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Global Fund to Resume New Health Grants




 

The Global Fund to Fight AIDS, Tuberculosis and Malaria has boosted its coffers and will resume funding new grants following the launch of a management overhaul prompted by a slowdown in donations and past disclosures of some misused grant money.

The Geneva-based organization, one of the world's biggest financiers of programs to combat the three infectious diseases, also has cut its work force 7.3% and reorganized to dedicate 75% of its staff to managing grants, up from 40% before the reorganization.

The announcement comes just over five months after the organization said it would have to suspend funding new grants until 2014 because it was short of money. The disclosure concerned health organizations that rely on Global Fund grants to buy AIDS drugs, bed nets to combat malaria and other interventions.

Now, the Global Fund forecasts that it has about $1.67 billion "to put to work" between 2012 and 2014, said Gabriel Jaramillo, the new general manager brought in by the fund's board in February to overhaul the troubled organization.

Of that money, $616 million will go to renewals of existing grants whose funds were set to expire and faced potential disruption of services. "We will put one third to work almost immediately," he said in an interview.

As for the remaining $1.055 billion, "we will be consulting in the next few weeks with countries and partners on the best way to use that money so it provides the greatest impact," Mr. Jaramillo said.

Another $500 million has been set aside in contingency money, in case of shortfalls in expected donations, potential exchange-rate losses and other unanticipated expenditures, according to a report to be delivered to the fund's board at a meeting in Geneva on Thursday and Friday.

The improved forecast is the result of money from new donors, an acceleration in contributions from existing donors earlier and the discontinuation of grants to programs in wealthier countries such as China and Brazil, Mr. Jaramillo said.

The fund was forced in November to announce it would put off some new grant-making for two years. It had to take that step partly because it had been too optimistic in its forecast of contributions it would receive from donors, particularly in light of the euro crisis and other economic woes that have slowed donations.

The forecasting problems didn't interrupt continuing grant funding, however. The fund expects to disburse $10 billion in grant money between 2011 and 2013, including $2.6 billion already disbursed in 2011.

Mr. Jaramillo, a retired chairman and chief executive of Sovereign Bank, a Boston-based wholly owned subsidiary of Spain's Banco Santander SA, and a specialist in corporate turnarounds, said the forecasting methodology has been revised. The fund also hopes to attract some new donations in September by hosting a "pledging" dinner for heads of state during the United Nations General Assembly, he said.

The Global Fund was established in 2002 and has been praised for attracting donations from about 45 countries and private donors such as the Bill & Melinda Gates Foundation to invest in more than 1,000 programs around the world that deliver lifesaving interventions. It has been noted for its transparency.

But it was also hurt over the past year and a half by publicity over its own disclosures of some misuse of some grant money in countries such as Zambia and Mali, management shortcomings, and a slowdown in donations from governments - due both to financial crises and concern over the disclosures of misused funds. Its troubles led its executive director, Michel Kazatchkine, to step down in March.

Among the donors to indicate they will deliver some contributions earlier is the U.S., the largest donor to the Global Fund, which has told the fund it will speed up some disbursements to get $226 million more into the fund's hands within the 2012-2014 time period, according to people familiar with the new fund forecast.

The U.S. has contributed $6.1 billion since the fund's inception and has pledged $4 billion over U.S. fiscal years 2011 through 2013, subject to approval from Congress.

Mr. Jaramillo said he has reorganized the Global Fund to dedicate more staff to managing grants, particularly those in the 20 countries with the highest burden of disease "so you can really move the needle on health millennium development goals." More staff will also be dedicated to managing grants in countries that represent the highest risk for investment. "We've now embedded a risk management function," with a chief risk officer, he said.

The fund aims to invest its money more strategically, he said, more actively managing grants and basing its financing decisions on results delivered by the programs it invests in. "We are very engaged in making sure we have clear metrics on morbidity and mortality. We want to move away from measuring inputs to measuring those outcomes," he said.

The reorganization eliminated 236 positions, but created 189 new positions for a net decrease of 47 positions. Dozens of vacancies remain to be filled. Mr. Jaramillo said he will seek to attract candidates from the private sector to the fund, whose culture has been closer to that of a diplomatic organization. "We're bringing in people who have a private sector culture," he said.

Write to Betsy McKay at betsy.mckay@wsj.com



 


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Information in this article was accurate in May 9, 2012. The state of the art may have changed since the publication date. This material is designed to support, not replace, the relationship that exists between you and your doctor. Always discuss treatment options with a doctor who specializes in treating HIV.