NCInnovation’s board of directors is weighing how the nonprofit could survive and operate more like a private entity, potentially with some state money, if state lawmakers claw back most or all of its $500 million taxpayer-funded endowment. This week, NCI’s board discussed the move which would mark a dramatic shift for one of North Carolina’s most debated economic-development experiments.
The May 12 meeting came the same day House and Senate leaders announced they had reached the basics of a state budget agreement and would continue working toward a final version. But when pressed by reporters on the status of NCInnovation, Senate Leader Phil Berger said the future of NCInnovation “was resolved to the extent that we will continue discussing how to resolve it,” signaling that the nonprofit’s future remains unsettled, even as broader budget negotiations move forward.
At the same time, inside the NCInnovation boardroom on Tuesday, directors discussed the political reality that NCInnovation’s endowment remains vulnerable, while also airing disagreements over tax filings, lobbying disclosures, legislative strategy, and whether the organization should prepare for a more private model.
Last year, the House passed a bill to claw back the entire $500 million endowment and redirect it to Hurricane Helene recovery. The Senate included language in its version of the state budget to claw back $400 million and reallocate it to a new children’s hospital, while sending NCInnovation $25 million per year for four years. Last month, Gov. Josh Stein proposed clawing back all the money and sending it to Helene recovery efforts.
Board members acknowledged during the meeting that NCInnovation is “in play” at the General Assembly.
“We didn’t put the question on the table,” Chairman Kelly King said during the meeting. “We would have been very happy to implement, to leave the program where it was. But when the House passes a bill, when the governor initiates a budget that excludes you, you are in play whether you like it or not.”
In 2023, state lawmakers agreed to a half-billion dollar endowment inserted into the state budget to create the private, non-profit NCInnovation to help commercialize university research and move promising technologies from North Carolina campuses into the marketplace. NCI was structured to allow the organization to use investment earnings to fund grants and operations but not take equity stake in the projects.
Some board members questioned whether the current structure is sustainable if lawmakers can reclaim the money during any budget cycle, others raised concerns about the organization’s “burn rate” of funds, and its decision to spend on self-promotion campaigns.
“I would point out that this cannot go on indefinitely,” said legislature-appointed board of directors member, Art Pope. “I was going to wait until we got to the budget, but we have about $3.5 million in cash and cash equivalent, and unrestricted private funds… You’ve got pledges for about another $5 million as of the end of March of 2025… We have about $8.5 million and we have a burn rate under the new proposal about $4.6 million, so we’re going to run out of money in two years.”
A philosophical divide
King said the state-backed model helped NCInnovation get started, but he floated a long-term vision that would rely more heavily on private-sector investment and potential equity stakes in companies the organization helps launch. He explained that current law bars NCInnovation from taking equity in companies it funds through non-dilutive grants.
King said that while he appreciates the endowment model, it is sustainable only “to the extent of the political whim,” adding that the $500 million could be taken back and that the structure is not ideal for long-term stability. He said NCInnovation should consider “a stronger private part of this public-private partnership,” including a model in which state and private money could be used to take equity.
“The General Assembly, in its wisdom, legislated that the grants that we were making are what’s called non-diluted grants, meaning we cannot take an equity interest in these companies that we’ve created; that makes no sense to me,” he told the board. “We should be taking equity out. I can see conceptually it powered down in the future, where we can restructure NCI in some form or fashion, but principally around the concept that we would take money, state and private, and make equity investments in these companies and get equity participation back. Over time, as those companies mature, we would build a corpus of money from those companies that are really successful. They win, we win, and we don’t have to keep going back to taxpayers of North Carolina and asking for annual appropriations or endowments or anything else. Now that’s the dream, that’s a vision down the road.”
“I personally believe we need to debate a model that allows for long term sustainability and even a perpetual existence if we perform,” he added.
The discussion revealed a philosophical divide over public money and public oversight.
Pope in turn argued that if NCInnovation wants to operate without legislative oversight or legislative appointees, it should return public funds and create a separate private entity.
“If there’s public money, I think there should be legislative oversight,” Pope said. “If NCInnovation does not want that oversight and legislative appointees on this board, then transfer the money back and come up with another funding model.”
Pope suggested that taxpayer funds could continue to support programs that serve the university system, but that a separate, private entity would be more appropriate for private-equity-style activity.
“Taxpayer funds should be invested on the merits of the programs providing services to our university system, which is what we are currently doing,” Pope said. “So put that in a separate entity apart from the private equity investment entity.”
“If there’s a desire not to have legislative oversight from public appointees, public appointees from the legislature to the NCInnovation board, then return the money and start a new fresh entity to carry out the core fund programs and grants programs and NCInnovation can pursue the direction that it wants to go,” Pope added.
NCI’S LEGISLATIVE STRATEGY
The funding debate also exposed concerns over whether NCInnovation has a clear legislative strategy, with at least one board member pointing out that the organization does not have a board-approved legislative agenda, even as lawmakers actively consider its future.
“This board needs to give its leaders and its staff a legislative agenda,” said director Blannie Cheng Miller. “We do not have one right now.”
Any formal proposal to the legislature requires board approval, so Miller asked the board to give management clearer direction on what position to take with lawmakers. Without that guidance, Miller warned, individual board members and staff could send mixed signals.
