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Local Fund Agents

The Global Fund does not have a country-level presence outside of its offices in Geneva, Switzerland. Instead, it hires Local Fund Agents to oversee, verify and report on grant performance. Local Fund Agents are selected through a competitive bidding process.

The Global Fund normally has one Local Fund Agent in each country (Excel) where it has approved a grant. This gives the Global Fund access to local knowledge that may be relevant to grant performance. There are some cases, however, where it is not possible to have a Local Fund Agent in the country. In these cases, the Local Fund Agent is based in a nearby country and flies in from time to time to verify grant implementation.

The Role of the Local Fund Agent

The Global Fund follows the principles of performance-based funding (PDF) in making funding decisions. The aim is to ensure that investments are made only where grant funding is managed and spent effectively on programs that achieve impact in the fight against HIV/AIDS, tuberculosis and malaria.

The Global Fund's grants are initially approved for two years (Phase 1) and renewed for up to three additional years (Phase 2) based on the performance of grant-funded programs. Funding is disbursed incrementally every three to six months throughout the grant's lifespan, and each disbursement is based on performance. Local Fund Agents play an important role in verifying the performance of grant-funded programs each time recipients report results.

The Local Fund Agent works closely with the Global Fund, and in particular with the relevant Fund Portfolio Manager, to provide the following services:

1. Work performed before the Global Fund signs a grant agreement with the Principal Recipient.This includes assessing the Principal Recipient's capacity to implement the grant, reviewing proposed budgets and work plans and otherwise assisting the Global Fund in grant negotiations.
2. Work performed during program implementation. The Local Fund Agent is contracted to independently oversee program performance and the accountable use of funds (known as Verification of Implementation). This includes reviewing the Principal Recipient's periodic requests for funds, undertaking site visits to verify results and reviewing the Principal Recipient's annual audit report.
3. Work performed with respect to the Phase 2 review. The Local Fund Agent's review of a grant as it approaches Phase 2 (years three to five of the grant's lifespan) is crucial in assisting the Global Fund to make its decision on whether to continue funding beyond the first two years.
4. Work performed with respect to grant closure. When a grant ends, the LFA is involved in assisting the Global Fund with closure of the grant.
5. Ad hoc assignments undertaken at the request of the Global Fund, such as investigations relating to the suspected misuse of funds.

The Local Fund Agent is an important part of the Global Fund's fiduciary arrangements. However, it is not an "agent" in the true sense of the word and is not empowered to represent the Global Fund's views or make decisions regarding grants.

The Local Fund Agent is also not permitted to undertake a number of activities with respect to any grants that it oversees. The Local Fund Agent:

• May not participate in the design of the grant-funded program;
• May not participate in the implementation of the programme;
• May not provide technical assistance to the Principal Recipient or sub-recipients;
• May not provide capacity building to the Principal Recipient or sub-recipients;
• May not make decisions on the grant (all decisions are made by the Global Fund);
• May not audit a Principal Recipient for which it is the Local Fund Agent.