NHCE’s first grant cycle is complete. Now things get interesting, complicated, and challenging
Late last year, the New Hanover County Community Endowment distributed roughly $9 million dollars in grants. Now, CEO William Buster is looking ahead to bigger things, and some bigger challenges, including the persistent, thorny issue of the endowment’s focus on New Hanover County, to the exclusion of its neighbors.
When William Buster was hired as the first CEO and President of the New Hanover Community Endowment, the board told him they wanted to do their first round of grantmaking before the end of the year — no easy feat, since Buster had to build a staff, develop grant criteria, and figure out which of the county’s hundreds and hundreds of nonprofits could handle an unprecedented influx of funding.
“I do think given where the organization started with the board, and the selection of them, and the selection of me, and them telling me on March 1, they wanted to get money out this year — from that perspective, I think we did well, but we have a long way to go. A long way to go,” Buster told WHQR.
Buster, a self-described perfectionist, acknowledgesthe first round of grantswasn’t flawless. For one example, the process didn’t fully involve the Community Advisory Council (CAC) — designed to give the endowment a more realistic sense of what’s actually going on with tough issues — the way Buster had intended; while the endowment’s bylaws don’t allow the CAC to directly make decisions on, he hopes their role will evolve in future grantmaking rounds.
The endowment also went through its inaugural grant cycle without a finalized strategic plan — perhaps as a result, the grants weren’t as focused as some would have liked.
And the endowment still needs to staff up, meaning board members played more of a role in the actual grant decisions than they had intended to.
All that said, Buster said it was good to see the endowment get resources into the community; the endowment funded about 100 of the more than 300 applications it received.
Some of the applications that weren’t accepted just “didn’t line up with what we wanted to do,” Buster said, adding, “others were just poorly written.”
But there’s hope for future grant rounds for organizations that didn’t get funded this time around.
“For me, those are the ones that I really am excited to talk to. It's like, okay, so it's not about ‘No,’ it's about ‘not yet.’ So let's talk about how you get this better,” Buster said.
Why some grant applications were successful and others weren’t is probably a topic of intense discussion in the boardrooms and c-suites of many nonprofits.
Asked if he’d make documentation, like grant applications, public, Buster said he hadn’t decided yet. For those who didn’t receive funding, he said he’s leaning towards leaving that up to the individual organizations and not posting them online.
But for successful grant recipients, Buster said he’d like the endowment’s website to feature “best examples” of applications — so other organizations can see what works.
What level of transparency the endowment provides is, ultimately, up to Buster and his board, because when New Hanover County commissioners approved the endowment structure, they deliberately reduced transparency by avoiding a public setup like the Golden LEAF Foundation – which is in the same neighborhood, endowment-wise, as NHCE – the organization that manages a portion of the state’s 1998 settlement with cigarette companies. Instead, they went with a private foundation structure, which isn’t covered by open meetings and public records laws.
Emergency grant to help displaced housing authority families
There was one grant that stood apart from the rest of the $9 million disbursement in December – a $335,500 grant to the Catholic Charities of the Diocese of Raleigh, which will work with the New Hanover Disaster Coalition and the Raleigh-based The Green Chair Project to provide furniture for dozens of families displaced from the Wilmington Housing Authority.
Buster said, even before being hired by NHCE, he’d followed reporting on the displaced families — the result of poor oversight and disastrous mismanagement of mold largely dating back to Hurricane Florence in 2018 — and wanted to do something about it when he took the job.
The Catholic Charities also received $197,500 through the regular grant process — but the furniture grant was truly an ‘emergency,’ Buster said. That’s why it didn’t go through the same process as the rest of the grants. Buster said he originally considered directing funding to directly assist with mold remediation — but that WHA’s new director Tyrone Garrett, then on the job about a month, said that wasn’t necessary.
“So then I kept asking around, ‘so what else can we do, we have to be able to do something, how can I help?’ And so this opportunity was brought to me, it's like, there's a great organization that doesn't give people the leftovers,” Buster said, referring to second-hand furniture that has been donated by other organization.
WHQR has heard some concerns about the grant, including the dispersal of so much funding — over $500,000 in total — to a religious organization, which may not have the same views on tolerance and acceptance as the endowment board.
