What Is the NCInnovation Endowment, and How Does it Work?
Legislature’s smart funding model means NCInnovation can deploy university research grants without spending down state money
- Funding for NCInnovation university research grants comes from “new money” earned from investment income on state reserves.
- The legislature’s smart funding model enables NCInnovation to continuously provide university research grants without recurring state appropriations.
- Private donations fund NCInnovation’s overhead, allowing the investment income from state funds to directly support researchers.
How NCInnovation receives and deploys state funding is central to the organization’s model and value for North Carolina, but it can also get complex awfully fast. We break it down for you below, and as always, please reach out to us with any questions.
NCInnovation is a nonprofit public-private partnership that offers grant funding and support to applied researchers at North Carolina public universities working on projects that have commercial promise. The university-to-industry research and development (R&D) pipeline has been the foundation for American innovation for decades. By accelerating the transition from academia to industry, NCInnovation aims to help drive job-creation and economic growth in every region of the state.
NCInnovation’s university research grants are funded from an endowment. In January 2024, the State of North Carolina transferred $250 million from state reserves into that endowment. In August 2024, the State of North Carolina certified that NCInnovation had met milestones required to receive the second tranche of funding, and subsequently transferred an additional $250 million into the endowment.
How does the endowment work?
The NCInnovation endowment earns interest and investment income, just like a retirement account or pension fund. The $500 million in the NCInnovation endowment right now – called the corpus – is earning more than 5%interest, or about $70,000 per day.
Since January 2024, that adds up to more than $6.8 million in new money that NCInnovation can deploy for applied research grants at UNC System institutions. It’s that new money – not the corpus – that NCInnovation intends to use to fund future research grants, too.
In the near future, NCInnovation will hire an investment manager. When that happens, the funding will move into an actively managed investment account, just like other endowments.
Naturally, the more funding there is in the endowment, the more new money it will produce. At the full $500 million in funding from the FY 2023-25 state budget, a 7% return (for example) produces about $35 million each year. That’s $35 million in grant funding and other support for UNC System researchers working on projects with real-world potential.
Private contributions from some of the best-known companies in North Carolina and the United States fund NCInnovation’s non-programmatic overhead. This allows the investment income from the NCInnovation endowment to directly support North Carolina public university applied researchers.
The legislature’s smart funding model does not require recurring state appropriations and should allow NCInnovation to deliver university research grants forever, with the endowment producing returns every year that are then directed into university R&D.
For more information and updates, please visit NCInnovation.org and follow the organization on LinkedIn here.
An earlier version of this post that was sent via email included a transcription error. The NCInnovation reserve has earned $6.8 million in new money since it was created, not $64.8 million. This version has been updated to reflect the correct figure.
NCInnovation is 501(c)(3) not-for-profit corporation focused intensely on accelerating commercialized innovation from North Carolina’s universities. NCInnovation deploys funding, mentors, and support services so that North Carolina university proofs-of-concept turn into companies and create jobs that remain in North Carolina. Learn more at NCInnovation.org.
