In January 2002, the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund) was established as an independent foundation in Switzerland to support country efforts to curb the number of illnesses and deaths caused by HIV/AIDS, tuberculosis (TB), and malaria. Each year, the three diseases kill some 6 million people, mostly in Africa. The Fund's Board meets at least twice annually to discuss governance issues, such as grant approval. Nineteen Board seats are rotated among seven donor countries, seven developing countries, and one representative from each of a developed country non-governmental organization (NGO), a developing country NGO, the private sector, a foundation, and affected communities. The United States holds a permanent Board seat. In its first five years, the Fund aimed to support: treatment for 1.8 million HIV-positive people, 5 million people infected with TB, and 145 million malaria patients; the prevention of HIV transmission to 52 million people through voluntary HIV counseling and testing services (VCT); the purchase and distribution of 109 million insecticide-treated bed nets to prevent the spread of the malaria; and care for 1 million orphans. As of July 11, 2008, the Global Fund has approved proposals for 519 grants in 136 countries totaling $10.8 billion ( Table 1 ). About half of those funds have been disbursed. As of December 2007, the Fund-supported grants have been used to treat an estimated 1.4 million HIV-positive people and 3.3 million people infected with TB, and to distribute 46 million insecticide-treated bed nets to prevent malaria transmission. An estimated 58% of Global Fund grants support HIV/AIDS interventions, about 17% fund anti-TB programs; some 24% sustain anti-malaria projects, and 1% strengthen health systems. According to the Global Fund, in 2005, its support represented more than 20% of all global HIV/AIDS spending, some 67% of global TB funds and about 64% of all international support for malaria interventions. In 2005, the Fund approved Round 5 grants in two tranches, because there were no sufficient donor pledges to support all recommended proposals at the time of grant approval. Its Comprehensive Funding Policy (CFP) specifies that the Fund can only sign grant agreements if there are sufficient resources to support the first two years of grant activities. The policy is designed to avoid disruptions in funding that might interrupt project activities. Financial delays can cause people to miss treatments, potentially leading to drug-resistance, susceptibility to secondary diseases, or death. The Fund distributes grants through a performance-based funding system. Under this system, the Fund commits to financially support the first two years (Phase I) of approved grants, though it disburses the funds quarterly if grants meet their targets. As the end of Phase I approaches, the Fund reviews the progress of the grant to determine if it should support the third through fifth years (Phase II). In November 2006, the Board established the Rolling Continuation Channel (RCC). This funding channel, which began in March 2007, permits Country Coordinating Mechanisms (CCMs) to request additional funding for grants that are performing well but set to expire. The application process for the RCC is not as rigorous as the Round process. RCC-approved grants can receive support for up to an additional six years, with the funds being awarded in three-year intervals. The channel is intended only for those grants that have demonstrated a significant contribution "to a national effort that has had, or has the potential to have in the near future, a measurable impact on the burden of the relevant disease." The Fund uses a performance-based funding system that permits it to temporarily suspend support for grants if it finds significant problems with project performance, such as accounting inconsistencies. In some instances, the Fund restored support to grants once key concerns were resolved. For example, in November 2006, the Fund suspended support for grants in Chad. After undertaking audits of the grants, the Fund reportedly discovered evidence of "misuse of funds at several levels and the lack of satisfactory capacity by the Principal Recipient and sub-recipients to manage the Global Fund's resources." In August 2007, the Fund announced that it had lifted the suspension, "after a series of investigation and negotiations between the Global Fund and national authorities ... and after efforts and strong commitment of all relevant stakeholders which guaranteed that the issues have been addressed and better systems with clarified responsibilities will be put in place. As part of the [Global Fund's] mitigation--besides other measures--a fiduciary agent will guarantee for an interim period of 12 months adequate financial monitoring and accounting for our grants." The Fund might discontinue support for grants in Phase II if it finds that they did not sufficiently meet their targets. Countries whose grants have been discontinued can apply and have secured funding in subsequent Rounds (see Nigeria below). In