The UNICEF USA Bridge Fund's Fiscal Year 2018 Annual Report

Annual Report

© UNICEF/UN061430/DEJONGH

June 30, 2018

Contents Leadership Letter........................3 UNICEF, the SDGs and Impact Investors.....................................4 Quarterly Activity.........................7 FY18 Activity...............................8 FY18 SDG Impact.......................9 FY18 Emergency Response......10 Financials..................................11 Our Stakeholders.......................12

Cover Photo A young girl in Côte d’Ivoire receives an oral polio vaccine, part of a UNICEF initiative to maintain West Africa’s polio-free status.

Last fiscal year, the Bridge Fund helped accelerate more than $39 million for lifesaving immunization campaigns just like this one.

Dear Bridge Fund Supporters, With 535 million children living in countries affected by emergencies — and with one in five of the world’s children still missing essential vaccines — the UNICEF USA Bridge Fund is proud of its continued support of UNICEF’s lifesaving work in emergencies and health. The Bridge Fund accelerated more than $47 million during Fiscal Year 2018 and, for the fourth year in a row, was included in the ImpactAssets 50 roster of impact fund managers.

To help reinforce UNICEF’s leadership on Sustainable Development Goals 2030 (SDGs) for children, the Bridge Fund now reports on our SDG impact. We are also committed to our role in helping UNICEF meet SDG 17 — mobilizing global partnerships and additional resources for children in developing countries.

However, challenges to meeting the SDGs, and changes in the impact-investing marketplace, have spurred us to explore new ways to support UNICEF. First, UNICEF’s March 2018 report on SDG progress for children revealed both significant advances and serious obstacles worldwide, including insufficient data collection and investment. Second, recent estimates suggest the SDG funding gap may be $2.5 trillion or more per year. Third, social impact investing is expanding rapidly, but not always to the benefit of the most marginalized children. This June, for instance, the Global Impact Investing Network reported 13% annual growth in global impact investing over the last five years. But investing in countries perceived as high-risk — with low per capita incomes, underdeveloped markets and weak infrastructure — remains a challenge in the very regions where targeted funding will make the biggest difference.

In response to UNICEF’s call for innovative solutions, we have been carefully exploring how new blended finance models at UNICEF USA might enable us to more effectively connect philanthropic dollars and private sector financing with UNICEF’s unique scale, scope and expertise. Translating the breadth and complexity of UNICEF’s initiatives — often involving capacity building, community engagement and systemic institutional change — into scalable investment solutions for children will be both complex and rewarding.

Bridge financing is our core business, and we are committed to growing the Bridge Fund to meet UNICEF’s needs.

And, to help us understand how we should re-shape and expand UNICEF USA’s impact investing role, we will also call on investors and donors to workshop ideas, provide feedback, and help identify the best ways to catalyze new investment for the children who need it most.

Once again, thank you for your support.

Caryl M. Stern President and CEO UNICEF USA

Edward G. Lloyd Chief Operating Officer and Chief Financial Officer UNICEF USA

UNICEF, the SDGs and Impact Investors

The Bridge Fund Enables You to Leverage Social Return for Children

To help UNICEF make progress on SDG 4 (quality education for all), the Bridge Fund accelerated grants for schools for displaced Syrian children like 5-year-old Seif-ed-Dien.

In turn, the UNICEF USA Bridge Fund offers social impact investors and donors the ability to leverage UNICEF’s lifesaving work for children and track the impact of their contributions via concrete SDG indicators at the global, national and local levels.

While discussing the SDGs and impact investing, Christine Bosse, a Board member of the Global Impact Investing Network (GIIN), Allianz, TDC and BankNordik, argues that the SDGs offer “… a golden opportunity [for investors]. And the people who get knowledgeable first and are interested in really getting on board in these areas will, of course, also be the ones who, in the long run, take the largest benefits.”

With ambitious goals for global health, gender and economic equality, education and the environment — and for fostering new and innovative partnerships for a better world — many SDGs intersect with UNICEF’s expertise in child health and malnutrition, psychosocial development and learning, child protection and social inclusion, girls’ empowerment, and safe water and sanitation — among just a few of UNICEF’s major initiatives.

As Henrietta Fore, UNICEF’s Executive Director, explains: “The SDGs embody our highest aspirations for a better world — and

The Sustainable Development Goals embody our highest aspirations for a better world — and reflect our greatest responsibility as a global community.

—UNICEF Executive Director Henrietta Fore

reflect our greatest responsibility as a global community: to provide children and young people today with the services, skills and opportunities they need tomorrow to build better futures for themselves, their families and their societies.”

