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With $1.25B On The Way, Foundation Funded By NHRMC Sale Begins Forming

By Scott Nunn, posted Nov 20, 2020

When the possibility of selling New Hanover Regional Medical Center was first announced, leaders said the proceeds could transform the community. A year and a half later, that possibility is now a reality, with Winston-Salem-based Novant Health, a private, nonprofit system, on the verge of taking over county-owned NHRMC.

If the deal passes regulatory scrutiny, it is expected to close in early 2021. When it does, about $1.25 billion -- the bulk of the cash proceeds -- will go into a private endowment meant to make that community transformation happen. As officials wait for the transaction to be finalized (think of it as a home closing on steroids), the vehicle that will drive the transformation is already revving its engine.

Although it’s waiting for the rest of its members to be named, New Hanover Community Endowment Inc. is up and running. The initial appointees are working on administrative tasks for the newly formed organization, which, overnight, will become one of the largest charitable funds in North Carolina. (The $3.8 billion Duke Endowment is the largest).

Five of the board’s 11 members were appointed by the New Hanover County Commissioners as part of the Oct. 5 vote approving the sale. The remaining six will be appointed by a new 17-member board of managers that will oversee NHRMC under Novant’s ownership. (Most of its members were appointed by the current NHRMC board of trustees).

Although the board of managers will not have oversight of NHRMC until the sale is final, the purchase agreement authorized it to convene prior to closing specifically to make its appointments to the foundation, according to Jessica Loeper, chief communications officer for New Hanover County. It is not clear yet when the appointments will be made.

Hannah Gage, along with Spence Broadhurst, Virginia Adams, Stedman Stevens and Shannon Winslow, is one of the foundation board members already appointed.

“Until the full group is constituted, the initial five of us are only doing the absolute minimum, things that required signatures and filings, etc., and were time sensitive,” Gage said last week. “Everything else has been delayed until we have the full group.”

Gage, Broadhurst and Adams were members of the Partnership Advisory Group (PAG), the special committee that was formed to explore options for NHRMC’s future and make a recommendation to the county commissioners and hospital board of trustees. Broadhurst, a former Wilmington mayor, is serving as chair of the foundation for now. 

“The impact (the foundation will have) on our community is just remarkable – health care, education, maybe law enforcement, housing, the opioid crisis,” Broadhurst said recently.

In an attempt to depoliticize the foundation, it was formed as a private charitable organization “exclusively for charitable, scientific or educational purposes … including supporting public health needs and social welfare projects in New Hanover County,” according to articles of incorporation filed Oct. 6 with the N.C. Secretary of State. The status also gives the foundation investment options that state regulations prohibit organizations linked closer to public entities to choose.

As a private, nonprofit organization, the foundation will not be subject to public-records laws. (The same will be true for NHRMC once it is owned by Novant). But Broadhurst has been emphatic that, even if not required by law, the foundation’s board intends to be transparent and open to the public.

The amount of funds distributed annually is limited to no more than 4% of the endowment's fair-market value.

As it worked to get the foundation up and running, the board was missing more than just some of its members. Although the $1.25 billion was in the pipeline, the endowment had an empty bank account. To bridge the gap, the county commissioners recently approved a $100,000 loan to the foundation to cover expenses as it waits for the closing.

In addition to administrative work, Gage said the board wants to ensure strong governance principles are in place. Although the resolution authorizing the sale created endowment bylaws, the full board will need to adopt specific guidelines in areas such as the grants process and staffing, Gage said, adding that it will be important to get “the pillars of the foundation in place before we go hiring anybody.” 

“This group will have to get to know each other, and we'll sort through a lot of things,” she said. “And you know, it's very, very different from joining a foundation board that's already got everything running.”

While the size and potential impact of the endowment are unprecedented here, Gage, who has served on many boards including two terms as chair of the UNC System Board of Governors, said good governance is fundamental to success, regardless of the size or mission.

“Someone once said to me, and I thought it was really good advice, that at the end of the day, if you're putting in really strong fundamentals, it's not different for a foundation with $1 million and one with $1 billion,” Gage said.

“Protecting the public's money, [avoiding] conflicts of interest, they shouldn't change at all, no matter the size of your organization.”

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