“There seems to be a lot of confusion and nearly some chaos around that,” she added. “It just seems very prudent that this board come up with a legislative agenda that is board-approved.”
NCInnovation’s new CEO, Michelle Bolas, who replaced founding CEO Bennett Waters, said she has been talking with lawmakers and stakeholders about what NCInnovation does, but said she was not advancing a specific legislative ask from the board.
“It is really hard to carry the vision through turbulent times,” she told the board. “It is very hard to build things; we are going to continue to evolve we are going to have challenges, we are going to meet those challenges, and we’re going to come out on the other side maybe looking a little different sometimes. But we are still carrying the vision.”
The discussion turned to allegations involving Waters, and whether he may have drafted language that later appeared in the Senate plan. Pope asked whether NCInnovation had requested language that would return the endowment to the state and provide the organization with $100 million over four years. Pope pointed to an email King sent in 2025 indicating that he’d had meetings with lawmakers in mid-April that year.
“There’s a transcript from the Senate Appropriations Committee meeting, public record, in which Sen. Grafstein inquired about the NCInnovation fund, giving back $500 million and receiving $100 million allocated back, and Sen. Jackson responded with ‘NCInnovation, this is what they requested,’” said Pope. “Did we make requests last year to give the endowment back to General Assembly then receive $100 million in funding $25 million over 4 years?”
King told Pope and the board that NCInnovation had not offered specific language but was instead responding to questions from lawmakers.
lobbying expenses
The legislative debate comes as NCInnovation is also dealing with ongoing internal disagreement over how lobbying expenses have been classified on the organization’s federal tax forms. The statute setting up NCI limited the amount of money that the organization could spend on lobbying state policymakers. During Tuesday’s meeting Pope repeated his concerns that some expenses had been treated as consulting but should have been reported as lobbying on IRS Form 990 filings. Pope argued that federal IRS lobbying definitions are broader than state lobbying-registration rules.
“There apparently was a mistaken belief or assumption that if you were not registered with the state, we didn’t have to report it,” Pope said. “For all these reasons, I think that those numbers are wrong.”
Pope specifically questioned whether contracts related to state budget advocacy and strategic engagement had been properly classified, saying some work “clearly” fell within lobbying definitions. King responded that management had agreed to continue reviewing the issue and that the current 990 draft included language noting the matter could be revisited.
“We understand that there is disagreement about how those expenditures were calculated in the past,” said King. “If we were to discover this afternoon, or 12:00 tonight, or two months from now there’s some issue that need to be changed and amended, we will do it.”
Board member Kelly Fuller, who was contracted in 2021 to help develop NCI strategy, requested that meeting records reflect the nature of her contract.
“It has been shown before that my activities as a contractor were not lobbying,” Fuller said. “When that is proven once again, I’d like for the record to stand.”
The board ultimately voted to file the Form 990 with the understanding that it could be amended later if necessary. NCI’s CFO Linda Hall told the group that their outside accounting and audit firm BDO supported the filing as drafted.
The 990 debate was not limited to lobbying expenses. Pope also voiced concern centered on whether the organization may have a duty to report an “excess benefit transaction” involving Ven Poole, who sits on the NCI board of directors. Pope said the issue appeared to stem from an error in which a pledge previously recorded in financial statements as a legally binding personal obligation was later satisfied by Poole’s 501-C3 family foundation.
“I don’t think there’s anything nefarious,” Pope said, adding, “Mr. Poole was personally relieved of that transaction and I think there’s no contemporaneous documentation to the contrary. I think we have an obligation to report that.”
Poole recused himself from the 990 vote due to the discussion.
“No longer a theory”
The board’s broader debate over NCInnovation’s future comes as its leaders continue to point to the organization’s support of university research commercialization and creating businesses and jobs. A press release issued on Tuesday from NCI points to approval of $7.9 million to support nine applied research projects, bringing it’s total to $37 million in grants across 47 projects.
Bolas told the group that NCInnovation has built a system that identifies university-based technologies and prepares them for commercial markets.
The newly-approved slate of projects backs university-led research spanning surplus sweet potato-based food products, tumor-targeted cancer treatments, plastic-waste-to-jet-fuel and chemicals conversion, cleaner battery-material production, at-home neurological monitoring, honeybee mite treatment, disease-free strawberry starter plants, high-voltage fault detection for data centers, and battery-powered rail systems with wireless charging.
“No one else is as uniquely positioned as we are to fill what is very clearly a gap in North Carolina’s economic development picture,” Bolas said.
“We are no longer a theory on paper, as we were when we were talking about the first legislation,” she said. “We are a team of 20 and we have contractual obligations with every single university in the system now as well as other private service providers.”
King also defended the organization’s work, telling reporters covering Tuesday’s open public meeting that they should not interpret the board’s discussion as panic over NCInnovation’s future.
“I do not want you to draw the conclusion that I or this board are scared, worried, or concerned about the future of NCI,” King said. “The business of NCI is alive and well.”
But by the end of the meeting, the board had not settled on what it would do in a full clawback: ask for annual appropriations, set up a private structure, or develop some hybrid model. Directors agreed the executive committee should meet urgently to consider near-term legislative questions and longer-term structural options.
This article was corrected on May 18 to reflect that NCI has approved $37 million in grants, rather than $39 million.