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There Is No Such Thing as a Free Lunch:

Also available in: Español

Challenges of Costing Community Interventions in LAC

By Alejandro Uriza Ferretti 

“There is no such thing as a free lunch.” This quote, attributed to economist Milton Friedman, was one of the first lessons I learnt when I was studying economics at university. Beyond its simplicity, it contains a profound truth: every action has a cost, and there is always someone who bears it. In the realm of social intervention from a community perspective, this reality is inescapable. Every action, every activity, every visit—whether funded by a donor, a government or a civil society activist—entails a cost that must be accounted and managed. 

Community action is essential in the fight against HIV, TB and malaria. It is not just about meeting the financial requirements of the Global Fund, but about understanding and valuing everything that goes into delivering a product, good or service to achieve an effective outcome. Through proper costing, we can measure our efficiency (doing things in the best way possible, using the least amount of resources— such as time, money or effort) and effectiveness (achieving the desired outcomes or goals), determine how far we can go with the resources available, and design stronger, more realistic strategies within a project or grant. 

It is not uncommon for projects or grants to have insufficient funding to cover all costs. Therefore, it is not that we should avoid costing, but rather that we should design our products or services with clarity and transparency, cost them correctly, and recognize what is realistic or feasible to fund with a Global Fund grant. This exercise allows us to identify what part of the cost can be covered by another donor, by the government, or even by the organization or community itself through volunteer work. It also helps us clarify the goals and scope of our products or outcomes, especially in the context of innovative mechanisms such as the Global Fund’s results-based payments, which are designed to increase efficiency. 

What is the relevance of costing in the context of the Global Fund Strategy 2023-2028 and Grant Cycle 7 (GC7)? 

The new Global Fund Strategy 2023-2028 places a strong emphasis on “working with people and communities to meet their needs”. This approach recognizes that communities affected by the three diseases are in the best position to identify their needs and the most effective solutions to address them. 

In line with this strategy, Annex 5 has been introduced as a mandatory component of grant applications in Grant Cycle 7. This annex is designed to contain a list of up to 20 priority interventions recommended from the perspective of civil society and the communities most affected by the three diseases, even if some are not included in the final funding request submitted to the Global Fund. 

From this perspective, Annex 5 serves two key purposes. First, it assesses the effectiveness of the country dialogue, allowing the Global Fund to understand how inclusive and representative the planning process has been, ensuring that the voices of communities are heard and taken into account. Second, it provides a more comprehensive view of community needs. Even if some priorities are not included in the final request, their identification helps inform future funding opportunities and strategic planning. 

To facilitate this process, Social Dialogues are held. These are exclusive spaces that take place before the national or country dialogue (as it is referred to in other settings), which is also a requirement for submitting a funding request. These meetings bring together key populations, communities, and civil society organizations to analyze the current situation, identify gaps, and prioritize interventions. The Global Fund, through the Community Engagement Strategic Initiative (formerly CGR SI), often provides technical assistance to support these dialogues through technical partners mobilized by regional civil society platforms, such as the LAC Learning Platform, which facilitate this support to countries. 

The international organization ICASO has facilitated several community dialogues in Latin America to ensure that communities have the necessary tools and support to effectively engage in the identification and prioritization of their needs, as well as in the costing of community interventions, which has become a complement to advocacy and planning in Social Dialogues. My work with ICASO has allowed me to further recognize the importance and fundamental role of communities and civil society in the design of funding requests for several reasons: 

  • Engaging communities in identifying priorities and costing interventions fosters a sense of ownership and commitment to results, increasing the likelihood of success and sustainability of initiatives. 
  • Communities have first-hand knowledge of local challenges and needs. Their involvement ensures that interventions are relevant and adapted to the specific context, improving their effectiveness. 
  • Engaging communities in costing promotes transparency in the allocation and use of resources. This builds accountability and trust among all stakeholders. 
  • Through this process, communities develop financial planning and project management skills that will enable them to participate more actively in future funding and strategic planning processes. 

