How to Understand UNICEF USA’s Charity Ratings

When you are considering making a donation to a nonprofit, independent groups like GuideStar, Charity Navigator and the Better Business Bureau’s Wise Giving Alliance at Give.org can provide valuable information to help you decide which charities to support.  

For every dollar donated, UNICEF USA spends just 8 cents on fundraising and less than 3 cents on administration.

Most years, UNICEF USA has received the highest marks for accountability and transparency from Charity Navigator. UNICEF USA has also been awarded GlobalGiving’s Superstar status for demonstrating the highest level of engagement and/or effectiveness. Our program expense ratio of 88.9 percent means we are a highly efficient charity, with 2.9 percent of our expenses going to administration and 8 percent to fundraising.

To make the most of evaluations like these, it’s important to understand how the ratings methodologies work and how well they apply to the unique structure, governance and operating conditions of the nonprofits ranked.

Sometimes a combination of factors can cause a disconnect between the metrics Charity Navigator uses to rate nonprofits and their commitment to their missions and values.

Liquidity and UNICEF USA’s mission

A measure of a charity’s financial health is whether it has the liquidity to weather an economic downturn. This is one of the important metrics Charity Navigator uses to rate nonprofits like UNICEF USA.

But when so many millions of the world’s children are endangered by war, disease, poverty and climate change, UNICEF USA looks at its cash reserves differently; if the choice is between keeping money in the bank and sending water, nutrition and medical supplies out into the field, children will always come first. That approach is core to UNICEF USA’s mission. In some years that means that cash in reserve falls short of Charity Navigator’s preferred ratio.

UNICEF USA is committed to providing maximum support for UNICEF's work to save children who are suffering from malnutrition. With UNICEF's help, severely malnourished children like 10-months-old Fatima, who lives in northern Afghanistan, can get the screening and treatment they need to make a full recovery. © UNICEF / Frank Dejongh

How UNICEF USA sees liabilities versus assets

Charity Navigator’s preferred liabilities to assets ratio is an important metric. It cannot fully measure the value of two crucial strategic decisions UNICEF USA has made in recent years that have drastically improved both its capacity and sustainability.

Operating a nonprofit in New York City can be tremendously costly. The per-square-foot cost of office space is among the highest in the nation. To reduce monthly costs and build long-term equity, UNICEF USA financed via bond financing the purchase of the three floors it occupies in lower Manhattan.

The bond on UNICEF USA’s New York City office space is a liability on its balance sheet. Owning Manhattan real estate is a major asset, which UNICEF USA capitalizes upon in order to work more efficiently and effectively. The savings on a high-priced office-space rental has allowed UNICEF USA to free up capital for its mission to save and protect the world’s children.

UNICEF USA’s innovative Bridge Fund

UNICEF USA is always on the lookout for new, strategic ways to generate flexible funding for whenever and wherever children need help. The UNICEF USA Bridge Fund is just one tactic UNICEF USA has innovated to meet that need.

In September 2018, an earthquake in Central Sulawesi, Indonesia, triggered a devastating tsunami that displaced tens of thousands of people, leaving destruction in its wake. Thanks to the UNICEF USA Bridge Fund, UNICEF could rush relief to the area's traumatized children. On the first anniversary of the disaster, UNICEF temporary schools are helping children like 5-year-old kindergartener Novia (above) learn, play and heal. © UNICEF/UNI206453 

An impact investing tool, the Bridge Fund is designed to remove financial obstacles when quick action means the difference between life and death. Such was the case in September 2018, when a 7.4-magnitude earthquake struck off the coast of Sulawesi, Indonesia, triggering a tsunami that killed more than 2,000 people and displaced 212,000. Thanks to the Bridge Fund’s $500,000 contribution, UNICEF was able to preposition supplies and accelerate the delivery of humanitarian aid and child protection during those critical first days and weeks.

The benefit to children since UNICEF USA created the Bridge Fund in 2011 has been tremendous. Yet, the source of these revolving funds — 3-year and 5-year loans that are secured by net worth grants to UNICEF USA — appears on the accounting ledger as debt. In some fiscal years, that has counted against UNICEF USA’s Charity Navigator rating, and UNICEF USA’s four-star rating has dropped to three.

What remains constant is UNICEF USA’s sustained, full-fledged and cost-effective commitment to helping children survive and thrive.

Top photo: At UNICEF therapeutic feeding centers in Yemen, malnourished children get lifesaving treatment and loving attention from workers who've received special training in early childhood development. © UNICEF/UN0280847/Huwais AFP Services