UNICEF USA launches fund to support PPE procurement

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Health care workers inspect their personal protective equipment at an isolation center in Addis Ababa, Ethiopia. Photo by: ©UNICEF Ethiopia / 2020 / Mulugeta Ayene

WASHINGTON — The United Nations Children’s Fund has run into a recent challenge as it works to procure personal protective equipment on behalf of about 90 low- and middle-income countries as part of its COVID-19 response: Suppliers are demanding payments upfront.

But a new fund launched Tuesday by UNICEF USA, an organization that supports UNICEF through fundraising, advocacy, and education efforts in the U.S., aims to help solve that problem by providing guarantees for UNICEF’s supply chain division to procure those essential goods.

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The FAST Fund is looking to raise at least $3 million from individual donors, foundations, corporations, and donor-advised funds, though it would like to raise more, said Cristina Shapiro, president of UNICEF USA's Impact Fund for Children, which will be managing the new fund.

The guarantees provided by the FAST Fund will protect UNICEF’s prepayment until goods are delivered — some suppliers are asking for about one-third of the total cost upfront — which would increase the risks for UNICEF. After that happens — delivery of goods typically takes between 30 and 60 days — the returned funds can be reused for another guarantee, a process that can be repeated throughout the fund’s 18-month term.

According to Shapiro, every $100,000 of investment, which can be recycled about six times in a year, can be used to secure up to $1.8 million in supplies, which UNICEF has said could protect up to 12,400 health care workers. The fund aims to help guarantee the procurement of about $54 million worth of supplies for the coronavirus response.

The fund will raise grants and recoverable grants — instruments that are similar to loans and would be repaid if certain conditions are met. If a supplier fails to deliver on time or to standard, the fund would suffer a loss and the recoverable grant would not be repaid, at least not in full.

“People right now are looking to pledge dollars where they derive measurable impact; this is clearly one of those opportunities.”

— Cristina Shapiro, president, UNICEF USA Impact Fund for Children

UNICEF’s supply division told Shapiro that it has tendered more than $249 million in orders of PPE supplies, much of which has to be guaranteed, she said.

On day one, the fund already has a commitment for a $250,000 recoverable grant with a matching challenge, and it expects to get its first request for a guarantee from UNICEF this week.

“[UNICEF is] looking to raise additional guarantees elsewhere. They are in deep, deep need,” Shapiro said.

The new fund was built on an existing relationship but started with a phone call from UNICEF’s supply chain division asking for help, she said. UNICEF is typically able to get a bank to guarantee procurements so it does not have to take on the risk, but suppliers were either not able to get guarantees from banks — some of which were closed — or not willing to do so, opting to sell to whoever bid without a guarantee, Shapiro said.

UNICEF USA was already working with other parts of the division through its impact investing arm, the Impact Fund for Children. That fund manages the Bridge Fund, which provides money for UNICEF to procure items as it waits for donor funding to arrive, at which point it repays the fund.

UNICEF USA was able to quickly respond to UNICEF’s request because of its existing relationship with the supply chain division and because it had a team familiar with these types of guarantees and a finance team that was able to quickly draft necessary documents, Shapiro said.

“The key thing to me is the measurable impact that can be achieved,” she said. “People right now are looking to pledge dollars where they derive measurable impact; this is clearly one of those opportunities.”

Update, May 26, 2020: This article has been updated to clarify the explanation of the FAST Fund, and includes updated figures from UNICEF USA of the value of PPE order.

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About the author

  • Adva Saldinger

    Adva Saldinger is a Senior Reporter at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.