extreme cases, the Fund will immediately cancel financial support. If funds are immediately revoked, the Fund might invoke its continuity of services policy, which ensures that life-extending treatment is continued for suspended or cancelled grants or for those whose terms have expired until other financial support is identified. To date, the Fund has only terminated grants in Burma. When the Fund decided to terminate support for grants in Burma, policy analysts debated how best to serve humanitarian needs in politically unstable countries. On January 30, 2004, the Global Fund announced that it had temporarily withdrawn its grant in Ukraine. Citing the slow progress of Fund-backed HIV/AIDS programs, the Fund stated that it would ask "a reliable organization to take over implementation of the programs for several months, to give Ukraine the opportunity to address concerns of slow implementation, management, and governance issues." Nearly a month later, on February 24, 2004, the Fund announced that the suspension had ended, and that a temporary principal recipient had been identified. The Fund hoped that if a new Principal Recipient (PR) were used, project performance would improve and related problems would be resolved. In July 2005, the Fund announced that the new PR was successfully implementing the grant and that it had approved additional funds for the grant's Phase II activities. In May 2006, at its 13 th board meeting, the Fund decided to discontinue support for Nigeria's HIV/AIDS programs awarded in Round 1. In previous board meetings, the Secretariat recommended that the Fund not award Nigeria additional support for Phase II. The Board disagreed. At the 12 th Board meeting, the Board and Secretariat agreed to create an Independent Review Panel to review the grants and report back to the Board. Following its investigation, the Panel presented similar findings and agreed with the Secretariat that the grants were performing poorly. The Board agreed not to fund Phase II of the grants, but committed to support procurement of HIV treatments for up to two years. Although those grants were discontinued, the Fund awarded Nigeria different HIV/AIDS grants in Round 5. Staff at the Global Fund report that the Fund discontinued support for Pakistan's malaria projects in Round 2 because of weak project implementation, slow procurement of health products, poor data quality, and slow spending of project funds. Specifically, the Secretariat found that 8 of the grant's 10 targets had not been reached and only 15% of the insecticide-treated nets (ITNs) had been distributed. On March 1, 2005, the Global Fund announced that it would not approve funding for the second phase of Senegal's malaria project, which was originally funded in Round 1. A Fund press release indicated that the project "was found to have systemic issues that resulted in poor performance." The release did not specify what issues it had with the project, though it indicated that "review of the Senegal grant raised serious concerns" about the effective use of Global Fund resources. Although the program was discontinued, Fund officials encouraged Senegal to address the issues that were raised and to apply for new funds in the future. Ultimately, the Fund approved a grant proposal that Senegal submitted for malaria projects in Round 4. In December 2005, the Global Fund Board voted to discontinue funding an HIV prevention grant in South Africa. The Board decided that the grant, implemented by an NGO named loveLife, had failed to sufficiently address weaknesses in its implementation. Press accounts quote a Global Fund representative explaining that it had become difficult to measure how the loveLife prevention campaign was contributing to the reduction of HIV/AIDS among young people in South Africa. Additionally, the representative reportedly stated that the Board had repeatedly requested that loveLife revise its proposals and address concerns regarding performance, financial and accounting procedures, and the need for an effective governance structure. A Global Fund spokesman was quoted as saying that "loveLife is extremely costly, there are programs that have been very effective, which cost a fraction of what loveLife costs. It would be irresponsible of the Global Fund to spend almost $40 million without seeing results." LoveLife officials were reportedly surprised that the Global Fund ultimately decided to discontinue funding the grant, particularly since there were some reported differences of opinion regarding the matter between the Fund's Technical Review Panel (TRP), Secretariat, and the Board. Additionally, loveLife officials reportedly argued that the decision was politically motivated and influenced by U.S. emphasis on abstinence in HIV prevention efforts. One press account quoted a loveLife official as saying, "Obviously the strength of conservative ideologies is spilling over into the field of HIV and HIV prevention and it has direct impact on programs like loveLife." According to a loveLife press release, the decision to discontinue support for the program will substantially curtail South Africa's efforts to prevent HIV infections among young people, because the Global Fund's grant supported one third of the program's budget. However, the South African government has reportedly provided additional funds to the program to close the funding gap, and other donors, such as the U.S.