GLOBAL FUND OBSERVER (GFO), an independent newsletter about the Global Fund provided by Aidspan to nearly 10,000 subscribers in 170 countries.

Issue 173: 10 January 2012. (For formatted web, Word and PDF versions of this and other issues, see www.aidspan.org/gfo.)

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CONTENTS
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1. NEWS: Aidspan Guide to TFM Applications Now Available

The English-language version of "The Aidspan Guide to Applications under the Global Fund's Transitional Funding Mechanism" is now available. French-, Spanish and Russian-language versions should be posted by the end of January.

2. ANNOUNCEMENT: Aidspan Seeks Applicants for Three Staff Positions

Aidspan seeks applicants for three newly-established positions: Senior Research Officer, Senior Editor, and Editor/Writer. All three positions are based at the Aidspan office in Nairobi. The closing date for applications is 25 January 2012.

3. NEWS: Secretariat, OIG Agree on New Protocol

The Global Fund Secretariat and the Office of the Inspector General (OIG) have agreed on a new protocol that covers communications between the two entities and describes how they will collaborate on audits, diagnostic reviews and investigations conducted by the OIG.

4. NEWS: Global Fund Releases Additional Information on Changes to Grant Renewal Process

Additional information from the Global Fund on changes to the grant renewal process includes an eligibility list for 2012 renewals and an FAQ document.

5. NEWS: Numbers of Services Provided and People Reached Up Sharply Again in 2011

The Global Fund is continuing to experience solid growth in terms of services provided and the numbers of people reached through programmes supported by the Fund. Estimates of the full year numbers for 2011 were released on 1 December 2011.

6. NEWS: Global Fund Rated High in Transparency

The Global Fund has ranked second out of 58 aid-giving organisations on the subject of transparency, according to a report published by "Publish What You Fund." The Global Fund ranked just behind the World Bank's International Development Association (IDA) programme.

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1. NEWS: Aidspan Guide to TFM Applications Now Available

The English-language version of "The Aidspan Guide to Applications under the Global Fund's Transitional Funding Mechanism" is now available at www.aidspan.org/guides. French-, Spanish and Russian-language versions should be posted by the end of January.The deadline for applications under the TFM is 31 March 2011.

The guide is designed to assist applicants with questions on the proposal form that may not be entirely clear, and to provide guidance on how responses to the questions can be structured and on what needs to be included to ensure a full response.

Unlike the guides Aidspan has produced for the last few rounds of funding, which were in two volumes, "The Aidspan Guide to Applications under the Global Fund's Transitional Funding Mechanism" covers everything we think applicants need to know in a single volume.Also, there is no separate version of the guide for multi-country applicants because the proposal forms for single- and multi-country applicants are almost identical.

The following is an extract from the guide's table of contents:

Chapter 1: Introduction

Chapter 2: What's New for Applications under the TFM?

Who Is Eligible to Apply under the TFM?

Duration of Funding

Two Pools of Funding

Prioritisation

Reprogramming

Health Systems Strengthening

Consolidated Proposals Mandatory for Some Applicants

Single Stream of Funding Agreements and Grant Consolidation

Changes to the Proposal Form and Guidelines

Chapter 3: General Information on the TFM Applications Process

Guidelines for Proposals

Eligibility Criteria and Counterpart Financing Requirements

Information Notes and FAQs

Versions of the Proposal Form

Documents that Form Part of Your Application

Process for Submitting a Proposal

The TRP Review

Some Key Concepts Used in All Proposals

General Guidance on Filling Out the Proposal Form

Chapter 4: Guidance on Specific Sections of the TFM Proposal Form

Chapter 5: Guidance on the Attachments

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2. ANNOUNCEMENT: Aidspan Seeks Applicants for Three Staff Positions

Aidspan, independent watchdog of the Global Fund and publisher of GFO, seeks applicants for three newly-established positions: Senior Research Officer, Senior Editor, and Editor/Writer. All three positions are based at the Aidspan office in Nairobi. The closing date for applications for all three positions is 25 January 2012.

The Senior Research Officer will support, and partially lead, a new programme of research and analysis designed to make Aidspan the world's foremost repository of knowledge about the Global Fund. Applicants must have a history of high-quality research publications in the field of international health, and superb analytical and writing skills.

The Senior Editor will lead Aidspan's production of news, analysis, commentary, guides and reports on the Global Fund, and will become Editor of GFO. Applicants must have superb analytical, writing, editing and mentoring skills, backed by a proven track record of articles and reports that are clear and free of jargon. Knowledge of international health issues is preferred but not required.

The Editor/Writer, who will report to the Senior Editor, must have credentials of a similar nature, and will increasingly take the lead on various projects.

For further information, please visit www.aidspan.org/jobs.

As reported in GFO Issue 172, Aidspan is also seeking applicants for the position of Executive Director (see article).

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3. NEWS: Secretariat, OIG Agree on New Protocol

Protocol describes how the two entities will collaborate on audits, diagnostic reviews and investigations

Process and timelines for audits spelled out

The Global Fund Secretariat and the Global Fund's Office of the Inspector General (OIG) have agreed on a new protocol that describes how the two entities will work together. The protocol covers communications between the Secretariat and the OIG, and outlines how the two entities will collaborate on audits, diagnostic reviews and investigations conducted by the OIG. The protocol also describes the steps involved in conducting audits and diagnostic reviews, complete with timelines.

