Board Approves Allocation Methodology for 2017-2019

Strategy and Policy Head Harley Feldbaum and Allocation Model Manager Hannah Grant presented on the Allocation Methodology for 2017-2019.

The Board at its 34th meeting in November 2015 requested that the Allocation Methodology be holistically refined to ensure:

  • Greater impact
  • Simplicity
  • Flexibility
  • Predictability

The Strategy, Investment, and Impact Committee (SIIC) recommended a package of refinements to the Allocation Methodology.

The decision point included three annexes:

  • Annex 1:  Allocation Methodology
  • Annex 2:  Technical Aspects
  • Annex 3:  Affirmed Access to Funding Principles

Below is a diagram of the Allocation Methodology:

Allocation Methodology

Allocation Methodology

The Board paper states:

The SIIC-recommended approach for the 2017-2019 allocation period aims to increase impact by directing a greater portion of the funding towards the countries with the highest disease burden and least economic capacity; retaining significant funds for catalytic investments in strategic priorities, including for key and vulnerable populations, women and girls, human rights, multi-country approaches and strategic initiatives; prioritizing both scale-up in below-formula and predictable decreases in above-formula components; and increasing the Global Fund’s ability to flexibly address the needs of countries on a case-by-case basis.  The SIIC-recommended approach is simplified, entailing only two funding approaches:  country allocations and catalytic investments.

This approach seeks to maximize funding through country allocations.  It would move significantly more towards the formula-driven financing for countries than the Current Policy approach, resulting in a distribution of resources that is increasingly in line with disease burden and country economic capacity.  This is based upon a major challenge of the 2014-2016 allocation methodology, where [$1.25 billion] was set aside for incentive funding, multi-country, and strategic initiatives, yet many country allocations were insufficient, at least 10 of the highest burden country components had to shorten grants to maintain efforts against the three diseases, and incentive funding had to largely be appropriated to fill programming gaps.

As such, with the exception of up to [$800 million] for catalytic investments, all funding available will be run through the allocation formula to ensure more robust and predictable country allocations.  Instead of an MRL [(minimum required level)], once the formula has been run, up to [$800 million] can be moved to ensure scale-up, impact and paced reductions across the portfolio.  This approach will balance the need for scale-up in previously high burden and under-formula countries with paced reductions for countries which were previously above-formula.  The funding for catalytic investments and to ensure scale-up, impact and paced reductions is limited to 15% of funding available to ensure robust allocations.

The Catalytic Investments serve three purposes:

  1. Incentivizing use of country allocations for strategic priorities in line with Global Fund and partner disease strategies, including for:
  • Key and vulnerable populations
  • Gender-based programs
  • Contributing to Resilient and Sustainable Systems for Health (RSSH)
  1. Multi-country approaches
  2. Strategic initiatives

The Board paper states:

For 2014-2016, a 75% MRL was adopted to provide paced-reductions for country components that had previously received more funding under a rounds-based approach than they would through the allocation methodology.  … the 75% MRL was applied portfolio-wide, without consideration of potential funding gaps or reductions in impact arising from this one size fits all approach.  For the 2017-2019 allocation period, the SIIC recommends taking a more progressive and differentiated approach to balancing scale-up, impact and paced reductions across the portfolio.  The SIIC-recommended approach would ensure that the methodology is able to deliver on its aims of ensuring increased impact, whilst remaining predictable for countries and protecting the gains of past investments.

The SIIC recommends that the MRL be replaced by an approach that utilizes up to [$800 million] to balance scale-up, impact and paced reductions across the portfolio after the initial allocation is run.  The movement of these funds would be guided by the following approach:

First, the allocation would prioritize at least 50% scale-up towards the formula’s initial calculated amounts in country components whose previous funding levels were below these amounts

Second, the allocation would prioritize providing paced reductions to country components whose previous funding levels were above the formula’s initial calculated amounts. In doing so:

  • A country component with a larger gap between the formula’s initial calculated amount and previous funding level would receive proportionately more funding than a country component with a smaller gap; and
  • No previously above-formula country component (i.e. with previous funding level above initial calculated amount) would receive funding greater than 75% of previous funding levels.

The SIIC recommended that the Secretariat have the flexibility to move funds for Catalytic Investments to the funding available to ensure scale-up, impact, and paced reductions if necessary.

The Board paper indicates that the new Allocation Methodology significantly increases overall funding to:

  • Sub-Saharan Africa
  • South Asia
  • East Asia and Pacific
  • Low-income and lower-middle-income countries
  • Previous high-burden bands

The Board paper also indicates that the new Allocation Methodology increases HIV funding to:

  • Countries classified with extreme burden by more than one-third
  • Sub-Saharan Africa by almost 15% in line with global burden of disease
  • Sub-Saharan African countries with highest rates of infection in young women and adolescent girls by almost 30%

… increases TB funding to:

  • Countries classified as having extreme or severe burden by more than 20%
  • Top 28 high MDR-TB countries by 25%

… and increases malaria funding to:

  • Countries classified as having extreme or severe burden by more than 10%
  • Sub-Saharan Africa by more than 10%
  • Low- income and lower-middle-income countries by 5%

The Developed Country NGO Board Delegation worked closely in particular with the Communities, Developing Country NGO, Eastern Europe and Central Asia (EECA), and Latin American and Caribbean (LAC) Delegations before and throughout the Board meeting to amend the decision point.

SIIC Chair David Stevenson accepted numerous “friendly”/”nonmaterial” amendments to the decision point:

  • Paragraph 27:  Description of Unfunded Quality Demand (UQD) mechanism
  • Paragraph 30 and Annex 1:  Change in reporting threshold for adjustments to formula-derived allocations to greater than 15% and greater than $5 million (as opposed to $30 million)
  • Annex 1:  Inclusion as qualitative factor of adjustment factor for populations disproportionately affected by HIV and TB and in low-endemicity malaria settings

David did not accept a “nonfriendly”/”material” amendment to change the amount of Catalytic Funding from “up to $800 million” to “$800 million.”

Developed Country NGO Board Member Owen Ryan proposed that amendment to the Board.

The Communities, Developed Country NGO, Developing Country NGO, and EECA Board Delegations stressed the importance of the Catalytic Funding to maximize impact.

The Board did not approve the amendment.

Owen commended the outstanding leadership of Implementer Group Chair Allan Maleche (Developing Country NGO Board Delegation) in coordinating within the Implementer Group and with the Donor Group, SIIC leadership, and Board leadership to amend and improve the decision point.

The Board approved the decision point.

The Communities Delegation abstained from the vote.

The new Strategy Committee at its meeting in June 2016 will review and approve the method by which the Secretariat will apply and report on the qualitative adjustment process.

The Strategy Committee at that meeting will also review the priorities, activities, and initiative to be funded as Catalytic Investments for recommendation to the Board.