Performance-based funding ensures that funding decisions are based on a transparent assessment of results against time-bound targets.
As a financing method, performance-based funding promotes accountability and provides incentives for recipients to use funds efficiently to achieve results. Performance-based funding emerged in the 1970s in the tertiary education sector in the United States; it was developed to improve the quality of education by funding results attained rather than funding according to the size of an institution or standard budgeting procedures.
Today, the performance-based funding model is used by a number of development organizations and initiatives (including the GAVI Alliance, the Millennium Challenge Account and the European Commission) as a way to ensure the accountability, efficiency and effectiveness of programs being funded.
Performance-based funding lies at the heart of the Global Fund's operating model:
Raise it. The Global Fund continually raises funds to dramatically increase resources to fight three of the world's most devastating diseases.
Invest it. The money received from donors is channeled to program implementers for grants operating in 140 countries around the world.
Prove it. The achievements of grant activities are measured against performance indicators and the results are used for ongoing funding decisions. The proven performance of Global Fund grants is critical to raising additional funding from donors.
Global Fund programs are provided with initial funding based on the quality of their applications. In order to receive subsequent financing, they must demonstrate results against defined performance targets. These targets are proposed by the country (for approval by the Global Fund), thereby ensuring they are appropriate to the national context and local program realities. Performance-based funding at the Global Fund provides a platform for grants to demonstrate that they can convert financing into results, enabling further funds to be committed to the programs achieving results and impact in fighting AIDS, tuberculosis (TB) and malaria.
The Global Fund's system of performance-based funding was developed to:
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