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As Harper Peterson gazed across the river toward the city he once led, he saw inequities in the Wilmington skyline.
Standing in Battleship Park under a drizzle of rain, Peterson pointed out publicly funded, glitzy development projects that city officials prioritized over ensuring the poorest neighborhoods had functioning parks—a blindness he says continues to plague decision-making. He says he’s not a pessimist, but rather an optimist for what could be.
“There’s no political will,” he said, swatting at dime-size mosquitoes. “It’s a free-market, entrepreneur-driven, private-sector community, and they call the shots.”
Peterson isn’t a stranger to lobbing sharp critiques. A one-time mayor and former state senator, the Democratic organizer earlier this year corralled a new coalition together to stand up to some of the most powerful entities in the state: Attorney General Josh Stein and the New Hanover Community Endowment, the state’s largest philanthropic fund per capita. As attorney general, Stein is seen as the only stopgap—other than the Internal Revenue Service—to keep the endowment in check.
Peterson’s group, Heal Our People’s Endowment, has collected nearly 1,240 signatures on a petition urging Stein to intervene in the endowment, which the group believes has suffered from a political takeover.
But Stein has been largely absent on the issue. He’s been busy running in one of the most expensive and—before the latest scandal erupted around his opponent—competitive gubernatorial races in the country.
While Stein has frequented the Wilmington region this year for private fundraisers, local critics, many from within his own party, say he has ignored issues voters in the area care most about, like the state of the hospital and what’s become of the endowment that controls the sale proceeds.
Experts say Stein’s legal authority is limited. Still, Peterson and his group argue the attorney general does have more avenues at his disposal than he is using. They say Stein has failed to fulfill his legal obligations in New Hanover County and now are studying taking legal action against the endowment on their own. Stein has said he imposed conditions in the hospital sale using the fullest extent of the law.
This is the second time in recent years that Peterson finds himself publicly pressing Stein to step it up. As a state senator, Peterson filed a complaint with Stein over the initial sale of New Hanover Regional Medical Center in 2020, alleging the deal was corrupt and prebaked. Stein never responded.
This time, Peterson received an acknowledgment letter in August from the attorney general’s office’s “constituent services,” but has yet to hear from the man himself.
A New Funding Frontier
When New Hanover County sold its hospital four years ago, it created the largest transfer of public wealth the region has ever seen. Commissioners chose to shift the bulk of the sale proceeds from the sale of the regional medical center to Novant Health into a new private endowment.
By 2028, the nonprofit New Hanover Community Endowment must give away 5 percent of its balance annually to comply with tax laws that govern charitable organizations. With a balance that’s grown to about $1.4 billion, that will amount to roughly $70 million a year, a dizzying figure for the local nonprofit sector to swallow.
The endowment must prepare to ramp up for this level of spending—and nonprofit leaders are eager to receive help in scaling their administrative abilities to be ready for it. In its first grant cycle in 2022, the endowment awarded $9 million to 110 groups, mostly a hodgepodge assortment to get dollars out the door and test the waters.
Last year, it gave away $25 million, most of which went to big, established institutions like Cape Fear Community College and UNC-Wilmington for a nurse training pipeline. So far this year the endowment has invested nearly $18 million in various projects (including previous obligations from last year) and just announced its first long-awaited affordable housing grant package.
Because they sold a county-owned hospital, commissioners kept the endowment’s spending confined within county borders—a controversial parameter that continues to sting rural neighbors who helped generate the hospital’s value over decades. The guardrail means New Hanover County residents stand to benefit from among the most concentrated philanthropic health legacy funds in the nation.
“I would venture to say New Hanover is among the largest per capita,” said Kate Treanor, a senior program director and strategic adviser at the nonprofit Grantmakers in Health. Treanor helped write a census of similar endowments created by health care consolidations across the country in 2021. At the time, just nine health conversion endowments in the U.S. (not including New Hanover, which was then new) exceeded $1 billion in assets.
Asheville’s Dogwood Health Trust, created from the sale of Mission Health hospitals in 2019, had a balance of around $2 billion as of 2021 and serves an 18-county region of about 1 million people. New Hanover County, home to about 239,000, has per capita assets of about $5,860 compared to Dogwood’s roughly $2,000.
Sometimes called conversion or health legacy foundations, these organizations have emerged in increasing numbers as health care institutions have consolidated across the country. Many are experimenting in real-time with strategies to become as effective grantmakers as possible, with limited worn-in paths to success.
In this emerging field, legal safeguards are generally limited in overseeing these foundations and their creation. “Our experience is that government’s role in private philanthropy is quite limited,” said Bob Reid, a philanthropy researcher. “Governmental intervention typically occurs in the rare instances of bad behavior such as self-dealing … Unless there is alleged wrongdoing, I am not surprised your [attorney general] is standing back.”