(A diagnostic review is less extensive than an audit; for example, the accounts of sub-recipients [SRs] are routinely examined in an audit, but are usually not included in a diagnostic review.)

According to the protocol, the Executive Director and the Inspector General will meet every two weeks or more often if needed. Focal points have been identified to handle day-to-day communications. The focal points are:

• on the OIG side: the directors of the Audit and Investigations units; and
• on the Secretariat side: the Director of the Country Programs Cluster for grant-related audits, reviews and investigations;and the Director of the Corporate Services Cluster for internal audits.

Audits and diagnostic reviews

The protocol describes the steps involved in preparing for an audit or review, conducting the audit or review, finalising the report, organising debriefing sessions and publishing the final report. The following is a partial list of the steps:

• Two months prior to the start of an audit or review, the OIG sends notification letters to all parties involved.
• Six weeks before the start of an audit or review, the Secretariat, CCM and principal recipients (PRs) provide the OIG with information concerning shortcomings, potential irregularities and risks of which they are aware.
• At least four weeks before the audit or review starts, the OIG calls a planning meeting with the Secretariat in which the Secretariat shares any concerns or issues that it believes should be pursued.
• The OIG provides the Secretariat with preliminary key findings and recommendations of an audit at least two days before the OIG's debriefing meeting with in-country officials (or, in the case of a diagnostic review, at least one day before).
• Within 12 weeks following the finalisation of OIG field work, the OIG provides the Secretariat with a first draft of the report. The Secretariat has 15 working days to provide comments.
• Following integration by the OIG of the comments from the Secretariat, the Secretariat shares the revised draft with the subjects of the audit or review, requesting them to submit comments within 15 working days.
• Following integration by the OIG of these latest comments, the OIG shares the latest draft of the report with the Secretariat, which has 10 days to comment.
• A meeting is then held between the OIG and the Secretariat to resolve any outstanding issues.

The final report will note any remaining areas of disagreement between the OIG and the Secretariat and between the OIG and the subjects of the audit.

The protocol notes that if the above timelines are met, the OIG will strive to produce audit reports within six months of the completion of field work. Less time will be required for reports on diagnostic reviews.

As mentioned above, the OIG holds debriefing meetings with stakeholders - e.g., CCMs, PRs, SRs, relevant governmental entities - once its draft report is ready. The protocol says that the OIG will give consideration to meeting first with a limited number of key stakeholders in order to collect information on possible misunderstandings or misrepresentations before debriefing a wider audience. In addition, the protocol says that findings about the Secretariat and LFA should not be presented at the debriefing meeting with CCMs.

The protocol says that the Secretariat, CCM and PRs will receive an advance copy of the final report from the OIG before it is publicly released.

Investigations

With respect to investigations, the protocol says that allegations concerning PRs or SRs received by the OIG directly from whistle-blowers will not be disclosed to the Secretariat (in order to protect the whistle-blowers). In addition, according to the protocol, unlike as is done for audits and diagnostic reviews, the OIG does not provide a country debriefing following the completion of field work for an investigation. This is due to concerns about confidentiality and due process.

To ensure due process, the subject of the investigation is given an opportunity to provide its perspective once the investigation is complete, and prior to the finalisation and release of the report. However, when cases are referred to law enforcement agencies and not immediately published, subjects are not notified of the OIG's investigation outcomes, so that the investigations by these agencies are not compromised.

The protocol says that once the OIG has prepared its draft investigation report, the Secretariat has 15 working days to provide comments. After integrating these comments, the OIG seeks comments from in-country partners and the subjects of the investigation. The OIG integrates these latest comments into the report, noting any remaining disagreement, unless disclosure of these comments would prejudice law enforcement efforts.

Once an investigation report is deemed final by the OIG, the report goes first to the Board's Audit and Ethics Committee and then to the Board. When it is sent to the Board, copies are sent to the Secretariat and in-country stakeholders. All of these steps occur before the report is publicly released.

Recommendations

With respect to recommendations made by the OIG as a result of an audit, diagnostic review or investigation, according to the protocol the Secretariat provides the OIG with an action plan and a timeline for the implementation of the recommendations prior to the release of a final report. The Secretariat provides an explanation for recommendations it does not accept; the protocol says that the OIG and the Secretariat will normally share this explanation with the Board.

Internal audits

With respect to audits of internal Secretariat procedures, the OIG provides detailed reports to the Global Fund's Executive Director. The detailed reports are not provided to the Board and are not published. However, a redacted summary report is sent to the Board and is published. ("Redacted" means that some sensitive information, such as the names of persons under suspicion, are blacked out.)

Grant management following preliminary evidence of misuse

The protocol says that the OIG "normally" informs the Secretariat, preferably through a confidential verbal briefing, of preliminary evidence of misappropriation of grant funds identified in the course of an audit or investigation, so that the Secretariat can make appropriate grant management decisions. However, because any action taken by the Secretariat as a result of receiving this information can have significant repercussions for the OIG's continuing work on the case in question, the OIG may decide not to inform the Secretariat, or may decide to provide only partial information, depending upon the circumstances of the audit or the investigation, and whether actions based on any disclosure would "interrupt investigation efforts and cause due process issues."