-based Kaiser Family Foundation, have continued funding loveLife HIV-prevention efforts. On August 24, 2005, the Global Fund announced that it had temporarily suspended all five of its grants in Uganda. Additionally, the Fund declared that the Ugandan Ministry of Finance would have to establish a new structure that would ensure effective management of the grants before it considered resuming support. In a press release, the Fund explained that a review undertaken by PricewaterhouseCoopers revealed serious mismanagement by the Project Management Unit (PMU) in the Ministry of Health, which was responsible for overseeing the implementation of Global Fund programs in Uganda. Examples of "serious mismanagement" included evidence of inappropriate, unexplained or improperly documented expenses. Up to that point the Fund had disbursed some $45.4 million of the $200 million approved. Three months later on November 10, 2005, the Fund announced that it had lifted the suspension on all five grants. The PR and the Ministry of Finance committed to restructure management of the grants and strengthen oversight and governance of Global Fund grants to Uganda. In spite of these actions, the Fund did not approve support for Phase II activities. After extensive consultation with the U.N. Development Program (UNDP), the Fund decided to terminate its grant agreements with Burma effective August 18, 2005. The Fund stated that while it was concerned about the extensive humanitarian needs in Burma, travel restrictions imposed by the country's government prevented the Fund from effectively implementing grants. According to the Fund, travel clearance procedures that the Burmese government instituted in July 2005 prevented the PR, implementing partners, and Global Fund staff from accessing grant implementation areas. The Fund indicated that the travel restrictions coupled with new procedures that the government established to review procurement of medical and other supplies "prevented implementation of performance-based and time-bound programs in the country, breached the government's commitment to provide unencumbered access, and frustrated the ability of the PR to carry out its obligations." The Global Fund's decision to discontinue those grants in Burma sparked a larger debate about providing humanitarian assistance in countries that are politically unstable or governed by dictatorial regimes. Some were disappointed that the Fund terminated its assistance, citing the significant humanitarian needs in the country. A Burmese official stated that, "the restrictions on aid workers were only temporary, and 'do not justify irreversible termination of grants.'" A U.N. official accused the United States of pressuring the Global Fund to withdraw its support in Burma. One U.N. official warned of impending death as a result of the situation, stating that, "without exaggeration, people are going to die because of this decision." Some, however, blamed the Burmese government for the Fund's decision to terminate the grants. One Washington-based observer stated that, "it needs to be recognized who causes suffering in that country. It's not the Global Fund...It's the regime." A Global Fund spokesperson stressed that the interrupted aid was not a political decision, rather one based on effective project implementation. Burma has garnered support from other countries and international organizations to continue programs terminated by the Fund. Australia is reportedly increasing its aid to Burma by 25%. Additionally, the European Union (EU) announced that it had pledged about $18 million to fight HIV/AIDS in the country. In January 2006, Australia, Britain, Sweden, the Netherlands, Norway, and the European Commission announced that they planned to establish a $100 million, five-year joint donor program that would replace some of the financial support the country lost after the Fund had withdrawn. The program, the Three Diseases Fund (3D Fund), was officially launched in October 2006. The donors contend that the funding system maintains the safeguards established by the Global Fund that ensures the money does not directly support the military regime. In September 2000, at the United Nations (U.N.) Millennium Summit, member states adopted the U.N. Millennium Declaration, which among other things, established a set of time-bound, measurable goals and targets for combating poverty, hunger, disease, illiteracy, environmental degradation and discrimination against women. This resolution contains what have become commonly known as the Millennium Development Goals (MDGs). World leaders who agreed to the MDGs pledged to provide sufficient financial and technical support to meet the goals. Of the eight goals, the one aimed at HIV/AIDS and malaria commits world leaders