5 Things You Should Know About the SDGs 1 In 2015, 193 countries and the United Nations established 17 Sustainable Development Goals (SDGs) to create a better world by 2030 — in a broad range of areas, including poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, the environment and social justice — with an enormous impact on the lives and futures of children.

2 Unfortunately, the World Economic Forum and the U.N. Conference on Trade and Development estimate that developing countries face an annual $2.5 trillion SDG funding gap.

3 T he Business and Sustainable Development Commission (BSDC) estimates that incorporating the SDGs into core growth strategies, value chain operations and policy positions could unlock economic opportunities worth at least $12 trillion a year by 2030 (more than 10 percent of global GDP) and generate up to 380 million jobs (covering more than 10 percent of the predicted labor force in 2030), mostly in developing countries.

4 T he BSDC suggests that some of the primary SDG impact investing opportunities will be in four economic systems: (i) food and agriculture, (ii) cities, (iii) energy and materials and (iv) health and well-being.

5 T he GIIN’s recent impact investor survey revealed that 75 percent of investors report tracking their investment performance against the SDGs or that they plan to do so in the future. ● Learn more: sustainabledevelopment.un.org/sdgs

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s a leader in implementing the world’s Sustainable Development Goals 2030 (SDGs) for children, UNICEF offers social impact investors and donors a powerful opportunity to promote long-term systemic change and assess the social return on their investments across a consistent set of goals by using internationally agreed-upon metrics.

In addition to UNICEF’s comprehensive programming, the organization’s unparalleled scale — operating in 190 countries and territories — and its influence among multi-lateral organizations, governments, partner NGOs, philanthropy and the international business community means that UNICEF is uniquely positioned to help implement SDGs that affect children and measure global progress.

SDG Progress for Children In fact, as part of UNICEF’s SDG-related leadership, it recently released the first comprehensive assessment on the SDGs for children. Entitled “Progress for Every Child in the SDG Era,” the report offers both good news and bad.

We believe that consistent, credible data about children’s situations are critical to the improvement of their lives — and indispensable to realizing the rights of every child — Progress for Every Child in the SDG Era

Global Immunization Rates

“More than half the world’s children live in countries where we either can’t track their SDG progress, or where we can and they are woefully off-track,” said Laurence Chandy, UNICEF’s Director for the Division of Data, Research and Policy, when the report was released. “The world must renew its commitment to attaining the SDGs, starting with renewing its commitment to measuring them.” UNICEF concludes with an urgent call-toaction to governments, partners and funders involving:

In what otherwise might be a grim report, however, there is hope. Fortunately, progress on SDG 2, which targets hunger, and on SDG 3, which targets children’s health and well-being, has been greater and more measurable than for many other SDGs. Momentum is particularly strong for under-five child mortality, due in large part to the efforts of UNICEF and partners to aggressively address child survival and collect reliable data on program outcomes.

● i mprovement of data coverage for children; ● stronger measurement of service delivery; ● more shared norms on children’s data, particularly for migrant and refugee children and other hard-to-reach children; and ● data-sharing that helps target the most vulnerable children with services while preserving their privacy.

Immunization has driven much of the continuing reductions in child mortality. Moreover, as UNICEF’s and the World Health Organization’s (WHO) joint annual global immunization update (July 2018) makes clear: “A record 123 million infants were immunized globally in 2017,” with vaccination rates for maternal and neonatal tetanus (MNT), diphtheria, whooping cough, measles and rubella all showing marked improvement.

UNICEF’s Data Leadership 1 For 20 years, UNICEF has led global efforts to generate, analyze and share data for children and helped develop international indicators (including for the SDGs) on children’s well-being.

2 UNICEF believes that smart use of data drives better results for children.

3 UNICEF helps devise new methodologies, indicators and monitoring tools, build statistical capacity at the country level, develop joint estimates and harmonize monitoring across governments, NGOs and other UN agencies.

4 UNICEF has invested in pioneering work on household surveys, global data advocacy and country-led data innovation.

© UNICEF/UN0202777/HIBBERT

5 Since its inception in 1995, UNICEF’s Afghanistan is one of three remaining countries where the wild polio virus is still endemic. That is why continued polio vaccination there saves children’s lives and helps make critical progress toward SDG 3 (health and well-being).

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“Multiple Indicator Cluster Surveys (MICS) — with 304 MICS conducted in more than 112 countries — has become the world’s largest source of statistically sound and internationally comparable data on women and children.