The protocol says that in instances where the OIG makes a preliminary disclosure that is acted upon by the Secretariat before the completion of the OIG's work, the Secretariat should ensure that this action does not impede the pursuit of the audit or investigation effort.

Noting that the full or partial denial of access by the OIG to the documentation it needs to undertake an audit, review or investigation constitutes a breach of the grant agreement, the protocol says that the Secretariat shall support the OIG when it encounters a lack of cooperation from the subjects of its enquiries.

The undated protocol between the OIG and the Secretariat is not yet available on the Global Fund website. We have posted a copy on the Aidspan website; it is available for direct download here.

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4. NEWS: Global Fund Releases Additional Information on Changes to Grant Renewal Process

The Global Fund has posted on its website information on changes to the grant renewals process as a result of decisions made at the November 2011 meeting of the Board. The information is available here.

Most of the information on the website was included in a GFO article in Issue 169, published on 5 December 2011. However, some of the information is new.

The Global Fund has now published an eligibility list for grants renewals in 2012. The list is organised by country and, within each country, by component (i.e., HIV/AIDS, TB, malaria, health systems strengthening). For each component, the list shows whether the country is eligible to apply for renewal and, where the country is eligible, what the focus of proposal requirements are and what the counterpart financing minimum threshold is. The eligibility list can be accessed from the Fund's website, and can also be downloaded directly here.

The Global Fund has also published an FAQ document on the changes to grant renewals. The document can be accessed from the Fund's website, and can also be downloaded directly here.

In addition, the Global Fund has produced a chart depicting the new requirements for grant renewals by income category. The chart can be accessed from the Fund's website, and can also be downloaded directly here.

The Global Fund Secretariat is in the process of updating its request for renewal package. The package includes an application form and guidelines. The formal name of the request for renewals is "request for additional financial commitment," though the Fund uses several different terms on its website. According to the Fund's website, the Global Fund Secretariat will communicate with all applicants that are in the process of submitting their request, or that have already submitted their request, and whose request is scheduled to be reviewed after 1 January 2012. This communication will provide detailed information on the applicant's situation, and may state that the applicant is required to resubmit its request or provide additional information to the Secretariat.

The website also states that more information on different scenarios regarding requests for additional financial commitment will be communicated to affected countries as soon as it is available, "which should be no later than January 2012."

The Global Fund says that specific questions should be directed to fund portfolio managers, and that general inquiries should be sent to Grant.Renewals@....

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5. NEWS: Numbers of Services Provided and People Reached Up Sharply Again in 2011

The Global Fund is continuing to experience solid growth in terms of services provided and the numbers of people reached through programmes supported by the Fund, even as reduced estimates of available resources are forcing the Fund to tighten its belt.

The Global Fund released estimates of the full year numbers for 2011 in time for World AIDS Day on 1 December 2011. The number of people who received antiretroviral treatment (ART) in 2011 was 3.3 million, an increase of 10% compared to the 3.0 million people who received ART in 2010. The number of mothers treated to prevent them from transmitting HIV to their babies rose to 1.3 million in 2011, from 1.0 million in 2010, up 30%. The number of HIV testing and counselling sessions rose 27% to 190 million in 2011, compared to 150 million in 2010.

The number of tuberculosis cases detected and treated rose to 8.6 million in 2011 from 7.7 million in 2010, an increase of 12%.

The numbers for malaria were also up sharply:

• 70 million bed nets were distributed in 2011, an increase of 43% over 2010;
• indoor residual spraying was carried out in 43 million homes in 2011, an increase of more than one-third over 2010; and
• the number of malaria cases treated with effective anti-malaria drugs also jumped by more than a third, to 230 million in 2011 from 170 million in 2010.

The Global Fund supports around half of all patients receiving HIV treatment in poor countries, and provides two-thirds of international funding to fight tuberculosis and malaria. The Global Fund estimates that it will disburse between $9.5 and $10 billion to programmes it supports in the period 2011-2013.

The Global Fund announced in November 2011 that because of a sharply deteriorating economic situation, which is placing severe pressure on the budgets of donor countries, the Fund will not be in a position to finance new grants before the end of 2013. The Global Fund's Executive Director, Professor Michel Kazatchkine, appealed to donors to increase funding, saying that while the latest results showed that programmes supported by the Global Fund were delivering remarkable results, far more could be achieved with additional resources. "The poor and the vulnerable must not be made to pay the price for the global financial crisis," Kazatchkine said.

Note: As indicated above, these accomplishments are attributable to programmes that the Global Fund has supported. This does not mean that the Global Fund alone can take credit for this; many of these programmes have also been supported by national governments and other donors. Information for this article was taken from a Global Fund press release.

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6. NEWS: Global Fund Rated High in Transparency

The Global Fund has ranked second out of 58 aid-giving organisations on the subject of transparency, according to a report published by "Publish What You Fund," which describes itself as a "global campaign for aid transparency." The Global Fund ranked just behind the World Bank's International Development Association (IDA) programme.

The online, undated report said that most international aid donors are still not open enough about their aid programmes, and that some offer no information at all.

