GF/B22/DP24
Approved by the Board on: 15 December 2010
Use of innovative promissory notes by private foundations
The Board:
1. Refers to its decision entitled "Multi-Year Contributions and Promissory Notes from Private Donors" taken by electronic vote on 13 September 2010 (EDP/B21/20) to permit the use of promissory notes by private donors when providing contributions to the Global Fund.
2. Acknowledges the potential for the Global Fund to mobilize additional resources from private foundations through the use of innovative long-term promissory notes, while being mindful of the associated opportunity costs.
3. Notes that the forms of contribution instruments provided by donors should not conflict with the principles and requirements set forth in the Comprehensive Funding Policy (CFP), including the conditions under which instruments may be characterized as assets for the purpose of determining commitment authority.
4. Notes the practice of the Global Fund of accepting promissory notes with encashment schedules for annual payments over the next succeeding three years, which is in line with grant disbursement profile and thereby ensures that the Global Fund will continue to meet grant disbursement needs.
5. Decides that, for an initial period of three years, and upon the approval of the Finance and Audit Committee, the Global Fund may accept promissory notes issued by private foundations available for encashment only at the end of terms exceeding three years ("Long-Term Promissory Notes"). However, the acceptance of Long-Term Promissory Notes is contingent upon the compliance of such instruments with the requirements of the CFP and the right of the Global Fund to automatic early encashment where the Global Fund requires cash to meet grant disbursement needs.
6. Decides that contributions to the Global Fund through Long-Term Promissory Notes shall be limited to those from private foundations.
7. Requests the Secretariat to establish a minimum cash policy in order to ensure a requirement of a minimum cash threshold equal to six months of projected disbursements at any given time, as may be amended from time to time by the Finance and Audit Committee. The minimum cash threshold requirement established by the Secretariat would underpin the early encashment provisions of the long-term promissory notes to allow for payment at any point at which the cash available to the Global Fund to fund disbursements falls below the required minimum cash threshold.