“I've had that experience, too, when you find out that there is some discrimination, you do have to step back from that. But I didn't have any concerns, because I actually met with the leadership of the local folks [at the Catholic Charities’ Wilmington office]. And I felt like this was an opportunity to do something that was really time-bound. Very specific. Let's get this done,” Buster said.
Another concern was, with three nonprofits involved, was the grant money going directly to the people who needed it most — the displaced families?
Buster said the endowment started with the amount it wanted each family to receive and then worked from that to generate the grant amount. Some of the money will go to the administrative costs of the organizations involved, but the “bulk” of the money is for the families, Buster said.
The final concern speaks to a broader issue: the emergency grant sent money to two Raleigh organizations, was there no one more local who could handle the project?
“One of the things that I'm running into is the capacity of organizations to take on larger grants in this community. And so when you start to talk about who can take this grant, your number of organizations actually really gets smaller,” Buster said.
Capacity is essentially shorthand for whether a nonprofit has the staff, resources, and experience to complete a project effectively and efficiently. Many nonprofits rely on volunteers and part-time employees, with limited core staff and sometimes limited physical space — so even with an influx of funding it can be difficult to ramp up operations.
Too much money?
While roughly two hundred organizations didn’t receive grants, the issue wasn’t a lack of funding. In fact, outgoing Board Vice Chair Hannah Gage recently said the endowment could have put a lot more money into the community — but there isn’t enough capacity to handle it.
The endowment is still transitioning from a public charity to a private foundation, and the IRS has given them a grace period to hit their legally required level of grantmaking. Still, within about five years, the endowment will be looking at giving away $40 million or more a year.
Without local organizations that can handle that kind of money, there’s actually a bizarre problem: too much money.
“Well, $40 million in one county of roughly 230,000 people is probably damn near impossible, just to be honest with you,” Buster said.
And, as evidenced by turning away two-thirds of the grant applicants, Buster doesn’t want to ‘throw money out the door’ just to say the money’s been dispersed. But, without the “right organizations” to absorb tens of millions of dollars, every year, it’s an issue.
Buster’s solution? Dream bigger. This first round of grants was capped at $250,000 dollars per application — but future grants could target bigger problems. Buster imagines ‘Moonshot’ project, taking aim at issues like childhood development and affordable housing.
“I'm not looking to do $100,000 grants, I really want to do some substantive change. We'll always do, I think, responsive grantmaking, where an organization has an idea, and they come to us. But what we have to do is begin to say, ‘so what truly are some of the wildest dreams that we have, if we had the opportunity that no other community has?’”
On the issue of childhood development, Buster sees the potential for transformational change. That’s a ubiquitous buzzword in the philanthropic world, but Buster thinks the endowment has the resources and the connections to actually make something radical happen – providing multiple layers of support for every child born in New Hanover County from healthcare, to education, to helping parents with the real-world raising of their children — and accessing the economic opportunities needed to actually make that all feasible.
While Buster, and the endowment, are uniquely positioned to tackle the multifaceted issue of early childhood development it’s hard to see how many of those efforts would be fully successful while thousands of mothers are struggling to afford a place to live. Which is another way of saying, one of the things the endowment hears about, a lot, is the affordable housing crisis.
Affordable housing: challenges and opportunities
The housing market is currently stuck in a supply-and-demand feedback loop that is pushing rents up across the board, and the lack of higher-end housing is pushing more affluent renters down-market; that pressure, known as filtering, is increasing demand for affordable housing as people who can afford more expensive units are competing with people who would be cost-burdened for those very same houses and apartments. The down-market pressure ultimately ends with more people pushed into subsidized housing – and onto the street.
And corporate landlords aren’t innocent bystanders in this economy. As anin-depth ProPublica report last year showed, landlords use an algorithmic software known as Yieldstar to push tenants as hard as possible with rent increases – which helps set the market rate, even for landlords who don’t use the software, a big part of why renters have seen housing costs increase over 60% in the Wilmington area since 2017.
Empty units were once anathema to landlords, and conventional wisdom held it was unwise to raise rents so high that some tenants had to move out. But this newer approach accepts that many will be priced out of housing — while the bottom line can still benefit as long as enough remaining renters are paying considerably higher rents.