Publish What You Fund was launched at the 2008 Accra High Level Forum on Aid Effectiveness by a coalition of governance, aid effectiveness and access to information organisations.

Organisations were ranked against a series of transparency indicators, using a numerical scoring system. On the basis of total scores, organisations were rated as "good," "fair," "moderate," "poor" or "very poor." No organisation scored high enough to be rated "good." Nine organisations were rated "fair," nine "moderate," 25 "poor" and 15 "very poor." Some of the organisations rated fair (in addition to the Global Fund and the World Bank) were the African Development Bank, the Netherlands and the U.K. Department for International Development.

The report said that the Global Fund performed particularly well on the organisation and activity level indicators; that information on the organisation and its activities is provided in a comprehensive project level database on the Global Fund website; and that the information can be downloaded in Excel. The report said that there is a very high level of information provided for all projects, including agreements and other project documents.

The report from Publish What You Find is available here.

"Reproduced from the Global Fund Observer Newsletter (www.aidspan.org/gfo), a service of Aidspan."

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 Yours in Global Concern,

 A.SANKAR

Executive Director- EMPOWER  INDIA - Professional Civil Society Organisation

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National Convener- National Alliance for Health, Environment and Rights ( NAFHER)

107J / 133E, Millerpuram

TUTICORIN-628 008, TN, INDIA

Telefax: 91 461 2310151; Mobile:   91 94431 48599: www.empowerindia.org

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·           This e Forum moderated by   EMPOWER, a Non-profit, Non-Political, Voluntary and Professional Civil Society Organisation.

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GLOBAL FUND OBSERVER (GFO), an independent newsletter about the Global Fund provided by Aidspan to nearly 10,000 subscribers in 170 countries.

Issue 174: 24 January 2012. (For formatted web, Word and PDF versions of this and other issues, see www.aidspan.org/gfo.)

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CONTENTS
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1. NEWS: Global Fund Executive Director Michel Kazatchkine To Resign

Michel Kazatchkine announced today that he will "step down" as Executive Director of the Global Fund by mid-March. He said that his planned resignation resulted from a decision by the Global Fund Board two months ago to appoint a General Manager who will supervise many Global Fund activities and who will report direct to the Board. GFO understands that this decision by the Board to transfer many of Dr Kazatchkine's responsibilities to someone else arose from the Board's concern that the Fund's managerial leadership was not sufficiently effective.

2. NEWS: National NGOs Serving as PRs Excluded from the Global Fund's Policy on Percentage-Based Overhead Costs

Concerns have been expressed that the Global Fund's new policy on percentage-based overhead costs for international NGOs, adopted in April 2011, excludes national NGOs, except in very limited circumstances, and that there is no equivalent policy for national NGOs.

3. NEWS: Demonstrators Rally to Urge African Leaders to Spend More on Health

The Global Fund's decision to cancel Round 11 was a hot topic at the International Conference on AIDS and Sexually Transmitted Infections in Africa (ICASA) held in Addis Ababa, Ethiopia on 4-8 December 2011. Demonstrators called for more spending on health from African governments.

4. COMMENTARY: The Transformation of the Global Fund - Concerns and Opportunities

"This is a significant and even bewildering time for the Global Fund," says Dr David McCoy. "It is undergoing not just a financial and fiduciary crisis, but also a process of transformation. And multiple agendas are in play... While it is too early to predict the final impact of all the changes, given their unclear (and, at times, contradictory) nature, there is still opportunity to shape the eventual outcomes of the transformation."

5. ANNOUNCEMENT: Aidspan Releases Revised Version of Its Guide to TFM Applications

The new version incorporates some minor changes to the text.

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1. NEWS: Global Fund Executive Director Michel Kazatchkine To Resign

Board Had Concerns Regarding Managerial Leadership

Gabriel Jaramillo, Brazilian Banker, to Serve as General Manager

Michel Kazatchkine announced today that he will "step down" as Executive Director of the Global Fund by mid-March. He said that his planned resignation resulted from a decision by the Global Fund Board two months ago to appoint a General Manager who will supervise many Global Fund activities and who will report direct to the Board. GFO understands that this decision by the Board to transfer many of Dr Kazatchkine's responsibilities to someone else arose from the Board's concern that the Fund's managerial leadership was not sufficiently effective.

"For the last ten years, the Global Fund has been my passion and my most important undertaking," Prof. Kazatchkine said in a statement to staff. Simon Bland, Global Fund Board Chair, responded by saying, "Few individuals have played a more central role in the creation and evolution of the Global Fund than Michel."

The Global Fund also announced today that the General Manager will be Gabriel Jaramillo, a prominent banker from Latin America who was one of the members of the High Level Panel that extensively evaluated the work of the Global Fund during 2011. Mr Jaramillo spent three days last week meeting senior staff at the Global Fund.

The Global Fund said that Mr Jaramillo will take up a 12-month appointment on 1 February. The Fund did not specify whether Mr Jaramillo will serve as Acting Executive Director once Dr Kazatchkine leaves, but it implied that he will when it said, in a Q&A document sent to Board delegation members, that Mr Jaramillo will "take over all of the management responsibilities of the Global Fund Secretariat." A spokesman told GFO that the Global Fund will launch a search for a new Executive Director "in due time."

