Do PEPFAR, the Global Fund, and the World Bank MAP Make Funding Decisions Against Performance? And Why This Matters NOW!

With contributions from David Wendt.In 2008, international AIDS assistance from the G-8, European Commission, and other donor governments reached its highest level to date--US $8.7 billion—a greater than fivefold increase from 2002 levels. Despite this increase, it is unlikely that this funding trend will continue in the current global economic downturn. As funding becomes more constrained, donors and recipient countries will need to do more and better with the same amount of money—for HIV treatment, prevention and care, health systems strengthening, family planning, maternal and child health and nutrition. This pressure pushes donors to ensure that funding goes only to the most effective programs. How might they do that?One approach is to link decisions about funding specifically to performance, in an effort to reward high performing recipients and to incentivize poor performers to improve. Our new report, Are Funding Decisions Based on Performance? examines how the three donors make funding decisions, and whether these are linked to program performance. We find that that of the three, only the Global Fund systematically bases funding decisions on performance metrics, though in practice it is often hampered by poor information. Both PEPFAR and the World Bank MAP use assessments of performance to inform decisions, but the data and decision processes are not systematic and program performance is often treated as a secondary criterion, after financial and operational performance.Based on findings from Mozambique, Uganda and Zambia, we offer specific funding recommendations to each donor, as well as collective recommendations. By acting on these suggestions, donors will strengthen their models by linking funding decisions to clearly defined and measurable performance metrics.  A sneak peak of a subset of our recommendations:For The Global Fund

1. Disclose documentation for all disbursement decisions to help country-level and other stakeholders understand the reasoning behind funding decisions.
2. Lengthen the time between performance reports to six months or more to ease the burden on recipients and to smooth the flow of disbursements. 

For PEPFAR

1. Release performance data for individual grants and make funding decisions more transparent to increase accountability and help key stakeholders—host country governments in particular—coordinate national AIDS responses.
2. Develop clear guidelines for how to use performance data in funding decisions by outlining the rewards for good performance and the consequences of poor performance against a grant’s targets. 

For The World Bank

1. Give greater weight to programmatic outcomes to emphasize and reward achieving the programs’ ultimate goals, in addition to operational and financial targets.
2. Release performance targets and assessment results for each recipient on an ongoing basis to help country-level stakeholders understand the reasons for funding decisions. 

Now is the time to act on these recommendations. PEPFAR’s new strategy—emphasizing the shift from an “emergency response” to a “sustainable response”—focuses on identifying and implementing efficiencies that could include performance based funding strategies. The Global Fund faces major fundraising challenges as it continues to grow its portfolio of programs and associated targets to address growing demand for funding, and they have made across the board cuts to their two most recent rounds of grants (read about all that here). By publicly disclosing funding decision information, Global Fund applicants will be in a better position to understand their successes or failures, and to strengthen their programs accordingly. Evaluation after evaluation (here and here) of the World Bank’s health portfolio points to unsatisfactory achievement of results, despite a “managing for results” approach. (For example, just last year the Independent Evaluation Group completed an evaluation of World Bank health projects and found three quarters of projects in Africa (since 1997) had not achieved satisfactory results.) By prioritizing program performance measures and using this information to make funding decisions, the World Bank can regain its credibility as a financier for high performance and not of mediocrity.Share your thoughts on these recommendations by commenting below.  Do you think AIDS donors can use funding more effectively if they link funding decisions to performance? Why or why not?  We will continue this discussion during an event on May 10 when a CGD HIV/AIDS Monitor panel will ask on how the three donors may address these recommendations moving forward. Save the date!