIV/AIDS grants, and grants for less than $2 million, 

respectively.

a

Denotes effects which are significant at the .05 level.

b

Denotes effects which are significant at the .10 level.

Model 1 in table 4 shows the effect that time, or days between the first 

disbursement and February 2, 2005, has on the percentage of the grant 

disbursed. The significant time-squared term indicates that the effect of 

time is nonlinear. This nonlinearity makes the interpretation of the time 

coefficients somewhat less straightforward, but the positive time 

coefficients in table 4 indicate, not surprisingly, that grants that have had 

more time to make disbursements have disbursed a larger percentage of 

the 2-year grant amount remaining after the first disbursement. The 

negative coefficients associated with the squared term means that over 

time, time is less of a factor, or that the difference in the percentage 

disbursed between 100 days and 200 days is greater than the difference 

between 300 and 400 days. The sizable F-statistic at the base of the column 

for model 1 attests to the significance of the effect of time, and this 

nonlinear effect of time explains 17 percent of the variation in the amount 

disbursed of the total remaining after the first disbursement.

Models 2, 3, and 4 estimate the gross effects of principal recipient type, 

disease type, and grant size on the percentages disbursed, after subtracting 

the amount of the first disbursement. These differences are estimated using 

dummy variables to indicate the differences between the grant categories 

named in the table and the omitted referent category (civil society for 

Disease type

Malaria 6.65 6.36

Tuberculosis 10.70 8.88

Grant size

$2-$5 million -0.37 9.45

$5-$10 million -9.10 2.25

>$10 million -6.20 1.85

Constant -194.44 65.96 51.52 59.27 -209.50

F-statistic 12.87 1.34 1.06 0.49 2.80

Significance <.001 .25 .35 .69 .002

Variance explained 17.1% 5.2% 1.7% 1.2% 22.6%

(Continued From Previous Page)

Model

12345
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 51 GAO-05-639 Global Health

principal recipient type, HIV/AIDS for disease type, and less than $2 million 

for grant size). The constants for each of these models reflect the 

percentages disbursed for grants in the referent categories, and the 

coefficients indicate the differences between the percentages for the 

categories in the table and the percentages for the referent categories. The 

overall percentage disbursed was 21 points lower for ministry of finance 

grants, and roughly 15 points lower for ministry of health grants and other 

government grants, than for civil society grants. These differences reflect 

the results of ignoring, rather than controlling for, differences in time since 

first disbursement, grant size, and disease targeted. 

Model 5 estimates all of these effects simultaneously and, as such, provides 

us with net effect estimates, or estimates of each effect, controlling for the 

others. It shows that the time each grant has had since its first 

disbursement is the principal determinant of the amount disbursed. Grants 

that made their first disbursement earlier disbursed larger amounts of their 

remaining 2-year awards. After these effects were controlled for, the 

differences between principal recipient types in the percentages disbursed 

became smaller than they appeared before controls; and the only 

difference, which had appeared marginally significant before controls, 

became insignificant afterward. We found no significant differences by 

disease type or grant size when looking at either the gross or net effects. 

Timeliness of 

Disbursements

We also looked at the extent to which disbursements were made in a timely 

fashion (i.e., in 135 days or less). As table 5 shows, 35 percent of all 

disbursements were timely, or within 135 days, and the extent to which 

disbursements were timely was greater for later disbursements than for 

earlier disbursements. The number of timely disbursements is too small at 

most stages for us to determine whether timeliness varies across grant 

types.
Appendix II

Methodologies Used to Compare Grants’ 

Disbursements 

Page 52 GAO-05-639 Global Health

Table 5: Percentages of Timely and Untimely Disbursements, by Disbursement 

Stage

Source: GAO analysis of Global Fund data.

Timeliness of disbursement

Disbursement 

stage Untimely Timely Total

2nd 94.0% 6.0% 100.0%

109 7 116

3rd 58.0% 42.0% 100.0%

47 34 81

4th 39.2% 60.8% 100.0%

20 31 51

5th 11.8% 88.2% 100.0%

2 15 17

6th 41.7% 58.33% 100.0%

5 7 12

7th 0.0% 100.0% 100.0%

044

Total 65.1% 34.9% 100.0%

183 98 281
Page 53 GAO-05-639 Global Health

Appendix III

Comments from the Global Fund ApendxiI
Appendix III

Comments from the Global Fund

Page 54 GAO-05-639 Global Health
Appendix III

Comments from the Global Fund

Page 55 GAO-05-639 Global Health
Appendix III

Comments from the Global Fund

Page 56 GAO-05-639 Global Health
Appendix III

Comments from the Global Fund

Page 57 GAO-05-639 Global Health
Page 58 GAO-05-639 Global Health

Appendix IV

Joint Comments from the Departments of 

State and Health and Human Services, and the 

U.S. Agency for International Development ApendxiIV
Appendix IV

Joint Comments from the Departments of 

State and Health and Human Services, and 

the U.S. Agency for International 

Development

Page 59 GAO-05-639 Global Health
Appendix IV

Joint Comments from the Departments of 

State and Health and Human Services, and 

the U.S. Agency for International 

Development

Page 60 GAO-05-639 Global Health
Page 61 GAO-05-639 Global Health

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact David Gootnick (202) 512-3149

Staff 

Acknowledgments

In addition to the person named above, Candace Carpenter, Martin de 

Alteriis, David Dornisch, Cheryl Goodman, Kay Halpern, Bruce Kutnick, 

Reid Lowe, Jerome Sandau, Douglas Sloane, Julie Trinder, and Tom Zingale 

made key contributions to this report.

(320292)
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