RALEIGH — A bill filed in the North Carolina House seeks to reclaim money allocated to a nonprofit for accelerating marketplace commercialization of state university research and development projects.
In 2023, the General Assembly allocated $500 million in two equal tranches of funding to NCInnovation (NCI), the 501(c)3 nonprofit providing acceleration grants to projects at universities and colleges.
Of the $500 million, $140 million was authorized for direct spending by NCI, but the group instead invested the principal amount, accumulating around $20 million in interest. NCI has used around $5.2 million of the interest funds for its first round of eight grants.
NCI has also raised $25 million in outside funding through various companies and businesses. That funding is being used for daily overhead, such as salaries and operating expenses.
House Bill 154, filed by Rep. Harry Warren (R-Rowan), would take back the $500 million as well as the remaining $15 million in interest. The outside funding is not included.
Warren told North State Journal the group should be privately funded.
“As I stated in the House Oversight and Reform Committee meeting, NC Innovation is a good concept, but should be funded by the private sector,” Warren said in an email. “Conditions in the economy and within the state can change suddenly and dramatically. It is critical to have the financial fluidity to address these concerns quickly as they arise.”
When asked why the funds were being taken back a little over a year and a half after it was appropriated, Warren said the bill “reflects the opinion of the bill sponsors” and “the legislature will express its position as the bill moves through the committee process.”
“North Carolina is confronted with challenges that were unforeseen when the arrangement with NC Innovation was made,” wrote Warren. “Considering the devastation created by hurricane Helene in our western counties and the mismanagement of the eastern coastal recoveries by NCORR under the Cooper administration, it is prudent to reconsider the relationship and recall the funding to be applied to the priorities of the citizens in the affected areas.”
NCI, through spokesperson Pat Ryan, issued a statement to North State Journal on the proposed bill.
“If and how policymakers wish for NCInnovation to support North Carolina’s worldclass applied research is and always has been entirely up to policymakers,” Ryan said. “NCInnovation has dedicated $5.2 million toward university research that has real-life commercial and strategic applications, including PFAS removal, lithium refining, and power grid resiliency.”
Ryan said more than 150 UNC System researchers have submitted applications totaling $90 million for NCInnovation’s next round of research grants.
“NCInnovation will of course continue its work on its core mission as mandated by state lawmakers in the 2023-25 budget, and the organization remains committed to working the General Assembly,” said Ryan.
Deanna Ballard, an NCI Board member and former state senator, told North State Journal she’d like to see NCI be given more time to work.
“You can’t change everything overnight and I just think there’s a lot of promising work ahead, and I think you’ve got to give it time for it to flush itself out,” said Ballard, who is chairing NCI’s programs committee.
“I think what’s happening at NCInnovation is really just going to make a huge impact … (in) the economic development space in North Carolina; the commercialization,” Ballard said. “If North Carolina wants to be even more competitive than it is, I think we need NCInnovation and our research projects.”
Ballard said she thought the bill was “maybe a little reactionary, perhaps right now,” and that she’d like policymakers to continue to work with NCI on what the group can accomplish.
John Locke Foundation (JLF) CEO Donald Bryson issued a statement about Warren’s bill, claiming NCI has “public oversight at every turn, has raised serious concerns about transparency and fiscal responsibility.”
“House Bill 154 seeks to address these concerns by ensuring that state funds are properly accounted for and returned to the General Fund,” Bryson said. “At the John Locke Foundation, we believe taxpayers deserve clear and accountable stewardship of public resources, for constitutional core government services — venture capital is not among them.”
Warren’s statements on the bill are similar to remarks he made at the end of an oversight hearing examining NCI’s operations that he co-chaired last July. NCI CEO J. Bennett Waters was questioned by lawmakers for nearly three hours during the hearing about the group’s operations.
“Some have suggested that public funding of public university applied research is tantamount to corporate welfare, and I’d like to address that claim head-on,” Waters told lawmakers during the 2024 hearing. “NCInnovation’s research grants only go to public universities that support research that has actual real-world impact. That is exactly what universities should be focusing on.”
Waters was also asked indirectly about an audit complaint filed over NCI’s accounting practices by NCI Board member Art Pope, the chairman of the John William Pope Foundation. He launched JLF in 1990, and Carolina Journal, which has run stories critical of NCI, is supported and operated by JLF.
