Once a funding request is recommended for grant making, the nominated Principal Recipient (PR) is required to develop a detailed budget using the full modular approach and costing dimension. Each PR must submit a detailed budget for review and approval, as indicated in the diagram below.
Practice Pointer
As a general principle, in developing a Global Fund work plan and budget, the PR must ensure a strong link between these documents, the performance framework (PF), and the health products management template (HPMT). It is recommended that the PR have a near-finalized PF before developing the budget, to ensure that appropriate levels of funding are allocated to achieve PF objectives/activities and corresponding targets.
NOTE: under Grant Cycle 7 (GC7) – 2023-2025 GF Allocation Period – the Detailed Budget template comprises two worksheets – one for health products (Detailed Budget – Health Products for Cost Groupings 4, 5, 6, and 7) and another for non-health products (Detailed Budget – Non-Health Products for all Cost Groupings except 4, 5, 6, and 7). Depending on the type of portfolio (High Impact, Core, Focused), the Global Fund Country Team will confirm whether a HPMT is required and, in such cases, the HPMT must be finalized first, and then the data copied/pasted into the Detailed Budget – HP worksheet of the DB template. The HPMT includes a Detailed Budget worksheet that includes all required information and is structured to mimic the Detailed Budget – HP worksheet. The PR will not be able to edit the information in the Detailed Budget – HP worksheet. When an HPMT is not required, the Detailed Budget – Non-HP worksheet is used exclusively for all budget lines across all cost groupings.
In addition, the PR is encouraged to design the work plan and annual budget (with detailed cash forecasting for each quarter). It is also recommended that the Country Office (or a grant designing team) should take the following into account in the template:
In addition, the PR is encouraged to design the work plan and annual budget (with detailed cash forecasting for each quarter). It is also recommended that the Country Office (or a grant designing team) should take the following into account in the template:
- unit cost/number of days/frequency/quantity/implementing partner or entity responsible for implementation (PR/Sub-recipient (SR)/Sub-sub-recipient (SSR));
- cost input linked to each activity line; and
- module and Intervention linked to each activity.
The detailed budget should be based on the cumulative funding approved for the funding request, including any above-allocation funding and any projected in-country cash balance available for the new funding cycle. For new grants, the initial budget estimates are based on the programmatic needs and the best estimates at the time of the funding request. The budget will provide the following information and justification
- alignment of the detailed budget to the approved funding request, taking into account any adjustments communicated by the Global Fund following Technical Review Panel (TRP) and Grants Approval Committee (GAC) reviews; and
- quantitative assumptions used for unit costs based on historical data and/or pro forma invoices when necessary.
The detailed budget should be submitted using the Global Fund budget template, which includes the following information:
- Modules – selected from a prescribed list
- Interventions – related to the module selected from the prescribed list
- Activity – this is not mandatory and is at the discretion of the PR
- Implementer – the entity that would implement and manage the associated budget line
- Cost input – selected from a prescribed list
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Payment currency – The payment currency is the currency that would be used to pay for goods and services.
For example, salaries for SR staff funded by the grant should be paid in local currency, health products are paid for in US dollars, etc.
- Unit cost at the start of the budget, and annual inflation/increase factor
- Quantities required for each period
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Period (annual 1) – this should be the estimated period of payment and disbursement
requirement from the Global Fund. Generally, this excludes procurement lead times for delivery of goods/services/commodities unless there is
a specific clause in the grant confirmation citing a national legal requirement to access funding prior to the initiation of the procurement process.
With respect to SR staff funded by the grant, the following procedures should be followed:
- SRs should contract project staff in local currency without reference to grant currency (US$ or Euro).
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The PR is to use the free worksheet in the Global Fund budgeting template to provide the SR salary assumptions in local currency, including projected salary increments based on the inflation rate (not to be completed unless requested by the Global Fund).
- UNDP can request budget adjustments for SR salaries based on the inflation rate in the country. The SR salary adjustments will make use of savings realized due to the depreciation of local currency.
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Country Offices (COs) should agree with Global Fund on reliable sources for inflation data and the procedure for adjusting SR salaries based on the inflation rate.
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Non-material budget adjustments for human resource (HR) costs of less than 5 percent of total budget of recipient HR cost grouping can be made and reported in PU, Pulse Check or Progress Update/Disbursement Request (PU/DR) without prior approval of Global Fund. HR cost adjustments above this threshold are considered material and will require prior Global Fund approval.
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The proposed increments for SR salaries denominated in local currency should be included in PU/DR cash forecasts.
The budget template is detailed at:
Once the template has been developed, the PR should undertake the following steps to finalize the work plan and budget based on the original document found in the proposal:
- Gather historical data for the grant and country context, in relation to unit costs and organizational arrangements.
- Based on this historical data, clearly define cost assumptions:
- In the absence of historical data efforts must be made to obtain detailed costs for each activity.
- These cost assumptions must be included in the same document for the Local Fund Agent (LFA) and Global Fund to review.
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Analyse the country storage and distribution system to adequately address the weaknesses and costs associated with the storage and distribution of the health products.
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Discuss quantification and procurement and supply management (PSM) assumptions with relevant agencies in the country.
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Consider cost recovery budget lines, as per the UNDP–Global Fund Cost Recovery Agreement.
Practice Pointer
The work plan and budget will be reviewed by the LFA and the Global Fund Country Team. The PR should be prepared for several rounds of negotiations in finalizing this document with the Global Fund. To avoid delays, the PR should take the following steps to ensure a quality work plan and budget:
- confirm that the budget is consistent with the proposed programmatic targets in overall terms and on a time basis;
- confirm that the budget is within the available maximum TRP-approved funding amount;
- confirm the arithmetic accuracy of the budget;
- scan each budget line (e.g. activity) to check reasonableness of the unit costs, quantities and the assumptions used;
- ensure the economy, efficiency and effectiveness (value for money) of budget activities;
- confirm that budget lines are classified in accordance with the Global Fund definitions cost groupings, interventions and modules [Refer to the Global Fund Modular framework handbook];
- confirm that the budget is consistent with the grant proposal and addresses all TRP concerns;
- identify ineligible costs which will not be funded/accepted by the GF and inform the respective implementers;
- confirm inclusion of other mandatory charges such as UNDP GMS, audit fees and capacity development activities;
- confirm that the budget does not contain duplication of funding with other Global Fund grants or other sources of funding;
- seek efficiency gains in accordance with Global Fund Board-mandated requests;
- confirm that revenue-generating activities are addressed in the budget;
- provide assurance as to the PR’s ability to implement and expend the budget within the stipulated period in accordance with the grant agreement.
Note 1: Starting from the Grant Cycle 7, the GF grant budgets are prepared on an annual basis, instead of quarters.
However, internally UNDP COs are required to prepare quarterly cash forecasts for the reporting fiscal year,
and revenue milestones need to be set based on the quarterly cash forecasts.
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