Published: 30 November 2022

Innovative Finance

Significant investments in health over the past two decades have yielded striking progress in the fight against AIDS, tuberculosis and malaria. Much of that has come through domestic resource mobilization and traditional development assistance, but the health financing landscape is shifting. Domestic funding has been accelerating, and there is both a need by and an interest from the private sector to engage – a situation made all the more acute in the evolving COVID-19 context. Building upon these trends, the Global Fund partnership is innovating – pursuing new opportunities to further finance and accelerate the fight to end the epidemics.

The Global Fund connects countries with diverse partners – private sector investors, philanthropists, civil society organizations, and multilateral donors – to develop and implement practical, innovative finance mechanisms to increase the impact against the three diseases. These solutions complement government spending and amplify domestic health financing.

We are uniquely positioned to enable innovative finance to have a catalytic effect. Our experience shows that innovative finance can have significant impact by:

Raising funds for program delivery
Fostering innovation
Increasing efficiency
Supporting countries in transition and ensuring sustainability

Innovative Financing Platforms

Our partnership focuses on key innovative financing platforms, outlined on this page, that complement the Global Fund’s funding model and government spending and that increase impact by:

Increasing funding for health programs beyond traditional funding mechanisms, both at a Global Fund level and directly at the implementing country level
Enhancing the efficiency and impact of our health programs

Consumer Donations

The Global Fund fosters partnerships that empower millions of individuals to contribute to the cause of global health. We work with organizations that raise funds when individuals purchase products or services, or create grassroots fundraising mechanisms. Some or all of the proceeds support Global Fund-supported programs.

(RED) works with the world’s most iconic brands and organizations to develop (RED)-branded products and services that, when purchased, activate corporate giving to the Global Fund. (RED) has generated US$700 million to support the fight against AIDS in Africa through the Global Fund.

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Philanthropic Platforms

Innovative philanthropic investment funds enable different types of investors, foundations, philanthropic leaders and others to pool their financial contributions to the fight. These pooled funding mechanisms aim to mobilize and distribute funds in a more coordinated and efficient way. Pooled fund investing is used to leverage financial resources as well as expertise to support Global Fund-backed health programs.

Debt Swaps

The Global Fund’s Debt2Health program converts debt repayments into lifesaving investments in health. Under individually negotiated “debt swap” agreements, an implementing country agrees to invest in programs to fight the three diseases or strengthen health systems through the Global Fund. In return, a creditor country cancels debt owed by the implementing country.

Since the inception of Debt2Health in 2007, ten implementing countries – Cameroon, Côte d'Ivoire, Democratic Republic of Congo, El Salvador, Egypt, Ethiopia, Jordan, Indonesia, Pakistan and Sri Lanka – have invested more than US$226 million in domestic health programs through the Global Fund. In return, Australia, Germany and Spain have canceled debt in those implementing countries.

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Blended Finance

Blended finance combines Global Fund grants with other sources of financing, including investments from development finance institutions. Health programs can be conditional on, or implemented in coordination with, investments from funding partners.

In Central America, we support the Regional Malaria Elimination Initiative (RMEI), which uses a mix of grants and concessional loans for collaborative programs to eliminate malaria in participating countries. The Global Fund’s contribution has leveraged additional new funding in collaboration with partners such as the Inter-American Development Bank, Carlos Slim Foundation, Gates Foundation and domestic financing.
Loan buy-downs can increase domestic financing, accelerate investments in prevention and scale up services. The Global Fund is investing US$40 million to help India secure a US$400 million loan from the World Bank to fight tuberculosis. In addition to this, in recent years, the Global Fund and the World Bank have signed multiple innovative finance agreements, focused on a performance-based funding project in the Democratic Republic of Congo and collaborated on technical support of a Multi-Donor Trust Fund for Indonesia and Sri Lanka. A framework agreement was signed with the World Bank in October 2019 and is expected to reduce transaction costs and lay the foundation for a deeper partnership focused on increasing impact for countries. The first joint investment under this agreement is due to be signed in autumn 2020.
The Global Fund is working with Lives and Livelihoods Fund, a collaboration between the Gates Foundation and Islamic Development Bank that provides concessional financing through a combination of grants and concessional loans. In 2019, through the Global Fund’s advocacy and technical support, the Lives and Livelihoods Fund approved a $49.9 million concessional loan for Benin, focused on community health and health systems strengthening. Learn more
We are expanding partnerships with development finance institutions such as the World Bank, Asian Development Bank, Inter-American Development Bank and others.

Results-based Financing

Results-based financing is the disbursement of grant funds after pre-agreed results are achieved at specific milestones. One form of this financing is known as “cash on delivery.”

The Global Fund has supported results-based financing models in countries like Solomon Islands, El Salvador and Rwanda.
In Rwanda, we support a results-based financing approach called the National Strategy Financing model. It enables Rwanda to evaluate performance against pre-defined targets and shift resources as priorities change.

Outcome-based Financing

Outcome-based financing is the disbursement of funds after pre-defined outcomes are achieved, with the donor or private investor generally providing upfront financing to a program implementer. If the pre-agreed outcomes of the program are met, the investment is repaid, often with a financial return. This financing includes social impact bonds, which focus investments toward programs that yield effective social outcomes in the fight against the three diseases.

In South Africa, the Global Fund supports a social impact bond to address HIV in adolescent girls and young women.
In countries in Africa and potentially Asia, we are exploring an outcomes-based financing approach for malaria elimination.

New Possibilities

We are constantly exploring new possibilities for partnerships and funding sources to increase our impact and save more lives. We follow a structured approach to identify innovative finance mechanisms and apply them to specific situations to enhance impact. Read more in our Forming Partnerships page and in our reports:

A Structured Approach for Innovative Finance - Increasing Financial Innovation
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Update on Innovative Financing
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How the private sector contributes to the Global Fund partnership