Charitable procurement: How UNICEF USA finds the balance between cost savings and value-based buying

Andy Rhodes for Procurement Foundry

With a mission of fundraising, education, and advocacy for children’s rights to ensure that kids worldwide have the opportunity to reach their full potential, at UNICEF USA we have a clear vision of what we are doing and why we are doing it.

Unlike many private sector organizations that are of a similar size, UNICEF USA does not have an actual procurement department. Purchasing at this U.S.-based non-profit is part of our finance department, and as CIO, I work very closely with my counterparts to ensure that the technology investments we make deliver maximum value for the world’s most vulnerable children.

Based on my experience, the link between acquisition and outcome in the non-profit world is more direct than in the for-profit world. Additionally, in the private sector, impact-driven decision making is often based on trust rather than firsthand experience.  However, at UNICEF USA we can draw a direct line from the investments we make to the work we do and the outcomes we deliver for kids.

Delivering maximum value

While the percentage for every industry will be different, the operating margin efficiency in the private sector is generally less than what you might find in the non-profit world.

With UNICEF and non-profits generally, there is a higher performance bar because we want to see as much money as possible go directly to our various programs. At UNICEF, 89 percent of all funds raised are earmarked for our programs, meaning that just 11 percent is allocated toward covering our fundraising and administration costs.

Moreover, as a 501(c)(3) non-profit, there is greater public visibility on how we operate.  Our annual financials are publicly available and evaluated by independent ratings organizations who publish their analyses.

When working for the purpose of driving social good, value-based buying decisions are critical. However, when making value-based decisions, it’s critical that the quest to achieve maximum efficiency doesn’t create a starvation cycle. In other words, we can’t cut costs to the point that we can no longer operate and innovate effectively as an organization. The challenge is to continuously find a balance between our mission – to provide life-saving aid to help the world’s most vulnerable children – while maintaining our operational capabilities and ability to do so innovatively. It is within this context that mission and collaboration come into play.

Knowing the why AND how

Earlier I talked about the shorter and more direct link between actions and outcomes within a non-profit entity. It is a key factor because we can see the results of our efforts on a more immediate basis, and as such, it further bolsters our strong belief in what we are doing and why we are doing it.

In my experience, this clarity of purposeful outcome is not always prevalent in a private sector organization – especially a larger global enterprise – simply because the outcome or payoff is so far down the line. It doesn’t mean that what a procurement professional does in the private sector is not worthy of recognition. What it does mean is that the impact of their efforts may not be as readily apparent, as their focus is on the immediate task at hand. As a result, they know what they need to do and how to do it, but the end goal isn’t as clear as within a non-profit, for example.

In focusing on maximizing investments, communication and collaboration are integral to everything we do at UNICEF USA as a non-profit organization. I spend a great deal of time with my business partners to understand their work and the outcomes they want to achieve, and we constantly evaluate opportunities against goals.

That’s not to say that we all agree with one another all the time, because we don’t. However, our unified goal of achieving impact for children means that even though we may come from different points of view, all discussions lead to a shared outcome – delivering maximum value to the world’s children who need it most.

Now that is value-based buying at its best!