NCInnovation board members battle over transparency

The board of directors of NCInnovation, a private nonprofit given $500 million in taxpayer money to fund grants facilitating the commercialization of public university research, met this week. Tension, and voices, ran high as staff and board members wrangled over how much the taxpayers deserve to know about their process.

The 13-member board — which consists of legacy members of the business community from its private genesis, as well as those appointed by the NC General Assembly as a condition of receiving taxpayer money — discussed multiple items of relevance to state taxpayers as matters of transparency created friction among board members.

NCInnovation (NCI) was created by some of the state’s business leaders in 2018. The aim of the nonprofit is to provide grants to further applied research at select UNC-system universities in order to fill an observed gap in the local commercialization of public university research. In late 2023, after a heavy lobbying effort during state budget negotiations, NCI was allocated $500 million in taxpayer funds in two $250 million installments.

The use of public funds to finance the group’s research-to-commercialization vision has attracted scrutiny of the nonprofit’s actions by this publication and others. Tuesday’s meeting invited further attention as board members battled over internal calls for transparency, concluding in one member promising to file a whistleblower complaint alleging he’s faced retaliation for requesting documents and information as part of his due diligence as a legislatively appointed board member.

That member, Art Pope, is one of three appointed to the board by NC House Speaker Tim Moore, R-Cleveland, in late 2023. Pope, CEO and president of Variety Wholesalers, is also president and chairman of the Pope Foundation, as well as a co-founder of the John Locke Foundation, of which Carolina Journal is a subsidiary.

Earlier this year, Pope filed requests with the Office of State Auditor for an audit of NCI’s books and accounting practices, especially as it relates to the accounting treatment of pledges of capital by private donors. As a condition of receiving taxpayer money, NCI was required to raise a minimum $25 million of private capital to fund operations and administration.

Records requests

At Tuesday’s meeting, executive NCI staff complained about the burden of satisfying records requests from Pope and media organizations. Carolina Journal has made four such requests for public records, most recently for a transcript of an August board meeting in which audio feeds were inaudible for virtual participants. That public records request, made in late August, was partially fulfilled Friday, Nov. 15.

The board discussed Tuesday a policy of limiting directors’ ability to request documents with the assistance of third-party counsel.

Asking clarifying questions of the outside counsel, Pope, also a member of the audit subcommittee, described his frustrations in being denied requests related to audit activity. Outside counsel advised that, under the proposed policy, an individual director would have to submit the request to the entire audit committee, which would then decide as a whole whether or not to grant the request.

Asked by a director if he had consulted the Public Records Act in drafting the proposed policy for an organization seeded with $500 million in taxpayers’ money, the outside counsel asserted he had not. Instead, the model policy proposal fell closest to those utilized by for-profit corporations. When Pope asked if he was aware of another nonprofit in North Carolina that submitted director records requests to a committee vote, the attorney answered, “Not that I’m aware of.”

He further revealed he had “never encountered a board that has had to deal with this kind of conduct where the board felt it was necessary to develop a policy like this.”

Following the questions of outside counsel, fireworks erupted when Josh Howard, NCI’s general counsel and chief risk, ethics, and compliance officer, expressed frustration over the amount of time such requests demand of staff, saying he has two desks in his office covered in paperwork to meet director Pope’s requests for documentation, and alleging most of the staff in the back of the room spent all day working to satisfy requests from the director.

“We need to get some guardrails for constant harassment of staff for information,” Howard said during the discussion.

Before voting on adoption of the policy, Pope made an appeal to his fellow directors.
“Mr. Chairman, members of the board, as we just heard, no other nonprofit in North Carolina has this process,” Pope recounted. “It’s impractical, it’s unwieldy. Every time there’s a written submission for a document, you’re gonna have to have a committee meeting or a board meeting. Respectfully, my requests for documents have been very limited, very specific.”

Pope described specific requests for accounts receivable designations for private donor pledges, tax filing designations under IRS rules concerning those private pledges, and attorney letters. He mentioned positive progress came as a result of those requests, barring the latter, which he said was denied, and he doesn’t know why.

“It’s just a document; it takes five minutes to review,” he lamented. “Respectfully to Howard, if you have 13 stacks of paper, that’s a lot; it just might be easier to sit down and cooperate and talk through it, than resist. I think this is unprecedented,” Pope concluded before urging members to vote “No” on the policy.

The board then entered a closed session to “discuss personnel matters with counsel.” Upon exiting the closed session, the board voted 10-3 to adopt the new, more restrictive policy. Pope, along with two other legislative appointments — Blannie Miller and Beth Friedrich — were the only opposing votes.

The move to officially restrict transparency at the publicly-funded institution was but one of many items discussed at the Nov. 12 meeting. Further discussions and actions concerning compliance with records requests, executive compensation, and possible violations of open meeting laws to discuss executive bonuses are also of note.

Continue to follow Carolina Journal for more on the NCInnovation story in the coming days.

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