Learn more: data.unicef.org/about-us/ unicefusa.org/bridgefund

The Bridge Fund has played a long-term role in supporting UNICEF’s landmark global immunization campaigns for children.

Indeed, since 2011, the Bridge Fund has accelerated $200 million for UNICEF’s immunization campaigns, offering impact investors an opportunity to help save children’s lives and — with the launch of the SDGs in 2016 — evaluate progress toward key, globally measurable targets.

For example, during Fiscal Year 2018, one the Bridge Fund’s signal immunization funding accelerations involved a multi-region, $5 million bridge for Gavi, the Vaccine Alliance, an international organization that brings together the public and private sectors to help vaccinate children living in the poorest countries with new or underused vaccines for diseases such as rotavirus, which causes diarrhea, a major child killer.

The Bridge Fund’s acceleration enabled timely procurement of vaccines and cold-chain distribution equipment in approximately 22 low-income countries. The acceleration also helped ensure that immunization campaigns took place as scheduled, increasing rates of child immunization and reducing child deaths — a key SDG 3 target.

As Edward G. Lloyd, UNICEF USA’s Chief Operating Officer and Chief Financial Officer, commented: “Since the Bridge Fund’s founding, we have made accelerated funding for global immunization a priority. We are deeply grateful for our investors, whose support has meant the difference between life and death for millions of children worldwide. Your continued investment will help UNICEF make further measurable SDG progress for children and forge that better world the SDGs envision for all children — no matter who they are or where they live.” ●

When speed saves lives, the Bridge Fund acts.

Last fiscal year, the Bridge Fund accelerated $4.4 million for UNICEF’s emergency response in countries like Haiti, devastated by Hurricane Maria.

A child receives an oral polio vaccine as part of mass vaccination by UNICEF during a Rapid Response Mission to the village of Aburoc, South Sudan.

The Bridge Fund Helps Support Polio Eradication 1 In the last quarter of Fiscal Year 2018, we accelerated $10 million to support the Rotary International Foundation’s (Rotary) and UNICEF’s polio eradication campaign.

2 Our acceleration of Rotary’s grants for Afghanistan, Nigeria and Pakistan supported eradication in these three remaining polio-endemic countries, while the West and Central Africa acceleration supported maintaining polio-elimination status in these regions.

3 A ccelerating funds enabled UNICEF to enter into new polio vaccination programming activities and to pre-position personnel and supplies without interruption for the upcoming year.

4 Expected outcomes include improved acceptance of vaccinators and immunization, increased vaccination rates among hard-to-reach children and in high-risk areas, more cost-effective vaccine procurement and cold-chain distribution, and further progress toward a polio-free world and SDG 3 (child health and well-being).

5 As total global polio eradication nears, the WHO estimates that paralysis of more than 16 million people will have been avoided, and an estimated 1.5 million childhood deaths will have been prevented through the systematic administration of Vitamin A during polio immunization.

6 The WHO estimates that polio eradication will have saved $40 to $50 billion, mostly in low-income countries. ● Page 6 Bridge Fund Annual Report

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© UNICEF/UN047343/BRADLEY

The Bridge Fund and Immunization

Quarterly Program Activity: $15 million For the fourth quarter of Fiscal Year 2018, the Bridge Fund completed five transactions totaling $15 million.

Bridge Fund SDG Impact

Sustainable Development Goal

Bridge Fund Progress This quarter’s health activity contributed to SDG progress via three targets for Goal 3: 3.2, 3.3, 3.8

Goal 3

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estimated 25.5 million children An immunized against polio

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40,000 community-based vaccinators and social mobilizers trained to promote immunization

●

romotion of safe, affordable vaccines for P children globally

Ensure healthy lives and promote well-being for all at all ages

Quarterly Activity by Sector and Region Health

$15,000,000.00

Middle East and North Africa

$2,692,200

South Asia

$3,727,700

West and Central Africa

$8,580,100

Learn more about SDG 3, and related targets, here: sustainabledevelopment.un.org/sdg3

Quarterly Program Impact

Transactions

Inputs

Outputs

Outcomes

World Bank-funded polio campaigns

$5 million accelerated for bOPV* procurements for 28 million doses

Execution of national immunization campaigns in Nigeria throughout 37 regions with a target of roughly 25.5 million individuals

● Stopped new outbreaks of polio

Four individual grants for polio eradication

For community-based vaccination

Community-based vaccination programming such as:

● Polio immunization of the poorest, most isolated children

$10 million

Afghanistan $3,727,700 Nigeria $3,399,200 Pakistan $2,692,200 West and Central Africa Region $180,900

● Community engagement and communication programming, including creation and distribution of resource materials, social mobilization tool kits and advocacy

● Further progress toward a polio-free Pakistan and Afghanistan

$5 million

● Continued progress toward polio eradication in Nigeria

Nigeria

Afghanistan, Nigeria, Pakistan, West and Central Africa Region

● Polio-free status for countries in West and Central Africa maintained

● Recruitment and training of community-based vaccination health workers and supervisors for polio vaccine delivery

* bOPV is an improved polio vaccine that reduces health risks for children.

