The future of NCInnovation, a state-endowed nonprofit tasked with turning university research into commercial ventures, faces fresh uncertainty as lawmakers escalate their demands for transparency.
On Tuesday, the Joint Legislative Commission on Governmental Operations sent a formal demand letter to NCInnovation’s board of directors. The letter, signed by House Gov Ops Investigative Counsel Wes Jones and Sumit Gupta, deputy general counsel for the speaker, orders the release of all documents related to an internal investigation.
The letter cites state law requiring NCInnovation to be fully transparent with legislators. In 2023, the state budget appropriated $500 million to establish the group, while also placing it under extensive reporting requirements. Initially Waters and NCI leadership requested $1.5 billion in taxpayer money, but in negotiations between the chambers, lawmakers dropped that figure to two tranches of $250 million.
“In conjunction with its sweeping grant of oversight authority in Section 143-728, Gov Ops is
authorized to access ‘any document or system of record held by a non-State entity receiving, directly or indirectly, public funds,'” the letter states.
Under the terms of the endowment in the state budget, the legislature has appointment power over eight of the organization’s 13 board-member positions as oversight.
“Given the unequivocal intent of the General Assembly to require complete transparency from NCInnovation and to subject it to legislative oversight and the broad powers of Gov Ops, NCInnovation is required to provide documents requested by Gov Ops staff,” the letter states.
According to the letter, NCInnovation’s outside counsel has so far refused to release the reports, citing attorney-client privilege and work product protections. But legislative attorneys argue the organization waived any privilege by discussing the reports during an Aug. 13 board meeting, and that the statutes governing NCInnovation override such claims.
“House Counsel rejects any theory that allows NCInnovation, devoid of any statutory authority, to carve out a Special Litigation Committee and retain outside attorneys for the purpose of shielding itself from legislative oversight,” the letter reads.
departure agreement for waters
In Monday’s NCI Board of Director’s meeting, the board went into closed session to discuss a personnel matter but returned to open session to pass a departure agreement for Waters. Art Pope and fellow board member Blannie Miller both opposed the agreement, saying it required further research into the tax and employment law implications.
“I certainly hope given that this is a compensation issue that it will be brought back, whatever agreement is reached, will be subject to approval of the full board,” Pope told board colleagues on Monday.
The letter sets a Sept. 15 deadline for NCInnovation to produce the documents and warns that a legislative subpoena will follow if the nonprofit does not comply.
Scrutiny grows as leadership departs
The demand comes as NCInnovation faces heightened pressure over its operations, governance, and future funding. CEO Bennett Waters recently announced he will step down in 2026, a move he described as unrelated to the organization’s political and budget battles. Still, his departure coincides with mounting skepticism among legislators over NCInnovation’s performance and transparency.
NCInnovation’s audit committee recently flagged errors in its IRS Form 990 filing, delaying final approval ahead of a September deadline. A separate performance audit from the State Auditor’s office in March acknowledged statutory compliance but identified concerns about transparency and areas for improvement in its documentation and operational procedures for awarding grants.
Lawmakers have already advanced proposals to reclaim the $500 million endowment. House Bill 154, introduced earlier this year, would dissolve the state’s partnership with NCInnovation and redirect the funds to the General Fund. Meanwhile, the House’s version of the 2025–27 budget claws back the NCInnovation endowment and reallocates it to Helene disaster recovery. The Senate’s budget plan proposes returning most of the endowment to the state and reallocating $400 million to a new children’s hospital initiative, while offering NCInnovation $25 million annually for four years.
A showdown over transparency
The Sept. 9 letter signals that legislative leaders are prepared to escalate oversight. “Should NCInnovation not comply with this demand, a legislative subpoena will be issued,” Jones and Gupta warned.
Taken together with the CEO’s planned exit, the threatened subpoena underscores the tenuous position of NCInnovation as it tries to defend its mission while retaining lawmakers’ trust.