Mr. Jaramillo, a native of Colombia and a citizen of Brazil, is a former Chairman and Chief Executive Officer of Sovereign Bank. Since he retired a year ago, he has served as a Special Advisor to the Office of the Special Envoy for Malaria of the Secretary General of the United Nations. Mr Bland said in a press release that Mr Jaramillo "is an outstanding choice, and exactly what we need at this time: an excellent manager and a proven financial leader who can direct change and improve performance in a large institution during a time of transition."

Background regarding Board concerns

On 21 November 2011, the first day of the Global Fund's two-day Accra board meeting, the twenty voting Board members and their alternates met in executive session to review a detailed performance assessment of Dr Kazatchkine. Such an assessment is automatically carried out each year by external professionals under the guidance of the Chair and Vice-Chair; it draws upon responses received to questionnaires that are submitted to dozens of people. According to several Board members, this year's assessment praised many aspects of Dr Kazatchkine's work, but it contained strong criticisms of his effectiveness as a manager - criticisms that echoed those made in the assessment that was conducted a year earlier.

On the second day of the Accra meeting, the Board decided, again in executive session, to appoint a General Manager. This decision was announced by the Fund the following day, as reported by GFO here. However, at that time, the Global Fund specified only that the General Manager would work "alongside" the Executive Director, adding that the General Manager would "help to take the organization through its transformation phase over the next twelve months."

Jon Liden, the Global Fund's Communications Director, clarified the situation earlier this month in the course of responding to questions from GFO. He said that all of the Fund's senior managers (including the Deputy Executive Director) who then reported to the Executive Director would instead report to the General Manager, and that the General Manager would report to the Board, not to the Executive Director. Mr Liden added that the person to serve as General Manager would be chosen by the Chair (Simon Bland, a U.K. government official) and Vice-Chair (Mphu Ramatlapeng, Minister of Health of Lesotho), in full consultation with the Board. Finally, he stated that the responsibilities of the Executive Director once the General Manager was in place were "to be determined."

It was against this context that Dr Kazatchkine announced today that he will resign by mid-March.

Speculation in French magazine

Earlier this month, there was speculation in the popular French magazine Marianne that certain procurements by the Global Fund were mishandled, and that this was of concern to the Board. The Chair has informed GFO that these allegations were not true and were not a factor in the Board's decision to appoint a General Manager. The procurements related to services to support the Born HIV Free campaign in 2010, in which Carla Bruni-Sarkozy, the Global Fund's unpaid Ambassador for Protecting Women and Children Against AIDS, and wife of the President of France, featured prominently. The Global Fund responded with a detailed accounting of the procurements in question, and stated emphatically that all Global Fund procurement procedures had been handled correctly and that this had been confirmed through an external audit specially commissioned by the Chair. (The Global Fund's statements in response to the Marianne article are available here and here.)

Dr Kazatchkine

Dr Kazatchkine, 65, has been Executive Director of the Global Fund since April 2007. Prior to then he served the Global Fund as the first Chair of the Technical Review Panel, then as Board member representing France, then as Vice-Chair of the Board. He is an immunologist who has been working in the field of AIDS since 1983. In 1988 he became the director of the French National Research Agency on AIDS (ANRS), the world's second largest AIDS research program, and he has also served as France's Ambassador on HIV/AIDS and Transmissible Diseases.

Further background information regarding Dr Kazatchkine is available in his bio, his Huffington Post blog entries, a 2007 interview with GFO, a 2007 Boston Globe profile, his report to the 2011 Accra board meeting, and various interviews and speeches.

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2. NEWS: National NGOs Serving as PRs Excluded from the Global Fund's Policy on Percentage-Based Overhead Costs

Policy covers primarily international NGO PRs

Some concerns that the policy is being applied inconsistently

Concerns have been expressed that the Global Fund's new policy on percentage-based overhead costs for international NGOs excludes national NGOs, except in very limited circumstances, and that there is no equivalent policy for national NGOs.

On 18 April 2011, the Global Fund adopted a new policy on percentage-based Headquarters overhead charges for international NGOs (INGOs) serving as principal recipients (PRs) and sub-recipients (SRs). The policy applies to INGO PRs and SRs that have certain services provided by their "Headquarters" (including regional offices) located in another country. The INGO PRs and SRs have to be able to demonstrate strong Headquarters involvement in their operations.

According to the policy, for services provided by Headquarters, an INGO PR can charge a maximum of 3% of the costs of procuring health products; up to 7% of other costs incurred by the PR directly; and up to 5% of the funds managed by SRs. These maximums are reduced in certain instances. For example, if a procurement agent is used, an INGO PR can only charge 1% of the costs of procuring health products (not 3%).

INGOs serving as SRs are entitled to charge a maximum of 3% of the costs of procuring health products; and can charge up to 5% of other costs incurred by the SR directly.

The policy states that the services provided by Headquarters for which a percentage-based overhead fee can be charged include financial accounting, treasury management and reporting support; management support and oversight; human resources administration support; legal support; IT support; internal audit; routine technical assistance and capacity building of in-country staff and structures; and procurement services.

