Global Fund looks to boost private sector contributions

Abstract

With donations from governments falling because of the economic downturn, the Global Fund is hoping that an innovative product for the private sector can fill the gap. Tatum Anderson reports. The Global Fund to Fight AIDS, Tuberculosis and Malaria is entering the world of high-finance to raise funds for global health projects. It plans to issue innovative financial products called Exchange Traded Funds in the coming months and by the end of the year to try to tap into the stellar wealth of the global hedge fund industry by getting individual hedge fund managers to split their fees with the Global Fund. The thinking is that these plans may be charitable, but they are not charity, and that managers who buy into a more ethical stance would be better placed to attract investors in the current climate. “Fund managers can use it as an opportunity to be more socially responsible and generate commercial returns at the same time”, said Robert Filipp, head of innovative financing at the Global Fund. It follows a recent move by UK bank HSBC to issue a bond worth £50 million (US$75 million), which will be used by the GAVI Alliance to subsidise vaccines in developing countries. These ideas are the latest in a trend by health organisations to move into the world of financial services and other parts of the private sector to raise money in increasingly innovative ways. Some, such as UNITAID, have introduced airline ticket taxes. And later this year, the companies responsible for 1·8 billion airline tickets bought online—Amadeus, Galileo Travelport, and Sabre—have agreed to modify their websites to enable travellers to donate to health projects when they buy tickets via the internet. Organisations need innovative financing to fund the scale-up coverage of antiretrovirals and other drugs, vaccines—and increasingly—health systems strengthening too. But crucially, they are attempting to plug the gap left by plummeting government contributions as a result of the global downturn. Concord—a group of 1600 European non-government organisations—estimates that between 2008 and 2010, aid will have dropped by 14% or $25 billion as the economies of rich country members of the Organisation for Economic Cooperation Development shrink. Even less will be available as countries such as Italy step back from aid commitments. Italy has already halved its aid budget and Ireland has reduced its budget several times this year. As well as producing reductions in aid, the recession is having other effects. Currency fluctuations are making medicines and hospital equipment more expensive and contribute to catastrophic effects that recession has on global health. The World Bank says past recessions, such as the Asian crisis, caused an additional million children to die between 1980 and 2004 as a result. For its part, the Global Fund has reported a $4 billion shortfall, and last year reduced the money available to existing projects by 10%. It has already pursued several other sustainable and innovative financing ideas in the past. Its (RED) campaign encourages companies from Apple to American Express to donate a proportion of all sales of (RED)-branded products to HIV/AIDS projects. “We want to apply the model for product (RED) to the financial services industry”, said Filipp. The idea is to increase private sector contributions to its coffers. At present only around 3% of all contributions to the Global Fund are made by the private sector and not a single UK brand has joined (RED). What is clear is that some traditional ways of giving are considered less than satisfactory—especially in the financial services. That is because even if they are generous—the celebrity-packed charity dinners or trading days where brokers give everything they make in a single day to charity—they are often one-off events. Organisations such as the Global Fund argue that one-off big-ticket giving makes the financing of longer-term aid projects, such as putting patients on a course of life-saving antiretrovirals or building clinics, almost impossible. Sustainable financing should be the name of the game. Filipp says: “We don't want one day of charity, we need a sustainable flow of income that will be normal business for the investor.” For their part, the financial services industry also stands to gain much from tie ups with high-profile charities and might go a little way to repair the image of an industry badly tarnished by the current financial crisis.