His nonprofit has a $500 million endowment. NC legislators look to take it back.
AI-generated summary reviewed by our newsroom.
- NCInnovation received $500M in state reserves to support early-stage research.
- Legislative budgets propose reclaiming funds, risking future grant distribution.
- This spring, NCInnovation awarded $13.6M to 17 projects across a dozen public universities.
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Open Source Conversations
Business and tech reporter Brian Gordon talks to leaders of some of the most influential institutions in the Triangle to learn how they’re handling challenges, including state and federal funding cuts, while still serving North Carolina and beyond.
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Bennet Waters emphasized that Research Triangle Park wasn’t a success after 24 months. If state lawmakers had pulled the plug on the economic project in 1961, they would have pivoted away from a bunch of fallow farmland between Raleigh and Durham.
Similarly, Waters, the CEO of NCInnovation, wants more time for the organization he leads.
Across 2023 and 2024, the Republican-controlled North Carolina General Assembly gave NCInnovation $500 million in state reserves to carry UNC System researchers through the so-called “valley of death” that often dooms proven concepts before they attract private investment. This spring, NCInnovation awarded (from its endowment interest) its second round of grants: $13.6 million to back 17 projects at a dozen public universities.
The future of its half-a-billion-dollar endowment, however, is in peril. Both the North Carolina House and Senate budgets demand the organization give back all of its funding. The Senate proposal would then fund NCInnovation $25 million annually for four years — and use the rest to pay for a children’s hospital. The House plan gives the nonprofit nothing.
With the chambers at a budgetary impasse, Waters spoke with The News & Observer about why this considerable investment is worth seeing through among other state priorities.
The conversation has been edited for clarity and length.
N&O: Playing devil’s advocate: CNBC ranks us No. 1 in business. Our population is growing. Things seem to be going well on the business front. What is the need then of having a substantial investment in an NCInnovation-type program in North Carolina?
Waters: Not all economic development is created equally, and what North Carolina is doing a really great job of is that we have an overall environment that is very healthy for existing businesses.
We are becoming really good at recruiting organizations into the state, because we have a tax-friendly environment, because historically, the legislature has worked well together and worked well with the business community. We have seen tax and incentive packages to bring businesses to this state.
What we are not No. 1 or No. 2 — and there is data that we are actually 20th or 21st nationally — is homegrown innovation and growing our own companies. And unfortunately, we have an increasing export model, which means that some of our best research and some of our best people are leaving North Carolina to find capital or (business) support services that are necessary.
N&O: State funding is a net-zero game. Why is NCInnovation worth supporting over other priorities?
Waters: We’re not actually having to make the decision between (NCInnovation) or teacher salaries or more highway patrol officers or Western North Carolina recovery. If and at such time as we get to the point that there are no more state reserves, then I think we’re talking about a very balanced conversation of whether or not we need to pull those reserve dollars back. But for now, we’ve grown the reserve.
At the same time we’re facing calls to defund the organization, we are getting calls from other states who want to know how we did this, and what would they need to do to set up an endowment to fund their university research commercialization efforts.
One of the knocks has been that this is something the private sector should do. In not one state in the country does the private sector fund this valley of death. It doesn’t happen within capitalistic venture markets.
N&O: The Senate budget is $25 million annually for the next four years. What would that change operationally?
Waters: For the first four years, absolutely nothing. When you look at the interest and income that comes off of the endowment.
N&O: And if the House budget as written passes, then NCInnovation wouldn’t be able to do what it’s doing now?
Waters: They would repeal the legislation, reclaim the endowment in its entirety, and there would be no money to give nondilutive grants.
When will taxpayers see returns?
N&O: When do you think taxpayers will be able to see the first concrete wins within NCInnovation?
Waters: I would argue that they already are. But among the challenges is when you’re starting from scratch, when we are behind what’s happening nationally, and when we are continuing to face questions around whether or not the state should be supporting its applied research community.
We live in a just-in-time environment. We are a couple of generations of Americans that live on instant gratification. We love the dopamine buzz of having our Instagram picture liked. We want immediate feedback. This does not lend itself to these sorts of (things)
It requires building capability and capacity that didn’t exist. It requires forming partnerships that will then lead to additional investments in the research apparatus of the state.
N&O: What sort of success rate would you consider to be successful for the organization?
Waters: So we don’t attach ourselves to future outcome measures over which we would have no control.
What we are focused on are the things from the first-year funding to the second year, meaning they hit all of the individual milestones and so forth that they have have laid out. We’re typically looking at no more than a two-year funding horizon for our piece of that valley of death. And so our percentages are higher. We expect to see more than half of our projects progress through there.
How to identify winning concepts
N&O: What do you look for when you’re trying to pick the winners or find the most promising projects?
Waters: I’m going to distance myself entirely from “picking winners.” That’s a phrase that I’m going to need an EpiPen.
I am not involved in the grant evaluation. When you look at grant-making organizations around North Carolina, historically, among the challenges that some have faced are claims that their review and award process is not truly independent, that there are political appointees that weigh in, and all the rest of it. We have deliberately insulated our process from any claims of that.
There’s a whole process to just get into the applicant pool. Then we have two independent panels. The first reviews every application and scores every application on the basis of a number of criteria that speak to scientific validity and technical rigor.
And there’s a second review panel that looks at whether or not, if the thing succeeds wildly, is there a defined market?
N&O: I don’t mean to reveal a Triangle bias when I ask: How does NCInnovation balance wanting to prioritize geographic diversity with wanting to have the best hit rate and the best return on taxpayer dollars? Obviously, great projects can come from all over the state, but the two biggest public research institutions are UNC and NC State.
Waters: We take our statutory authorities and requirements very seriously. If you read the statute, it actually required us to set up the first regional hubs in economically disadvantaged areas of the state.
I think it’s important that the story of regional North Carolina research gets told. Because everybody talks about the Triangle as if the only things happening in North Carolina are at Duke and NC State and Carolina, and maybe a little bit at Wake Forest.
But don’t sleep on the fact that one of the country’s best and brightest Alzheimer’s researchers is at UNC-Pembroke. Or that Dr. Rukiyah Van Dross-Anderson, who is onto something that may treat melanoma, is in Greenville at ECU, or that we’ve got parasitic livestock research happening in Western North Carolina, or uninterrupted power technology development at UNC-Charlotte.
This story was originally published August 4, 2025 at 6:45 AM with the headline "His nonprofit has a $500 million endowment. NC legislators look to take it back.."