And in a political reality where state legislators are unlikely to implement rent control or restrain rental markets, the problem of affordable housing is going to be expensive to address.
Take for example the Starway Village project being built on the site of the former flea market on Carolina Beach Road. The project will provide 278 affordable units.
The tax credit project got a boost from local governments, with $1.8 million from New Hanover County and $3.5 million from the City of Wilmington.
But those investments were made with federal Covid-relief money – funding from Congress’ response to what was hopefully a once-in-a-generation disaster. It’s not the kind of money the county or city will have on a recurring basis. After scrapping a proposed $50 million housing bond, the county offered a more-modest $3-million annual investment over three years.
Nor was that $5.3 million enough to make Starway financially workable. It ultimately took an additional $9 million from the North Carolina Office of Recovery and Resiliency. Again, this was disaster-based money from upper echelons of government – NCORR was set up to address the ravages of Hurricane Florence and other natural disasters by Governor Roy Cooper.
So, considering it took over $14 million to bring less than 300 affordable units online, and that New Hanover County is facing a shortfall of well over 10,000 affordable housing units — suddenly, too much money doesn’t quite look like a problem.
NHCE board members have said in the past that the endowment is “not a funding mechanism,” and Buster isn’t suggesting the endowment is ready to take on the issues single-handedly.
But at the same time, he’s willing to be a bit more forward. While board members like inaugural chair Spence Broadhurst and vice-chair Hannah Gage were more demure, taking a supportive role for other organizations, Buster said he’s ready to lead.
“I have no problem being the organization that catalyzes some of these conversations. Again, like I said, we have a long way to go before we're able to do some of that [...] But being an innovator, being a pusher — I would always say to my team, you’ve got to answer this question, ‘Are we leading? Are we also leveraging our name? Or are we just partnering?’ I'm saying that we're going to ask ourselves that question. And my opinion at this point is that we probably will be leading a lot more than we are just partnering with folks,” Buster said.
But there’s another way the endowment could get more money into the community. The Endowment could expand its horizons — beyond New Hanover County.
The $1.25 billion dollar endowment was created from the lion’s share of the sale proceeds of New Hanover Regional Medical Center — and the bylaws of the endowment, approved by county commissioners, constrain funding to organizations working inside New Hanover County.
That’s despite the fact that over two-thirds of the revenue that powered the hospital’s growth into a regional institution came from the poorer, more rural area around New Hanover — a disparity that has sat poorly with residents and elected officials in places like Bladen, Brunswick, Columbus, and Pender Counties.
Buster acknowledges it’s a legitimate issue.
“If I lived in Pender County, I would be mad as hell. If my family … if my grandmother and my you know, my mom, and all my sisters, and everybody gave birth in that hospital and everybody, grandma had to go there, and we shared, and I and I saw the numbers and the number was 68% of the revenue came from outside of the county. It's a sincere question that any rational person would have," Buster said.
It’s not just an issue of fairness or equity, either — Buster also takes a pragmatic approach, saying many of the ‘moonshot’ problems he wants to address freely cross county borders — and can’t be solved without a regional approach.
The inequity of locking the endowment’s funding inside New Hanover County isn’t a new problem — and the endowment board has acknowledged the regional nature of many of the key issues they want to tackle in the past.
In an October 2021 interview with WHQR, then vice-chair Gage said, “I think that we're not blind to the fact that what happens here, you know, overflows and the other thing is, I think five years from now, we don't want this to be the perfect place to live surrounded by nothing but poverty and need — that doesn’t help anybody.”
Gage also said at the time there would be an “evolution of thought” on the endowment’s boundaries.
But will the endowment actually change? Buster thinks it’s possible.
“Right now, yes, we are bound by our bylaws. But we wrote them. We can write some more. Are we poised to do that yet? No. But I do stand by my point, which is, nothing will be solved in this community, unless it's a regional conversation,” Buster said. “So I believe that there are folks in these other counties who are willing to have the conversation.
Disclosure notice: WHQR applied for a grant during NHCE's first funding cycle, but did not receive one.