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FY18 Program Activity: $47.3 million

The data below summarizes 18 transactions, including emergency response and development funding.

Total Bridge Fund Activity Since 2011

Annual Aggregated Activity by Sector

Education

As we concluded our seventh year, we have accomplished a milestone of more than $225 million in accelerated funds to UNICEF. This includes:

Emergency Response

Education $9.8 million / 745,000 children reached

Health

Health $207 million / 587 million individuals reached

$3.9 million

Total

$7.3 million

$47.3 million

$36.1 million

Emergency Response $8.2 million / 27.4 million individuals reached

Safe Water $500,000 / 5 million individuals reached

Bridge Fund Activity by Geographic Region Region Annual Aggregated Activity

by Geographic CENTRAL AND EASTERN EUROPE AND THE COMMONWEALTH OF INDEPENDENT STATES

NORTH AMERICA

1%

Emergency 100% Response

2%

100%

Health

LATIN AMERICA AND THE CARIBBEAN

SOUTH ASIA

16%

3%

Health 88% Emergency 12%

Emergency 100% Response

WEST AND CENTRAL AFRICA

47% Health

100%

EASTERN AND SOUTHERN AFRICA

6%

Health Education

97% 3%

MIDDLE EAST AND NORTH AFRICA

16% Education Health Emergency

49% 35% 16%

MULTI-REGION

9%

Health Emergency Response

92% 8%

For the fourth straight year, the UNICEF USA Bridge Fund has been selected for inclusion in the Impact Assets 50 for its work as an innovative, impact investing tool.

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FY18 Bridge Fund SDG Impact

$42.9 million accelerated to promote systemic, sustainable change for more than 87 million women and children Goal 17 recognizes that SDG progress will happen only when the entire global community, including the public and private sectors, collaborate to create the capacity, formulate policies, strengthen institutions and leverage the financing necessary for a better world. Since 2011, the Bridge Fund has brought together a diverse team of investors to enhance UNICEF’s financial ability to save children’s lives and build their futures. Promoting SDG 17 target 17.6, the Bridge Fund fosters multi-stakeholder partnerships that mobilize financial resources in support of the SDGs.

accelerated across health interventions to drive progress toward SDG 3

Vaccines: More than 100 million vaccine doses pre-financed to fight diseases such as polio, tetanus, tuberculosis and measles Cold-Chain Equipment: 326 units to support the cold-chain supply of vaccines Community Engagement: $10 million accelerated for community engagement in the fight to eradicate polio More than 84 million children reached, three million women of reproductive age reached, 40,000 community-based vaccinators mobilized

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$4 million

$100,000

Access to Education Syrian children, deprived of school, provided with self-learning curriculum that is equitable and accessible

Reduced Inequalities Children with and without disabilities provided with equal access to social and educational opportunities through sports

95,000 Children Reached

400 Children Reached

accelerated to promote access to quality education to drive progress toward SDG 3

Longitudinal health studies — like the one Teck Seavyong is leading here in rural Cambodia — are vital components of UNICEF’s global leadership on data for children and enable us to track progress on the SDGs.

accelerated to promote inclusion and awareness for children with disabilities

© UNICEF/UN0222199/BROWN

$39 million

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FY18 Bridge Fund Emergency Response

$4.4 million accelerated to reach more than two million children and individuals affected by man-made and natural disasters Lebanon Mediterranean Sea

Iraq

Lebanon and Iraq

Bangladesh

40,000

Syrian refugees in Lebanon and Iraq reached with winter clothing

Bangladesh Bay of Bengal

1.8 million

Rohingya refugee children and 98,000 families reached with emergency support including education, hygiene and sanitation, and nutrition supplies

Eastern Caribbean

United States

40,000

Houston

individuals protected from the after-effects of Hurricane Irma in the Eastern Caribbean Area including psychosocial support, access to safe water, and access to education supplies