to reverse the spread of the two diseases by 2015. The World Health Organization (WHO) and the Joint United Nations Program on HIV/AIDS (UNAIDS) estimate that in order to meet the MDG goal related to HIV/AIDS and malaria, in each year from 2008 to 2010, donors would need to provide between $28 billion and $31 billion. The Global Fund estimates that during that time period, its annual share of this amount would range from $4 billion to $6 billion. The Fund estimates that it will need between $11.5 billion and $17.9 billion from 2008 to 2010. The range represents the rate at which grant approval could escalate in three different scenarios ( Table 2 ). In Scenario A, the Global Fund would continue to award new grants at the current rate of about $1 billion per year and would not experience significant growth. In Scenario B, the Fund would moderately increase new grant awards, with annual grant awards averaging $5 billion from 2008 to 2010. In Scenario C, the Fund projects that it would meet the MDGs and would need an average of $6 billion for each year from 2008 to 2010. The Global Fund does not advocate any scenario, because it bases its financial needs on the grant proposals that it receives. However, at a board meeting in April 2007, the Board estimated that it would need from $6 billion to $8 billion by 2010--reflecting Scenarios B and C. At the launching of PEPFAR, the Administration proposed that over the Plan's five-year term, $1 billion be contributed to the Global Fund. The Administration has requested $1.3 billion for the Fund from FY2004 through FY2008: $200 million in each of FY2004 and FY2005, and $300 million in each of FY2006 through 2008. Congress has consistently provided more to the Fund than the Administration has requested through PEPFAR, appropriating some $3 billion from FY2004 through FY2008 ( Table 3 ). In FY2008, Congress appropriated $840.3 million for a U.S. contribution to the Fund, the single largest U.S. contribution to date. Of those funds, $545.5 million would be funded through the State Department, and $294.8 million through the Department of Health and Human Services (HHS). The President requested $500 million for FY2009. Some critics of the Fund have expressed concern about particular aspects of the Fund's financial policies. Observers contend that the Fund's oversight mechanisms are not strong enough to protect against wasteful spending, particularly in countries that have a well documented history of corruption and poor financial management. Fund supporters counter that the organization's website provides an abundance of information related to its funding process, grant project proposals and budgets, grant spending trends, and results of board meetings, which include decisions regarding the suspension of grants. Fund advocates also argue that the Fund's decisions to suspend temporarily, and in some cases, discontinue poor performing grants demonstrate the effectiveness of the Fund's oversight and funding mechanisms. In June 2005, the U.S. Government Accountability Office (GAO) reported that the Fund had a limited capability to monitor and evaluate grants, raising questions about the accuracy of its reported results. GAO also indicated that the Fund's documents had not consistently explained why it provided additional funds for grants or why it denied disbursement requests. In October 2006, the Center for Global Development (CGD) Global Fund Working Group reported similar findings and made a number of recommendations, including strengthening the performance based funding system. In an effort to strengthen oversight of the Fund's grants, Congress included a provision in Section 525 of P.L. 109-102 , FY2006 Foreign Operations Appropriations, that required 20% of the U.S. contribution to the Global Fund be withheld until the Secretary of State certified to the Appropriations Committees that the Fund had undertaken a number of steps to strengthen oversight and spending practices. The act allows the Secretary to waive the requirement, however, if she determines that a waiver is important to the national interest. At a March 2007 hearing on TB held by the Subcommittee on Africa and Global Health, Representative Adam Smith expressed his reservations about the Fund's oversight capacity, stating that The information and accountability that Congress has come to take for granted through bilateral programs are not available through the Global Fund, and that many of the primary recipients of the Global Fund grants are governments with a history of corruption and fraud and/or limited capacity to properly manage large sums of money in their health sectors. One could argue that the absence in the Global Fund of a robust reporting and monitoring mechanism, at both the primary and sub- recipient levels, is an open invitation for waste in these countries and a tragic loss of opportunity to save lives. The implementation of a system that provides accountability and transparency would seem vital, absolutely necessary, in my view, to continue the expanded donor support of the Global Fund in the future. GAO