The policy states that it specifically excludes national NGOs and U.N. agencies serving as PRs and SRs. Despite this, the policy includes a section on national NGOs. It says that national entities may not charge percentage-based overhead fees, but should be able to "directly charge" any support provided by Headquarters "using a reasonable basis of apportionment." Further, the policy states that in exceptional cases, where a national entity is managing multiple programmes and apportionment is not practical due to the low value of the Global Fund grant compared to other funding sources, a percentage-based charge may be applied.

Many national NGOs are upset about the fact that they are not permitted to charge percentage-based overhead costs in most situations. A spokesperson for one national NGO PR told GFO that in order to include any Headquarters cost as a direct cost in the programme budgets, detailed and tedious justifications are required. "One may say this brings about accountability," the spokesperson said, "but this does not assist the national NGO to grow beyond what it is today. Costs that go directly towards strengthening the governance structure of the organisation or increasing office space would be questioned by those [in the local fund agent and in the Secretariat] carrying out the review."

The Civil Society Principal Recipients Network (CSPRN), a network of 46 international and national PRs, expressed concern about the exclusion of national NGOs from the overhead policy. "As with INGOs," the CSPRN said, "national NGOs incur costs that are not directly related to Global Fund implementation but that have an overall impact on organizational effectiveness." The CSPRN formally recommended to the Global Fund that it develop an indirect cost recovery policy for national NGO implementers. The CSPRN said that such a policy would reduce conflict and delays during grant negotiations and would reinforce the Global Fund's objective of country ownership.

The CSPRN has set up a task force to advocate for a new policy on overhead costs for national NGOs or, alternatively, for the extension of the INGO policy to cover national NGOs.

The CSPRN also said that the new policy implemented in April 2011 has sometimes been misunderstood, misinterpreted and inconsistently applied by various stakeholders involved in grant negotiation processes. The CSPRN cited as examples the fact that there have been contradictory messages from local fund agents and fund portfolio managers concerning how the policy should be interpreted, and the fact that there have been instances of treating direct implementation costs as Headquarters support costs.

One member of the CSPRN told GFO that the Global Fund is attempting to apply the policy to grants signed before the policy came into effect. The member said that this is a violation of the signed agreements for these grants.

The Fund's policy on overhead costs for INGOs is contained in an operational policy note in Section 6.1.5 of "The Global Fund's Operational Policy Manual," available here. Some of the information for this article came from a paper describing the recommendations and meeting outcomes from a CSPRN meeting held in October 2011, on file with the author.

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3. NEWS: Demonstrators Rally to Urge African Leaders to Spend More on Health

Concerns expressed that cancellation of the Global Fund's Round 11 will have devastating consequences

Editor's note: This is the first article written by the Key Correspondents (KC) Team to appear in GFO. We hope to publish additional KC articles in future. See the note at the end of this article for more information on the KC Team.

Medicins Sans Frontieres (MSF) Health Policy Analyst Dr Mit Phillips described the cancelation of the Global Fund's Round 11 as a "catastrophe," as protesters demonstrated to call on African leaders to commit more internal resources to the HIV response. Dr Phillips said the cancelation will have devastating consequences on millions of people who are yet to access ARV drugs.

"The Global Fund is the main instrument. Don't take it away; more people need treatment. It is not right for the Global Fund to pull out. Africa has invested so much energy and time and more people need treatment," Dr Phillips said during a media briefing organised by the Global Fund at the International Conference on AIDS and Sexually Transmitted Infections in Africa (ICASA) in Addis Ababa, held on 4-8 December 2011.

Prior to the media briefing, AIDS activists from 40 African civil society organisations marched around the conference centre, chanting and displaying messages, reading "Where is the money for HIV and AIDS?"

The demonstrators were campaigning to get African leaders to commit resources to health. On the march was James Kamau a representative from the Southern African Treatment Access Movement (SATAMO), a network of AIDS advocacy organisations. Mr Kamau described the move taken by the Global Fund as "a reverse gear," and said countries in Africa should learn from Kenya, which has come up with a sustainable health financing programme with support from UNAIDS, the National AIDS Control Council and civil society organisations. The Kenyan government has introduced a tax levy on mobile phones, Mr Kamau said; subscribers pay 10 cents per phone call and the money generated from the tax levy is allocated to health.

At the press conference, Dr Phillips said that by 2013 an estimated 86,000 people in Zimbabwe will not be receiving antiretrovirals (ARVs) if the Global Fund doesn't reverse its decision to cancel Round 11. In Malawi, people living with HIV who were on the ARV drug tenofovir will be switched to stavudine, which has severe side effects. In Mozambique, 15% of people in need of ARVs don't have access to them and those who are sick are told to wait until their CD4 count drops to 250 to receive treatment. Dr Phillips said that due to the cancellation of Round 11, Mozambique will not have resources for the prevention of mother-to-child transmission of HIV (PMTCT) programmes.

Dr Phillips said Africa has made some progress in putting people on life saving drugs, hence the need to sustain existing programmes and to scale-up in order to reach out to people that need treatment.

Also at the media conference was Lynette Mabote, from AIDS and Rights Alliance for Southern Africa (ARASA), who lashed out at African leaders for not keeping the promise of allocating 15% of their national budgets to health. She said that Africa was at a "critical moment" and that there was an emergent need for "an innovative financing mechanism to be put in place to finance the health sector."

