This paper outlines seven challenges in development assistance for health, which in the current financial context, have become even more important to address. These include the following: (1) the proliferation of initiatives, focusing on specific diseases or issues, as well as (2) the lack of attention given to reforming the existing focal health institutions, the WHO and World Bank. (3) The lack of accountability of donors and their influence on priority-setting are part of the reason that there is “initiavitis,” and resistance to creating a strong UN system. (4) Other than absolute quantity of aid, three other challenges linked to donors relate to the quality of aid financing particularly the pragmatic difficulties of financing horizontal interventions, (5) the marginal involvement of developing country governments as aid recipients, and (6) the heavy reliance on Northern-based organizations as managers of funds. (7) The final challenge discussed focuses on two unintended consequences of the recent linking of health and foreign policy for international development assistance. The paper then provides three suggestions for ways forward: creating new mechanisms to hold donors to account, developing national plans and strengthening national leadership in health, and South-South collaboration.