re-evaluated the Fund and released a report in May 2007, which acknowledged that the Fund had improved its documentation of funding decisions, but also determined that the process needed improvement. The report indicated that while each grant that GAO reviewed included an explanation of associated funding decisions, the explanations did not detail what criteria the Fund used to determine whether to disburse funds or renew support, as it had found in 2005. GAO recommended that the Fund strengthen oversight of Local Fund Agents (LFAs) and standardize performance benchmarks to improve the quality of grant monitoring and reporting. In FY2008, Congress placed additional monitoring and oversight provisions to Global Fund appropriations. The FY2008 Consolidated Appropriations required that 20% of U.S. contributions to the Fund be withheld until the Secretary of State certifies to the Committees on Appropriations that the Global Fund releases incremental disbursements only if grantees demonstrate progress against clearly defined performance indicators; provides support and oversight to country-level entities; has a full-time, independent Office of Inspector General who is fully operational; requires LFAs to assess whether a principal recipient has the capacity to oversee the activities of sub-recipients; is making progress toward implementing a reporting system that breaks down grantee budget allocations by programmatic activity; makes the reports of the Inspector General publicly available; and tracks and encourages the involvement of civil society, including faith-based organizations, in country coordinating mechanisms and program implementation. The FY2008 Consolidated Appropriations also required the Secretary of State to submit a report within 120 days of enactment to the Appropriations Committees that details the involvement of faith-based organizations in Global Fund programs. Some in Congress have long advocated for stronger oversight of Global Fund spending. Supporters of this idea have welcomed the provisions. Some Global Fund supporters contend, however, that such action is unnecessary in light of the strides that the Fund continues to make in improving its reporting and monitoring practices. As Congress considers whether to continue supporting the Global Fund, Members might debate whether the Fund is sufficiently adhering to congressional mandates or if additional provisions are necessary. P.L. 108-25 , U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act, prohibits U.S. government contributions to the Fund from exceeding 33% of contributions from all donors. Congress instituted the contribution limit to encourage greater global support for the Fund. There is some debate about whether the 33% provision should be interpreted as the amount the United States should provide to the Fund or as the maximum amount the United States can contribute. Supporters of the Fund contend that Congress instituted the 33% mandate in recognition of the moral responsibility that the United States holds as one of the wealthiest countries in the world. Opponents of this idea assert that if U.S. contributions to the Fund were to reflect its share of the global economy, then U.S. contributions would and should range from 20% to 25% of all contributions. Some Global Fund advocates who disparage the 33% restriction argue that the differing fiscal cycles of the Fund and the United States complicate efforts to leverage support. Opponents to the 33% restriction contend that the requirement is harmful to the Fund, because the U.S. fiscal year concludes some three months before the Fund's. Critics most often point to FY2004 to substantiate their position. In that fiscal year, nearly $88 million of the U.S. contribution was withheld from the Fund to prevent the funds from exceeding 33%. Advocates of the restriction assert that the 33% cap was intended to suspend portions of U.S. contributions, where necessary. Proponents of the cap note that the Fund was not significantly affected, as the withheld portion was released at the end of the calendar year, when the Fund secured sufficient funds to match the U.S. contribution. Supporters of the provision contend that the Fund benefits from the policy, because it encourages other donors to increase their contributions, as happened in FY2004 ( Table 4 ). Debate on the 33% contribution cap has also focused on the limited amount of support that the private sector and others have provided to the Fund ( Table 5 ). Since its inception, the Fund has struggled to secure support from non-government donors. The Bill & Melinda Gates Foundation remains the largest single contributor among non-government donors. As of July 17, 2008, the foundation accounts for about 86% ($650.0 million) of all non-governmental pledges ($755.1 million) and more than 75% ($450.0 million) of all payments made to the Fund by non-governmental donors ($579.6 million). Some Fund supporters had hoped that the Product Red campaign, launched in January 2006 by co-founder Bono, would lead to significant increases in contributions made by the private