Chief among Heal Our People’s Endowment’s complaints is that the New Hanover Community Endowment Board of Directors is becoming whiter and more conservative.
“It’s more of a country club,” said Sonya Patrick, chair of the southeastern U.S. region of the National Black Leadership Caucus. “And that’s scary.”
Heal Our People’s Endowment has made some drastic requests, like asking Stein to overhaul the entire endowment structure to make a new one. But it has also pleaded for simple things, like hosting a public hearing to gauge the community’s concerns.
Patrick hesitated to outright criticize Stein but said she previously had full confidence he would intervene. “He’s come down here for quite a few fundraisers. You can’t camouflage that part,” she said. “He’s a politician. Politicians do what politicians do.”
In negotiating and approving the hospital sale in 2021, Stein’s office pushed the county to amend the endowment’s bylaws and require board members to reflect racial, gender, ethnic, educational attainment, economic prosperity, and social mobility diversity. Noting the inaugural 11-member board was disproportionately male and lacked Hispanic representation, Stein required the endowment to add two members it would internally appoint, and the board proceeded to appoint two women of color. But since his initial negotiations, Stein has taken a back seat.
“He’s a politician. Politicians do what politicians do.”
Sonya Patrick, National Black Leadership Caucus
Derrick Anderson, a Heal Our People’s Endowment organizer and former radio host, had a more pointed critique. He believes Stein hesitated to be more assertive with the hospital sale and the endowment given the amount of money flowing his way out of New Hanover County.
“There are a lot of wealthy people in the county,” Anderson said. “And they write checks.”
Indeed, the county has been among the most bountiful for Stein’s gubernatorial campaign. New Hanover County individual donors have handed Stein more than $732,000 since last year, with 190 donors giving more than $1,000, according to the latest state records.
Some of Stein’s largest local donors include endowment Chair Bill Cameron, who has given $12,000 this campaign. Spence Broadhurst, another endowment board member, has donated $12,200, and former endowment member Hannah Dawson Gage has given Stein $11,400.
“A board member’s support of a political candidate does not have anything to do with his or her role in endowment business,” Cameron said in a statement, adding members have not met with Stein.
Anderson remains skeptical of all things involving the endowment. “They basically turned the thing into a white good ol’ boy slush fund,” he said.
An independent voter, Anderson would have preferred Republican State Treasurer Dale Folwell, who lost in the primary race to Robinson. Folwell was a vocal presence against the hospital sale and has critiqued what he saw as Stein’s lax handling of the transaction.
During the hospital sale, Anderson remembers having a phone call with Stein and other members of Save Our Hospital, a group he was involved with that opposed the deal. (The group unsuccessfully sued the county to block the sale in 2020; its old Facebook page was revived this spring into Heal Our People’s Endowment, though each are separate nonprofits.) “We asked him to do what he did with Mission Health in Asheville,” Anderson said. “Josh Stein did not give this the same scrutiny.”
Stein initially agreed to an interview with The Assembly, but canceled the day prior, citing the need to attend a campaign rally for Vice President Kamala Harris. The attorney general didn’t agree to reschedule and did not respond to specific written questions, but provided a statement that generally addressed the topics at hand.
One of the unique concerns posed by the New Hanover transaction was “ensuring that the proceeds of the sale served all of New Hanover County’s residents,” Stein said. That’s why he required the endowment board to engage with the public and include members who reflect the county’s population.
“I will continue to monitor the composition of the endowment board and welcome input from the community,” he said.
Tough in Asheville, Light in Wilmington
Stein’s oversight of the New Hanover hospital sale often draws comparison to HCA Healthcare’s 2019 purchase of Mission Health. Generally, Stein was more aggressive in that deal and has had a much more active presence in the fallout, compared to his light-touch approach in New Hanover.
In Asheville, Stein required the establishment of an Independent Monitor, an outside group tasked with studying whether HCA Healthcare lives up to requirements it agreed to.
That monitoring group found in July that HCA Healthcare was seemingly non-compliant with its purchase agreement and some services had degraded. Separately, Stein is suing HCA Healthcare, alleging it hasn’t kept its promises; the hospital says it is in compliance and is fighting the suit. Nurses have organized, rallied publicly, and recently authorized a strike.
While the regional medical center has attracted its own share of negative reviews under Novant’s ownership, the dissatisfaction hasn’t quite reached levels seen in Asheville.
Even so, a retired physician who says he had a near-death experience at New Hanover created a nonprofit, the Five Star Project. It aims to bring attention to the hospital’s two-star rating and improve it.
