On Tuesday afternoon, as Jones Street was closing up shop for the incoming wintry weather, policymakers from the state House were prepared to give NCInnovation the cold shoulder when they filed House Bill 154 titled, “Reclaim State Assets from NCInnovation.”

NCInnovation

NCInnovation is a nonprofit organization established in 2020 to “grow the university-to-industry pipeline right here in North Carolina.” This would be a noble cause if it were not for the fact that it is primarily using taxpayer money, not private capital of its own.

In the 2023 biennial budget, policymakers allocated NCInnovation $500 million over two years while requiring the nonprofit to raise just $25 million in private capital. While some touted this government handout as a “free market approach,” it would be better described as a form of taxpayer-funded venture capital.

Essentially, NCInnovation’s business model is to give the $500 million in taxpayer money to a private investment manager, which will then expose it to market risk to seek out returns that will be used to fund low-probability research projects at North Carolina universities.

Since receiving half a billion dollars from hardworking taxpayers, NCInnovation has consistently been mired in controversies, including lack of transparency, insufficient accountability, conflicts of interest, and hostility toward House staff.

House Bill 154 “Reclaim Assets from NCInnovation”

House Bill 154 is “an act to dissolve the relationship between the state and NCInnovation and to require NCInnovation to return state funds and assets.” The funds would be diverted into the state’s General Fund, adding to the funds available with which to craft the state budget.

Policymakers should pass House Bill 154 for the following reasons:

  • The role of the state government is to provide core government services, not to engage in speculative investments with taxpayer money.
  • The UNC System already receives substantial state taxpayer support that facilitates innovative research. In FY 2023-24, the net appropriation to the UNC System exceeded $4.2 billion.
  • The idea behind NCInnovation is not novel. Other states, such as Texas and Georgia, started similar schemes in the 2000s that were plagued with failed investments and transparency issues.
  • Despite receiving $500 million from hardworking taxpayers, NCInnovation has repeatedly resisted requests that seek transparency and accountability.
  • NCInnovation threatened legal action against a House Oversight Committee staffer for simply carrying out his duties under the direction of House leadership.

Moving Forward

Utilizing taxpayer money for risky endeavors is never prudent; however, as the state is still trying to find ways to fund the Helene recovery, allowing NCInnovation to keep $500 million would be particularly ill-advised. The taxpayers of North Carolina deserve fiscal responsibility, transparency, and accountability; House Bill 154 is a step in the right direction.