Major Barriers and Challenges to Community Participation in Costing Community Activities 

Nevertheless, there are challenges to engaging communities and civil society in costing interventions that hinder their participation: 

  • Numbers and costing are perceived as complex: A recurring challenge is the perception that “numbers are complex and not for them.” Many communities feel that financial mathematics and costing are topics only for economists or experts, which creates resistance and a lack of confidence in their ability to engage in these processes. 
  • Lack of Clarity about Products and Services: Community organizations often do not have a clear understanding of what constitutes a product or outcome, good or service in their interventions. Without this clarity, it is difficult to identify and break down associated costs, which hinders effective and realistic financial planning. 
  • Lack of Knowledge of Key Economic Concepts: Concepts such as fixed and variable costs, or economic principles such as the Law of Diminishing Returns, are not widely understood. As Joan Tallada mentions in his article for the LAC Platform in May 2023, once a certain threshold is crossed, it becomes increasingly expensive to achieve each additional unit of health outcome; that is, the marginal cost of achieving an additional health outcome increases progressively. Without understanding these concepts, organizations may underestimate the resources needed to scale up their interventions. 
  • Cost Structures Based on Available Budgets: Many organizations base their cost structures on the budget a donor is willing to provide, rather than on the actual cost of the products or services needed to achieve results. This can lead to poor financial planning and inefficient resource allocation. 
  • Fear of Innovation and Methodological Changes: There is a natural resistance to change and the adoption of new tools or methodologies. Innovation can be perceived as a risk, especially if there is no clear understanding of the benefits it can bring.  

Tools and Support Available to Facilitate Costing of Community Interventions 

To overcome these challenges, it is essential to have tools and support that make the costing process more accessible and effective for communities and civil society in its broadest expression of representation. This is where the adaptation of specific tools to the Latin American context comes into play. 

The tool developed by Frontline AIDS has been updated and is now available in version 2.0. Designed in Excel, it aims to simplify and automate the costing process, making it easier for communities and civil society organizations to use. 

One of the key benefits of this updated tool is its automatic link to the Global Fund’s Modular Framework, which allows prioritized interventions during Social Dialogues to be directly connected to the modules and illustrative activities presented by the Global Fund in 2022 and updated in 2023. This allows organizations to classify their activities according to standard categories, supporting the development of the funding request and ensuring alignment with the Global Fund’s requirements. 

The tool also simplifies the selection of cost categories. Using drop-down menus of categories and subcategories, organizations can easily identify and classify the costs associated with each intervention, distinguishing between fixed and variable costs. This makes it easier to understand and manage financial concepts that may have previously seemed complex. 

It also allows users to define the scope, quantities, and target populations. It is possible to specify the scope of interventions, the quantities needed, and the types of populations targeted, along with the unit cost for that intervention. This provides an accurate estimate of the resources required, which is essential for effective and realistic planning. 

Another key feature is the automation of calculations. With automated spreadsheets and totals, the tool reduces the likelihood of errors and saves time, making the process more efficient and allowing organizations to focus on the impact of their interventions. 

Most importantly, the tool is adaptable and can be customized to each country and context. This makes it relevant and useful to different communities and realities, taking into account the economic and cultural specificities of Latin America and the Caribbean. Its simplified design and intuitive use make it accessible to people without financial training, breaking the myth that “numbers are not for me”. 

Key Recommendations for Communities and Organizations 

In order for communities and organizations to begin costing community interventions, it is critical to take advantage of available tools that simplify this process and make it more intuitive. Using tools that are adapted to the local context makes it easier to understand costs and allows for more effective financial planning. In addition, it is essential to invest in the training and capacity building of community members in the basic concepts of costing and financial planning. This training empowers organizations to make informed decisions and manage their resources more efficiently—a key lesson from recent work with organizations in Colombia. 

Participation in Social Dialogue is another critical aspect. Through proactive engagement, communities can ensure that their priorities and needs are reflected in funding requests, thereby strengthening their position with donors and governments. In addition, collaboration and strategic partnerships with other organizations and experts can enrich the process and facilitate the exchange of knowledge and resources to increase the impact of interventions. 

Finally, it is essential to maintain an open attitude towards innovation and adaptability. A willingness to adopt new methods and tools can significantly improve the effectiveness and efficiency of interventions. Innovation involves not only the use of new technologies, but also a willingness to rethink approaches and strategies based on changing needs and lessons learned. By integrating these recommendations, communities and organizations will be better prepared to meet challenges and maximize the impact of their efforts to fight HIV, TB and malaria.