sector. As of July 17, 2008, Product Red™️ has contributed $69.8 million to the Fund, comprising 12% of non-government contributions, double what it paid in April 2007. The Administration has argued that any amount that Congress provides to the Global Fund in excess of its request skews the appropriate balance of aid that the United States should provide to the Fund and other bilateral HIV/AIDS efforts. At a FY2005 Senate Appropriations Committee hearing in May 2004, then-Global AIDS Coordinator Ambassador Randall Tobias argued that the "incremental difference between what the Administration requested and what was appropriated to the Fund is money that might have been available" for U.S. bilateral programs. Although appropriations to the Fund have been increasing, the percentage of U.S. global HIV/AIDS, TB, and malaria appropriations provided for U.S. contributions have remained mostly level ( Table 6 , Figure 1 , and Figure 2 ). Fund supporters counter that appropriations made to the Fund in excess of requested levels better reflect what the United States should provide and complement U.S. bilateral HIV/AID programs, particularly since the Administration and the Fund have strengthened their coordination. U.S. officials acknowledge that though the Fund is a critical part of PEPFAR, when making appropriations, Congress should consider the pace at which the Fund can distribute funds. The Office of the Global AIDS Coordinator (OGAC) has cited an instance when PEFPAR used some of its funds to purchase anti-retroviral medication (ARVs) for a Global Fund project that faced financial delays. In FY2009, the Administration requested $500 million for U.S. contributions to the Global Fund through Foreign Operations and Labor/HHS Appropriations. This amount accounts for almost 8% of all HIV/AIDS, TB, and malaria proposed spending--about 5% less than FY2008 enacted levels.

Summary:
The Global Fund to Fight AIDS, Tuberculosis, and Malaria, headquartered in Geneva, Switzerland, is an independent foundation that seeks to attract and rapidly disburse new resources in developing countries aimed at countering the three diseases. The Fund is a financing vehicle, not an implementing agency. The origins of the Fund as an independent entity to fight the three diseases lie partly in a French proposal made in 1998, in ideas developed in the 106th Congress, and in recommendations made by United Nations Secretary-General Kofi Annan in April 2001. Though the Global Fund was established in January 2002, President Bush pledged $200 million to such a fund in May 2001. As of July 17, 2008, donors have pledged more than $20.2 billion to the Fund, of which more than $10.2 billion has been paid. The fund has approved support for more than 500 grants totaling some $10 billion for projects in 136 countries. Each year, the Fund awards grants through Proposal Rounds. The Fund launched its eighth Round on March 3, 2008. In 2005, the Fund approved Round 5 grants in two tranches, because initially there were insufficient donor pledges to approve all the recommended proposals. The Fund approved the first group of Round 5 proposals in September 2005 and the second in December 2005, after donors pledged to make additional contributions. The Global Fund only approves proposals if it has sufficient resources on hand to support the first two years of a proposed project. This policy is designed to avoid disruptions to projects due to funding shortages. Funding lapses can cause interruptions in treatment regiments, which could lead to treatment-resistant strains of the diseases or death. The United States is the largest single contributor to the Global Fund. From FY2001 through FY2008, Congress has made available an estimated $3.6 billion to the Fund, including $840.3 million in FY2008, the single largest U.S. contribution to date. Of those funds, $545.5 million would come from the State Department, and $294.8 million from the Department of Health and Human Services (HHS). The President requested $500 million for a FY2009 contribution to the Global Fund. There has been some debate about the level of U.S. contributions to the Fund. Some critics argue that the United States should temper its support to the Fund, because the Fund has not demonstrated strong reporting and monitoring practices; because contributions made to the Fund in excess of the President's request are provided at the expense of U.S. bilateral HIV/AIDS, TB, and malaria programs; and because they maintain that the Fund needs to secure support from other sources, particularly the private sector. Supporters of current funding levels counter that the Fund has improved its reporting and monitoring practices, greater U.S. contributions to the Fund parallel increases in U.S. bilateral HIV/AIDS, TB, and malaria programs, and the Fund has attempted to raise participation of the private sector through the launching of Product Red™️. This report, which will be periodically updated, discusses the Fund's progress to date, describes U.S. contributions to the organization, and presents some issues Congress might consider.