BlackRock created a new charitable entity — the BlackRock Foundation — to expand the firm's social impact mission to create a more inclusive and sustainable global economy.
BlackRock contributed a total of $589 million Monday to the new foundation and the firm’s existing charitable fund through the transfer of 15.6 million shares of PennyMac Financial Services, the remaining 20% stake BlackRock held in the U.S. residential home-mortgage lender, confirmed Melissa Garville, a BlackRock spokeswoman.
"The contribution we're making — in line with our purpose as a firm — will support our commitment to creating greater financial well-being and advancing sustainability," said Laurence D. Fink, BlackRock's chairman and CEO, in a news release Thursday.
Mr. Fink said BlackRock's internal social impact team will work to strategically deploy the assets of the new foundation with "partners and programs aligned with this mission, helping catalyze new and innovative ideas that support social and economic progress for more people around the world."
BlackRock originally invested $34 million in PennyMac in 2008. After PennyMac's 2013 initial public offering, BlackRock created the BlackRock Charitable Fund and contributed 6.1 million PennyMac shares valued at $125 million to the fund.
The current sizes of the BlackRock philanthropic funds could not be learned. Both BlackRock philanthropic funds are based in New York.
Mr. Fink said in the news release that the success of BlackRock's 12-year partnership with PennyMac "now affords us the opportunity to enhance our contribution to society in the many markets where we operate around the world."
To date, issues supported by the BlackRock Charitable Fund include addressing financial instability; job training and employment; aid for refugees; and increasing the income of small-holding farmers in rural Africa through a tree-planting program, according to the release.
BlackRock's investment in PennyMac was from corporate assets.
BlackRock’s contribution to its two charitable funds will result in an operating expense of $589 million, which is expected to be offset by a $125 million non-cash, non-operating pretax financial gain on the contributed shares and a tax benefit of about $241 million, the release said.
The impact of the PennyMac share transaction will be excluded from BlackRock's "as-adjusted" results in the firm's first-quarter 2020 earnings report.
BlackRock managed a total of $7.43 trillion as of Dec. 31.