Ms Mabote urged governments to be accountable to its people, citing the case of Zambia were social audit and expenditure budget tracking is being implemented to make leaders accountable and promote transparency in the health sector. She also bemoaned the lavish life that most African leaders live when others are without basic health services. Ms Mabote added: "The Global Fund was meant to fill up the gaps in health sector. We cannot entrust our health to the donors. Africa should start funding the health sector."

Nearly 50 organisations are part of a broad coalition of HIV/AIDS organizations working under the banner of the "Where Is the Money Campaign" to push African governments to do more and give more in the fight against HIV/AIDS and in promoting health and life.

Many organisations working in Africa are advocating for local health and HIV funding. They include the African Council of AIDS Service Organizations (AfriCASO), ARASA, the Global Network of People Living with HIV (GNP+), the International HIV/AIDS Alliance, the International Treatment Preparedness Coalition (ITPC), the Networking HIV/AIDS Community of South Africa (NACOSA), the Eastern Africa National Networks of AIDS Service Organizations (EANNASO) and the World AIDS Campaign. Along with many other NGOs and stakeholders working in the HIV/AIDS and health fields, the Where is the Money Campaign coalition is pushing for African governments to own, scale up and sustain funding for HIV and health in Africa.

This article was written by Dennis Chibuye, a member of the KC Team. KCs are "citizen journalists" whose network is supported by the International HIV/AIDS Alliance. By posting dispatches and engaging in debate on www.keycorrespondents.org - read by activists, health professionals, academics, policy makers and journalists - KCs are able to communicate the reality of health and development to key influencers as a way to advocate for political and social change. For more information, contact kcteam@....

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4. COMMENTARY: The Transformation of the Global Fund - Concerns and Opportunities

by David McCoy

It has been a year of turmoil for the Global Fund. Round 11 has been officially cancelled, preceded by months of negative publicity about corruption and fraud. But the turmoil is set to continue as the Fund undergoes a process of organisational transformation. A Consolidated Transformation Plan (CTP) consisting of six "transformation areas," 31 projects and 162 deliverables is being implemented. A new Strategy for 2012-16 ("the Strategy") has also been produced, setting the direction for the Fund's future evolution. With so much happening, it can be hard to "see the forest for the trees."

This commentary identifies seven elements of the Global Fund's future transformation and then discusses what they might mean for the Fund's mission.

SEVEN ELEMENTS OF TRANSFORMATION

Contraction and tighter rationing

If the first decade was the Global Fund's era of expansion (in terms of the number of countries supported by grants and annual levels of expenditure), the next decade looks likely to be an era of contraction. As aid budgets stagnate or shrink, and as donor commitment to the Global Fund weakens, and given the reality of scarce resources and unmet need, the Global Fund has little choice but to consider tighter eligibility criteria and a more explicit system of rationing. The original demand-driven model of funding will thus be transformed into one that is more supply-driven. Funding will become less about countries "pulling in" Global Fund grants, and more about the Global Fund "pushing out" money according to stricter eligibility criteria.

A more hands-on approach

The Global Fund is adopting a more hands-on approach to all aspects of the grant cycle, from the initial applications for funding through grant management and programme implementation, and including grant renewals. This is designed to allow grant-making and grant-management to be better tailored to the specific context and needs of a given country. The CTP and Strategy also suggest a more operational role for the Fund in the procurement and supply management of pharmaceutical and other health commodities. In order to support this change, the status, capacity and authority of fund portfolio managers will be increased, as will the number of countries that will be managed under the country team approach. In addition, the time spent by Global Fund staff within recipient countries is expected to rise, and efforts will be made to strengthen the capacity and effectiveness of local fund agents. These changes mark a significant departure from the original vision of the Global Fund as a quick and nimble, global-level financing agency with a minimal in-country presence.

Shorter cycles of funding

The Fund will be moving towards shorter cycles of funding. For example, in future, new grants will cover a three-year period rather than a five-year period; and applications to the Transitional Funding Mechanism are limited to a maximum of two years. Grant performance will also be subject to more rigorous (and possibly more frequent) assessments and performance management prior to semi-annual disbursements. These changes mostly run contrary to the principles of aid effectiveness and may aggravate the difficulties associated with unpredictable and uncertain aid flows.

More emphasis on results and performance based funding

A striking feature of both the CTP and the Strategy is the even greater emphasis on results and performance measurement than before. This appears to be part of a general trend of donors and international agencies seeking to calculate their impact, especially in terms of the ultimate outcome measure: lives saved. As a result, the CTP and the Strategy include a number of plans to improve the health and management information systems of recipient countries and to improve the methodologies for measuring and attributing "results" to funders and programmes.

More risk averse

One of the transformation areas of the CTP is entirely focused on the Global Fund's approach to risk management. A risk management framework and strategy will be established at both the corporate and operational level. They include hiring a new and senior Chief Risk Officer; strengthening the role and management of external auditors; and ranking countries according to some type of risk score. This also marks a significant departure from the way the Global Fund was originally conceptualised. Whilst previously, the Global Fund was positively encouraged to "sail the boat whilst it was being built," the message now is to only sail fully constructed boats which have been tested and declared fit by an independent boat safety agency!

