NC legislators seek to claw back $500 million from NCInnovation research nonprofit
A group of North Carolina lawmakers seeks to end the state’s relationship with NCInnovation, a new nonprofit awarded $500 million over the past two years to help UNC System researchers convert promising concepts into revenue-generating businesses.
Filed Feb. 18, the legislation titled “Reclaim State Assets from NCInnovation” would require the organization to return the two payments of $250 million it received in 2023 and 2024. NCInnovation has used this money to establish an endowment, from which interest revenue has been used to fund pilot projects ahead of a larger grant round.
“NCInnovation is a good concept, but should be funded by the private sector,” Rep. Harry Warren, a Republican and chair of the North Carolina House Oversight and Reform Committee, 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.”
Founded in 2020, NCInnovation aims to bridge the “valley of death” many university researchers face when attempting to commercialize ideas that may lack the immediate return on investment to attract private funders. By law, grant recipients must operate in North Carolina for at least five years.
While the nonprofit accepts grant proposals from any UNC System researchers, it emphasizes work being done outside the Triangle area. So far, NCInnovation has established seven regional hubs at Western Carolina University, UNC-Charlotte, North Carolina A&T, East Carolina University, Appalachian State University, Fayetteville State University, and the UNC-Wilmington. Pilot projects announced last spring included efforts to refine lithium, increase beehive production, and strengthen the power grid.
Unlike the current research funding debates at the federal level, the fight over NCInnovation’s future pits Republicans against Republicans. Last year, the GOP-controlled state Senate proposed giving the nonprofit a one-time payment of $1.425 billion while the Republican-led House and Democrat Gov. Roy Cooper each suggested allocating $50 million.
Lawmakers settled on $500 million, but the arguments over NCInnovation didn’t end. Last year, conservative businessman and political donor Art Pope, who serves on the NCInnovation board, requested the state audit the nonprofit’s financials. And in August, Rep. Warren’s oversight committee questioned NCInnovation CEO Bennet Waters about why the money was needed.
“An innovation arms race has broken out across the United States,” Waters said at the hearing. “This underpins some of the basic need for what NCInnovation can be.”
In a statement Tuesday, Donald Bryson, CEO of the conservative think tank John Locke Foundation and a critic of NCInnovation receiving any public funding, said the state reclaiming the $500 million would be “a prudent step toward responsible governance and ensuring taxpayer dollars are directed where they are needed most.”
New budget priorities?
Five other Republican House members joined this week as sponsors of the new bill. Warren argued the state should prioritize the recovery effort from Hurricane Helene and older storms in Eastern North Carolina over the research nonprofit.
“North Carolina is confronted with challenges that were unforeseen when the arrangement with NC Innovation was made,” he said.
In an email Tuesday, NCInnovation spokesperson Pat Ryan said the decision to fund the organization remains with state lawmakers.
He highlighted that NCInnovation has so far awarded $5.2 million for UNC System research “that has real-life commercial and strategic applications, including PFAS removal, lithium refining and power grid resiliency.”
For the next grant round, Ryan said more than 150 researchers have submitted requests representing $90 million in potential funds.
“NCInnovation will of course continue its work on its core mission as mandated by state lawmakers in the 2023-25 budget,” he said. “And the organization remains committed to working with the General Assembly.”
The ongoing NCInnovation debate comes as the process of writing the next budget has begun. A joint forecast released Friday by the Legislative Fiscal Research Division and Office of State Budget and Management anticipated an extra $544 million in revenue before the new fiscal year begins July 1, which is 1.6% more than anticipated.
However, the forecast predicted “negligible growth in FY 2025-26 and a decline in FY 2026-27.”
While Senate Leader Phil Berger, a Republican, saw “good news” in the forecast, Democratic Gov. Josh Stein warned it augured a looming “fiscal cliff.”
This story was originally published February 19, 2025 at 1:26 PM.
