The $1.4 billion allocation for a non-profit called NCInnovation in the state Senate’s budget plan has raised some eyebrows. Given that this appropriation to the barely five-year-old non-profit organization would amount to nearly five percent of the entire state General Fund budget, it should.

This substantial allocation in the North Carolina state budget to NCInnovation is not an example of free enterprise because it involves government intervention and support. A recent article in the Winston-Salem Journal states that the funding is intended to support rural technology development, education, and workforce training. While this may be a worthy goal, it does not align with the principles of free enterprise, emphasizing the importance of competition and minimal government involvement in the economy. By providing such a significant amount of funding, the government is picking winners and losers in the technology sector, which can create market distortions and stifle true innovation. Therefore, while the funding may have positive outcomes in terms of job creation and economic development, it is not an example of free enterprise in action. It is something akin to compelled or synthetic enterprise.

Beyond the philosophical concerns, there are several functional concerns about NCInnovation’s governance, transparency, finances, and the massive taxpayer funding the Senate budget would provide. If legislators are willing to move forward with this allocation, in spite of concerns about free enterprise and government intervention, then they should consider improving the bill in a variety of areas


We have previously raised the alarm about a lack of transparency provided for NCInnovation by the Senate budget proposal. NCInnovation would be exempt from open meetings and public records laws, despite managing and dispensing public (taxpayer) dollars. Under the Senate’s legislation, the organization is only accountable for receiving $25 million in private-sector funding commitments, while taxpayers are asked to kick in $1.4 billion – or 98.2 percent of the organization’s funding. If North Carolina taxpayers will nearly fully fund the organization, they ought to know what it is doing and when it is doing it. If the Golden LEAF Foundation board of directors and charter schools are subject to transparency laws, NCInnovation must also be.

Proponents of the NCInnovation funds may make the point that investment and business decisions should not be made public, which is a reasonable argument. However, that is also a reasonable argument for why NCInnovation should be privately and not publicly funded. If these are business decisions, then they should be funded by the business community.

Private fundraising

The Senate budget plan also requires that NCInnovation receive “commitments to donate at least $25 million in private funds” within five years of receiving its taxpayer endowment. But “commitments” are not actual donations. What if some of those commitments don’t materialize? NCInnovation’s website brags about the $23 million in private funds it has already “raised.” However, its 2022 990 tax form shows less than $4.8 million in assets.

Lawmakers, representing the interests of taxpayers, should change this requirement to $25 million (or more) cash on hand for the organization, and require financial documents proving existence of the funds be presented to the Department of Commerce and legislators before taxpayer funds are released.

There is no reason why taxpayers should assume all risk in this endeavor.


With eight appointments and none for the executive branch, the legislature would wield a concentration of power over the group. The board will have 13 voting members, so the eight legislative appointments would not need any other board support to advance their preferences. Legislative Republicans may feel confident that conservatives will maintain power in the legislative branch, but that is never guaranteed, and dispersed power is preferred to concentrated power.

Conservatives generally prefer dispersed power in government, and government programs, because they believe in the principles of individualism and limited government. These principles are rooted in the philosophy of John Locke, who believed that individuals should have the freedom to pursue their own interests without interference from the government. Conservatives believe centralized power can easily become tyrannical and infringe on individual rights. By dispersing power among different branches of government, conservatives mitigate the risk of overreaching government power. This idea of dispersed power is also seen to promote competition, innovation, and accountability in the government, ensuring that different groups have a say in decision-making and preventing any one group from having too much influence.

This theory works well within the larger state government and should also be applied to NCInnovation. The Golden LEAF Foundation and the Economic Development Partnership of North Carolina both follow this model.

University Cooperation

Moreover, the Senate budget specifies that no state employees are eligible to serve on the board of NCInnovation. Since the organization is designed to cooperate closely with UNC campus research efforts, why shouldn’t any UNC chancellors or department heads be eligible to serve on the board? Four UNC chancellors and the UNC System President, Peter Hans, serve on the board. Why would they need to be kicked off? And how will collaboration between the business community and public universities occur without university executives working on both sides of the equation?

NCInnovation’s website points to similar organizations in other states, such as Georgia and Massachusetts, with university heads on their board of directors. NCInnovation should do the same to help with the success of its mission.

Administrative Costs

According to the Senate budget plan, NCInnovation shall prioritize the use of private funds to pay for overhead and administrative costs. No more than one percent of State funds can be used for such purposes. But one percent of $1.4 billion is $14 million, which means that even if all the $25 million in one-time private funds were dedicated to administrative costs, less than two years’ worth of State funding would be needed to replenish them.

It is also unclear why the organization would require such a high amount as $14 million per year for administrative costs. This administrative overhead cap should be lowered.

Employed Lobbyists

The Secretary of State’s website indicates that NCInnovation has nine lobbyists on Jones Street. Yes, that is a large number. However, as has been stated, North Carolina taxpayers will provide 98.2 percent of the organization’s requisite funding, and if that is the case, then it should be treated as most other state entities. State law requires that government entities cannot contract with independent lobbyists; they must be employees. Further, only two individuals can be designated government liaisons for those state entities. NCInnovation should have to follow this example in statute.

And call us skeptical, but the organizations most likely to ask for taxpayer dollars are those that have received them in the past. Taxpayers should not have to fund blue-chip lobbyists for an organization that has already received $1.4 billion in their hard-earned money.

NCInnovation appears to be garnering support from North Carolina’s business community. However, the state Senate’s proposed budget will need to address several areas of concern regarding funding allocation for NCInnovation, as stated above, and others. The Senate budget writers’ goal of commercializing university research is commendable, but not everything has to have a government solution.

If lawmakers do decide to allocate taxpayer dollars, then it is important that these funds are properly allocated and managed to ensure that NCInnovation can effectively support innovation and economic growth in the state. Therefore, legislators should make necessary adjustments in their budget proposal to improve the overall functionality of NCInnovation, and the stewardship of taxpayer money.