Changing the balance of power

Part of the Global Fund's transformation is concerned with changes to the Fund's governance and management. This includes the restructuring of the Board's committees; a clearer delineation of the roles and responsibilities of the Board and the Secretariat; and the appointment of a General Manager who, apparently, will be accountable to the Board. At the same time, the Executive Management Team (EMT) has been subjected to much criticism, causing harm to its reputation and authority. Meanwhile, the Office of the Inspector General (OIG), which has been at loggerheads with the Secretariat, has escaped being subjected to "transformation" and has, in fact, emerged with a bigger budget. All this adds up to a change in the balance of power across the Board, the OIG and the EMT. It is harder to discern whether there have been changes in the relative power and influence across the different Board members.

More fundraising and appealing to donors

When first established, the Global Fund was described as a "war chest" to help fight the scourge of disease (especially HIV/AIDS). Donors were quick to back the Fund; and, in turn, the Global Fund adopted an ambitious programme of expansion. The Fund was cast as a new type of global agency - quick, reactive, pragmatic and free of red tape. If the need was there, the money would be found. The Global Fund is now experiencing life under a more austere financial climate. As a consequence, there will be a bigger onus placed on the Global Fund to persuade donors of its value - possibly increasingly so as the Fund competes with other recipients of government aid. Additionally, the Fund will be expected to increase the level of support from the private sector and from the general public (e.g., through individual donations or through mechanisms such as voluntary levies applied to purchases).

CONCLUSION

How these different elements of transformation will impact on the Global Fund is unclear. It depends on how each element is implemented and how the elements interact with each other. But it's worth thinking about what might or might not happen.

The shift towards a more country-specific and iterative approach to grant management is potentially a good thing because it enables programmes financed by the Global Fund to align better with national disease strategies, national planning cycles and broader health systems strengthening (HSS) efforts. It could also help ensure better harmonisation with programmes funded by other development partners and sources of external funding for health. The Global Fund has been working towards simplification of its grant-making system through single-stream funding and consolidated proposals; there is an opportunity for the transformation to add further impetus to these efforts.

On the other hand, the proposed changes could result in the Global Fund becoming yet another uncoordinated actor in an already crowded health landscape. Unless the Fund deploys staff with the right competencies and mandate to work effectively with country-level stakeholders, the potential for better alignment and harmonisation may not be realised. There is also a danger that shorter funding cycles and greater pressure to demonstrate "value for money" could result in a more top-down, donor-driven funding model that would undermine country ownership. It could make it harder to invest in things that may only have an indirect or long-term impact on health outcomes.

Shorter funding cycles could also aggravate existing problems associated with short-term and unpredictable aid, and increase the transaction costs associated with frequent and multiple negotiations over grant renewals. On top of this, an over-zealous concern with risk reduction - if it leads to, for example, continued or greater use of parallel donor-specific M&E frameworks and accounting systems - could aggravate existing problems even further.

While the need to employ tighter eligibility criteria and more explicit rationing are regrettable in many respects, there is a potential silver lining in that this could create an opportunity for resources to be better allocated according to the health and financial needs of countries and communities. However, this opportunity could be undermined if proposals to incorporate financial risk into the Global Fund's future resource allocation policy are also accepted. Although an assessment of financial risk should inform the steps to be taken to ensure adequate fiduciary control, it should arguably not be used to influence resource allocation. Resource allocation should be primarily based on need.

The notion of the Global Fund becoming more reliant on private sector financing would also have consequences that would need to be monitored. For example, a greater reliance on private sector funding could lead to a greater emphasis on the funding of pharmaceutical and other technologies. There are some views circulating that the Global Fund should become a more focused "commodities fund," concerned primarily with financing the purchase and price reduction of medicines and other technologies. Such views would be more likely to become policy if the private sector becomes more influential.

The changes to the governance and management of the Global Fund should also be monitored. Will the changes improve the overall functioning of the Global Fund? Or will they create conflicting or parallel lines of authority between the Board, the OIG and the EMT? And will the changes translate into a new balance of power between donors, recipient governments, business and civil society?

This is a significant and even bewildering time for the Global Fund. It is undergoing not just a financial and fiduciary crisis, but also a process of transformation. And multiple agendas are in play. Some of the changes appear good, but others are worrying. It is too early to predict the final impact of all the changes. However, given the unclear (and, at times, contradictory) nature of the changes, there is still some opportunity to shape the eventual outcomes of the transformation.

Dr David McCoy (david.mccoy@...) is a public health physician who is supporting the development of Aidspan's policy and research programme.

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5. ANNOUNCEMENT: Aidspan Releases Revised Version of Its Guide to TFM Applications

"The Aidspan Guide to Applications under the Global Fund's Transitional Funding Mechanism" has been revised to incorporate two minor changes to the text. The new version is dated 19 January 2012. The original version was issued on 10 January 2012. The guide is available at www.aidspan.org/guides. The changes are explained on the cover page of the new version.

Both English- and Spanish-language versions of the revised guide are currently available. French- and Russian-language versions will be posted shortly.

"Reproduced from the Global Fund Observer Newsletter (www.aidspan.org/gfo), a service of Aidspan."

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National Convener- National Alliance for Health, Environment and Rights ( NAFHER)

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