Some groups wish Stein had gotten his hands dirtier in the New Hanover deal, but it’s not clear how much wiggle room he had.
Mark Hall, a law professor at Wake Forest University, said the difference in Stein’s approach boils down to the structure of the deals. Asheville’s was from a nonprofit to a for-profit, whereas Wilmington’s was a government to a nonprofit. “Those who say he should be doing more, or could have done more, I think are potentially wrong,” Hall said. “I don’t think the law allows him to do more than he has been doing.”
State laws governing the transfer of hospitals to for-profit entities are stronger, Hall said, giving Stein more leeway. In Asheville, “I think he pushed sort of the limits of what he could do,” Hall said.
As for policing the New Hanover endowment’s board makeup, Hall said Stein’s options are limited. “The county could have kept the money,” Hall said. “The fallback is it could have been entirely political.”
Six days after Heal Our People’s Endowment sent Stein a second letter in June, Stein sent county and Novant leaders a “reminder” letter. Stein’s letter wasn’t explicitly critical but cited the specific bylaws that leaders must follow when making appointments to the endowment. Republican Commissioner Dane Scalise at the time called Stein’s letter “political gamesmanship,” WHQR reported.
County leaders intentionally crafted the endowment as a private foundation in order to shield it from public disclosure rules that govern other public entities. They said this was to prevent politicization, an argument critics say seems ironic in hindsight, considering the board’s increasingly politicized appointment process.
Last year, the New Hanover County Board of Commissioners voted along party lines, 3-2, to remove two of their original endowment appointees whose terms were up for renewal. Against the recommendation of endowment chair Cameron, commissioners replaced Virginia Adams, a previous dean of the UNC-Wilmington School of Nursing, and Gage, a liberal former broadcast executive, with two conservative former members of the county board who had voted to sell the hospital, Woody White and Patricia Kusek.
“I will continue to monitor the composition of the endowment board and welcome input from the community.”
Josh Stein, attorney general
The switch meant the county had removed its lone Black appointee. Stein said he had “serious concerns” with the move but didn’t take any formal steps to address it.
Heal Our People’s Endowment argues there’s a conflict of interest because the buyer, Novant, maintains majority control over endowment appointments. Before approving the sale, the county considered giving itself the majority, but scaled its appointees back upon realizing it could have arguably made the new entity public.
Since the first appointee shakeup last year, the county made another party-line appointment to the endowment last month adding Bill Blair, a former Republican local politician, and Mary Lyons Rouse, a conservative private school administrator who the board appointed unanimously.
Today, all five county appointees are white and four are conservative. (New Hanover is one of the state’s whitest urban counties, but as a whole, the 13-member board is slightly less white than the countywide demographic composition, but remains disproportionately male, with just four female members).
All six of Novant Health’s endowment appointees are male. A spokesperson for Novant didn’t directly address why, but explained its appointees are nominated by its Coastal Region board’s nominating and governance committee. “They are tasked with identifying leaders with significant community involvement who can offer perspective and support on a variety of opportunities,” the spokesperson said.
Six of the 13-member endowment board are registered Republicans, three are registered Democrats, three are unaffiliated, and one appears to be unregistered. Nearly all have a record of making political donations.
The board recently hired former Republican Massachusetts lawmaker and judge Dan Winslow as the new CEO, replacing William Buster, an experienced philanthropist ousted earlier this year. Last week, three of the endowment’s nine staff members submitted letters of resignation ahead of Winslow’s arrival. In its CEO search, the board listed philanthropic experience as a preferred plus but not a requirement; Winslow has none.
“Dan brings a mix of experience and skills from his career as a lawyer, legislator, and nonprofit leader, making him the perfect choice to take the reins at the endowment,” Cameron said. Winslow most recently led the New England Legal Foundation, a libertarian-leaning nonprofit. He started Tuesday.
Democratic New Hanover County Commissioner Jonathan Barfield Jr., the county’s lone Black commissioner, who has voted against the recent party-line endowment appointments, said he’d like to see more diversity on the board. He said he has no regrets about voting in favor to sell the hospital or how the county designed the endowment.
The endowment board lacks vision, Barfield said, and unlike Buster, isn’t spending as much time immersed in the community. “You’ve got to build a relationship before you can do anything,” he said.
Private Public Money
The endowment is an insular organization. None of its board meetings are public, and the two public meetings it hosts each year were required by Stein. Its most recent public meeting, with assistance from PR firm Eckel & Vaughan, left many attendees annoyed, complaining it was vapid.
At least 10 people connected to the endowment—board members, staff, and county commissioners—either didn’t respond to or declined The Assembly’s interview requests.
