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New Hanover Endowment Taps BlackRock As Its Investment Manager

By Johanna F. Still, posted Oct 26, 2022
The New Hanover Community Endowment has partnered with investment firm BlackRock to manage its financial portfolio, created by last year’s sale of New Hanover Regional Medical Center to Novant Health. 

As one of the largest legacy health foundations in the nation, the New Hanover Community Endowment is tasked with growing its value over time, which started at about $1.25 billion. Including the settled escrow, the endowment’s balance was $1.29 billion last November. Recent turbulent economic conditions have caused the fund to lose about 10% of its value – down to $1.1 billion, according to investment officials.

Jeffrey Saef, managing director at New York-based BlackRock, said with the stock and bond markets respectively down 20% and 17%, the New Hanover Community Endowment's dip is not surprising. “They've lost a little bit of money but nothing close to their peers,” Saef said. “It’s been well managed and very conservatively managed.” 

While BlackRock does not disclose its specific underlying investment strategies, Saef said the firm would protect the endowment’s value by diversifying its investments across public and private markets. BlackRock's nonprofit clients with less reliance on public markets performed relatively better than their counterparts, according to Saef.

“The more things you could do that were not connected to the overall stock and bond market, those clients that embraced more of those alternative strategies, or perhaps less liquid strategies – private markets, private equity, private credit – are certainly faring a bit better than those that were all in just the public markets,” he said. 

New Hanover Community Endowment CEO and President William Buster said the organization interviewed about seven firms in the search for an investment manager, and BlackRock “rose to the top.” 

“Even a lot of other organizations use some of [BlackRock’s] software to do some of their own work,” Buster said. “So BlackRock is really the leader in this space.”

The New Hanover Community Endowment will join BlackRock’s nonprofit subset (including nonprofits, endowments, foundations and health care entities), which has a total asset size of over $100 billion among over 400 clients, according to Saef. 

Within this subset, Saef said clients subscribing to BlackRock’s whole portfolio solution (wherein the firm manages a client’s entire fund rather than just a portion of it) have assets totaling $15 billion. “We’re incredibly honored to have been selected” by the New Hanover Community Endowment, Saef said. “It's a very meaningful relationship for BlackRock.”

BlackRock’s whole portfolio management clientele has grown recently, Saef said, prompted by volatile economic markets in recent years. Lately, it’s been difficult to protect client assets, he said. BlackRock will employ a “best-in-class approach” to selecting managers, Saef said, including third-party asset managers, depending on the asset class. “We call it an open architecture … best-of-breed approach to building the asset allocation and the manager lineup,” he said. 

As a charitable nonprofit, each year, the New Hanover Community Endowment must give away a portion of its assets; bylaws task the group with distributing no more than 4% of its market value annually. 

The fund’s recent losses will not interrupt plans to disperse funding in its inaugural grant cycle, according to Buster. Endowment officials are in the process of reviewing the 293 proposals the fund received last month, he said. 

The endowment has a goal to disperse $10 million in its first cycle, and grant recipients will be notified of their award on Dec. 1, officials said.

Earlier this month, Buster announced the hiring of the endowment's third and fourth staff members, Lakesha McDay, vice president of programs and operations, and Joel Beeson, chief financial officer. The endowment’s first employee, executive assistant Alison Cheng, remains on board. 

By the end of 2023, Buster said he hopes to have a staff of 10 total. While the group is still looking for permanent office space, it will continue to operate out of coworking space at Common Desk.
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