United States

Puerto Rico

more than 4,700

60,000

individuals from the most vulnerable populations protected from the after-effects of Hurricane Harvey in Houston

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Eastern Caribbean

Puerto Rico

vulnerable children and families in Puerto Rico provided with basic hygiene needs following Hurricane Maria

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Financial Information

*

UNICEF USA In-Kind Assistance Corporation

UNICEF Bridge Fund Program (Segment) Statement of Financial Position (unaudited)* Assets Cash and Investments

$18,621,104

Contributions Receivable

$34,322,205

Total Assets

$52,943,309

Liabilities Loans Payable

$39,150,000

Accrued Interest Expense

$342,094

Total Liabilities

$39,492,094

Net Assets

$13,451,215

Total Liabilities and Net Assets

$52,943,309

*As of June 30, 2018

Covenant Calculation Leverage Ratio

Loan Goal

Actual

Debt : Net Assets

Maximum 3.5 : 1

2.9 : 1

UNICEF Bridge Fund Program (Segment) Statement of Activities (unaudited)* Public Support and Revenue Contributions Revenue

$48,013,141

Investment and Interest Income

$375,915

Total Revenue

$48,389,056

Expenses Program Services Grants to UNICEF and other NGOs

$47,328,140

Program Expenses (including interest expense)

$974,898

Management and General

$10,112

Fundraising $70,750 Total Expenses

$48,383,900

Change in Net Assets

$5,156

Net Assets – Beginning

$13,446,059

Net Assets – Ending

$13,451,215

*For the twelve months ended June 30, 2018

We certify that, as of the quarter ending June 30, 2018, there exists no default or Event of Default (as such term is defined in the Loan Agreement), and we are in compliance with the covenants set forth in Sections 4.1 and 4.4 and in Article V of the Loan Agreement, including without limitation and as demonstrated in the above computations, the financial covenants set forth in Sections 5.2 and 5.5 of the Loan Agreement.

Edward G. Lloyd, Chief Operating Officer and Chief Financial Officer Dated: June 30, 2018

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Thank you to our stakeholders for supporting the Bridge Fund.

We are proud to acknowledge the following supporters and partner organizations that have helped the Bridge Fund provide flexible financing to UNICEF, enabling it to accelerate the purchase and delivery of critical supplies, prevent the interruption of programmatic activity and optimize purchasing terms with cash up front.

Lenders* Our lenders provide fixed-rate, fixed-term loans that create a revolving fund to accelerate cash to UNICEF throughout the year.

Loans of $1,000,000 or above Anonymous (2) Merck & Co., Inc New Summit Investments Prudential Financial, Inc. St. Joseph Province TD Bank, N.A. Treehouse Investments, LLC

Fidelity Investments Charitable Gift Fund Futures Without Violence Hal and Nancy Kurkowski G. Barrie Landry Linda Spencer Murchison Nicole and Shahriar Shahida

Net-Worth Donors*

Mrs. Melba Gschneidner and the late Dr. Karl Gschneidner G. Barrie Landry Mr. Harry W. Lange Mariner Investment Group, LLC Ian Rosenfield and Susanne Caballero Luly and Maurice Samuels Mr. Jeffrey Urbina and Ms. Gaye Hill

Equity Contributions to the Bridge Fund are permanent grants that establish the foundation of our capital structure and provide collateral for our loan pool.

Sustaining Donors Anonymous (1) Mr. Andrew Beer and Ms. Eleanor Chai Mr. and Mrs. William Dietz, Jr. Mr. and Mrs. Steve Eaton Fidelity Charitable Trustees Philanthropy Fund Stefan Findel and Susan Cummings-Findel

Loans up to $1,000,000 Anonymous (3) Mary Louise and Bruce Cohen GPD Charitable Trust/John DeBlasio Mr. and Mrs. William Dietz, Jr. Embrey Family Foundation

* Listings as of June 30, 2018

Current Capitalization Our stakeholders have allowed us to grow our loan pool over time, while enabling us to maintain a conservative leverage ratio.

Net Assets

$13.45 million

2.9

Leverage Ratio

Loan Pool

$39.15 million

To learn more, please visit our website at unicefusa.org/bridgefund or contact: Edward G. Lloyd Chief Operating Officer and Chief Financial Officer elloyd@unicefusa.org 212-922-2557 Erin Egan Director, UNICEF USA Bridge Fund eegan@unicefusa.org 212-922-2571

$13.45 million in net assets provides a catalytic first-loss equity pool for investors (leverage ratio of 2.9) as a $39.15 million revolving loan pool multiplies the impact of this equity pool.

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