Even its own Community Advisory Council, an outside committee Stein made the endowment create as a condition of his approval of the hospital sale, has reported feeling boxed out. In March, the council wrote a letter to the endowment saying its purpose wasn’t being fulfilled due to “a lack of substantive information sharing.”
Pete Nemmers, an original appointee to the 15-member committee, was initially excited. The council’s function is to serve as a go-between for the public and the endowment, but Nemmers quickly felt his time was being wasted.
“It took all of about 30 minutes of the first meeting to realize that this entire thing is just lip service,” he said. “The meetings are run by this like, super feel-good, bullshit mediary company. So already they’re spending this money to have some third-party crap come in and they’re like, mediating the meetings.”
Nemmers said he believes the only purpose of the council is to placate the community. “Because at the end of the day, who decides where the money goes, and who’s on the board?” he said. “Oh, it’s the same old freaking rich people that are on the board of everything in Wilmington and the county.”
The Community Advisory Council is made of a cross section of people who tend to have experience in the endowment’s four funding buckets—community safety, social and health equity, community development, and education. Nemmers said these folks should be the ones on the actual endowment board making decisions. “We need to burn the whole thing down and start over again.”
Cameron, the board chair, declined to be interviewed but responded to written questions. He emphasized the endowment is an apolitical organization. “Change takes time and I’m confident that we’re on the right track,” he said. “We are just getting started.”
Because it’s still early on, success stories from the board’s grantmaking—$77 million to date, including multi-year commitments already pledged for the years ahead—have yet to fully bloom. Tensions and expectations are high.
Many nonprofits are cautious to air any issues with the endowment in fear of ruining their chances at netting big grants. Nonprofit leaders have reported struggling to secure face-time with endowment leaders, but Cameron says the endowment’s network officers are working with the community every day.
“We’re having constant and ongoing conversations with our partners and local leaders,” he said.
Minority-run nonprofits have been especially reluctant to publicly complain. Patrick, the National Black Leadership Caucus leader, said Black and brown nonprofit leaders running small operations have felt sidelined so far. “We still haven’t healed from 1898,” she said, referencing the white supremacist insurrection in Wilmington. “It’s ingrained in the system here today.”
Patrick wishes Stein would require implicit bias and cultural competency training for all endowment board and staff members. “How can you help a group of people that have clearly been impacted racially and socially and politically and financially, if you don’t understand their perspective?” she said. “This endowment is an opportunity to bring some type of healing.”
County manager Chris Coudriet said the county’s dream was to create something that could go on forever. “The endowment will outlive every single person in our community today and will help solve problems that don’t even yet exist,” he said. “That was the vision. That is the vision. That is what will happen.”
More Teeth
Even though Stein signed off on the New Hanover hospital sale, it wasn’t as if he was cheering for it. In announcing his non-objection, Stein gave more weight to his limited authority to influence the deal than any positives that could have come from it.
“Community hospitals are being purchased and merged into large health care systems all across our state,” he said at the time. “I have real concerns about what this means for the future of health care in North Carolina.”
He then foreshadowed a legislative proposal that would get filed two years later, bipartisan Senate Bill 9. The 2023 bill called for expanding the attorney general’s authority over hospital acquisitions regardless of deal structures.
“The endowment will outlive every single person in our community today and will help solve problems that don’t even yet exist.”
Chris Coudriet, county manager
Among the criteria that could be brought before a judge if the attorney general objects to a deal is whether the acquisition would raise health care costs or if the local municipality or county opposed the deal. (Wilmington’s city council urged the county to slow down, but was ignored.)
The legislation would have also given the attorney general more input on foundations and required them to provide that office with annual financial reports.
“We have done a lot of research on how other states have handled these transactions, with the bill language drawn predominantly from [Republican-controlled] Tennessee that shows this doesn’t have to be a political football,” Stein told the Winston-Salem Journal last year.
An identical bill also was filed last spring in the House. The legislation, opposed by the health care industry, never budged.
“We know that hospital consolidation often leads to higher prices and worse care, but each hospital transaction also poses its own unique issues for the community the hospital serves,” Stein wrote in his statement to The Assembly. “In every hospital transaction we reviewed, my office sought to impose conditions that addressed those unique concerns to the fullest extent of my authority.”
As the days until the election tick by, hope that Stein will step in continues to wane.
But Peterson, the former senator, has always insisted Stein ought to prioritize the legal obligations of his current job, regardless of his sights on a higher office.
“He doesn’t have to come in with a sword,” Peterson said. “We need his assistance, and we think this falls within his responsibility and jurisdiction.”
Johanna F. Still is The Assembly‘s Wilmington editor. She previously covered economic development for Greater Wilmington Business Journal and was the assistant editor at Port City Daily. She can be reached at johanna@theassemblync.com.