More than 70 percent, or 28.5  million, of the 40 million people with HIV/AIDS worldwide live in sub- Saharan Africa. The Fund was formally launched in January 2002. Key Governance and Other Supporting Structures Established

The Fund has made noteworthy progress in establishing key headquarters  and country-level governance structures. The Fund Developed Comprehensive Oversight Systems and Issued Procurement Guidance, but Systems Face Challenges, and Guidance Is Still Evolving

The Fund has developed systems for financial accountability and for  monitoring and evaluating grant activities and has issued guidance on  procurement. Lack of Resources Threatens Fund’s Ability to Continue to Approve and Finance Grants

The Fund’s ability to approve and finance additional grants is threatened by  a lack of sufficient resources. The Fund does not currently have enough  pledges to allow it to approve more than a small number of additional  proposals in 2003. In addition, without significant new pledges, the Fund  will be unable to support all of the already approved grants beyond their  initial 2-year agreements. As of April 1, 2003, only $834 million had been pledged for 2003,  6 percent of which came from the private sector. Improvements in Grant-Making Processes Enhance Fund’s Ability to Achieve Key Objectives, but Challenges Remain

The Fund has established detailed objectives, criteria and procedures for  its grant decision process and is making enhancements to the process in  response to concerns raised by participants and stakeholders. These efforts will seek to address ongoing challenges,  including ensuring that the money from the Fund supplements existing  spending for HIV/AIDS, TB, and malaria and that recipients are able to use  the new aid effectively. Other GAO contacts and staff acknowledgments are  listed in appendix V.

Objectives, Scope, and Methodology

At the request of the Chairman of the House Committee on Appropriations,  Subcommittee on Foreign Operations, Export Financing and Related  Programs, we assessed (1) the Fund’s progress in developing governance  structures; (2) the systems that the Fund has developed for ensuring  financial accountability, monitoring and evaluating grant projects, and  procuring goods and services; (3) the Fund’s efforts to mobilize resources;  and (4) the Fund’s grant decision-making process. We also interviewed Fund officials in Geneva  and U.S. government officials from the Departments of State and Health  and Human Services and the U.S. Agency for International Development.
Why GAO Did This Study

By the end of 2002, more than 40 million people worldwide were living with human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS), with 5 million newly infected that year. HIV/AIDS, along with tuberculosis (TB) and malaria, causes nearly 6 million deaths per year and untold human suffering. Established in January 2002, the Global Fund (the Fund) aims to rapidly disburse grants to augment existing spending on the prevention and treatment of these three diseases while maintaining sufficient oversight of financial transactions and program effectiveness. As of April 1, 2003, the United States had pledged $1.65 billion to the Fund and is expected to remain its single largest donor. In this study, GAO was asked to assess (1) the Fund's progress in developing governance structures; (2) the systems that the Fund has developed for ensuring financial accountability, monitoring and evaluating grant projects, and procuring goods and services; (3) the Fund's efforts to raise money; and (4) its grant-making process. In responding to our draft report, the Fund, the Department of Health and Human Services, the Department of State, and the U.S. Agency for International Development agreed with our findings.

What GAO Found

The Fund has made noteworthy progress in establishing essential governance and other supporting structures and is responding to challenges that have impeded its ability to quickly disburse grants. A key challenge involves locally based governance structures, many of which are not currently performing in a manner envisioned by the Fund. The Fund has developed comprehensive oversight systems for monitoring and evaluating grant performance and ensuring financial accountability and has issued guidance for procurement; however, the oversight systems face challenges at the country level and some procurement issues have not been finalized. The Fund's ability to approve and finance additional grants is threatened by a lack of sufficient resources. Pledges made through the end of 2003 are insufficient to cover more than a small number of additional grants and without significant new pledges, the Fund will be unable to support all of the already approved grants beyond their initial 2-year agreements. Improvements in the Fund's grant-making processes have enhanced its ability to achieve its key objectives, but challenges remain. These challenges include ensuring that grants add to and complement existing spending on HIV/AIDS, TB, and malaria and that recipients have the capacity to effectively use grants.