national innovation funds act of 2011

8/9/2019 National Innovation Funds Act of 2011

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While Build America Bonds expose the Federal Government to high levels of debt liability, the National InnovationBond program seeks to limit risk exposure by constraining subsidies for interest payments to tax credits instead ofdirect payments. The provisions of this Act also stipulate that such tax credits shall first be applied to the tax liability ofthe bonds themselves, further limiting Federal liability as such tax revenue would not exist without these bonds.

SUMMARY

National Innovation Funds Act of 2011 Establishes a Corporation for National Innovation and a National Innovation Bondprogram to provide incentives to small, fixed life-cycle venture capital funds for the purpose of acting as investmentintermediaries between the Federal Government and companies that pursue technological innovations deemed by Congress andthe President to be key national priorities, i.e. alternative power or fuel sources.

The three forms of incentive created by this Act, investment of Federal funds, exclusive rights to market a subsidized financialinstrument, and access to Federal publicity support, shall greatly increase investment in innovative companies pursuing research,

development and implementation that might otherwise fail to attract investment, thereby adding greater dynamism to theAmerican economy.

The national technological priorities set by Congress and the President shall have direct commercial application. The enactmentof such limitations is intended, in part, to fill the gaps in ARPA (later DARPA) created by the restriction of research anddevelopment to only those projects which have a direct military application.

The Role of Venture Capital (VC) Funds:

VC funds selected to receive funds will be responsible for soliciting applications from potential start-up companies anddetermining which companies have the greatest potential for success. The Corporation will provide assistance and advisementas required, as well as promotion aimed at encouraging small companies conducting research and development on prioritytechnologies to apply for funding.

VC funds selected to receive funding under this Act shall be small. Research shows that larger VC Funds tend to over-capitalizeearly stage companies and one of the purposes of this Act is to increase competitiveness and diversity in the American economy.

VC funds shall be required to match federal funds, whether through independent fundraising or through the sale of NationalInnovation Bonds, however they shall not solicit or accept such funds from second or third party investment firms, or anymonies originating therein, in order to prevent such large firms from creating dummy funds intended to compete for fundingunder this Act. Rules established herein are not however intended, and could not legally, bar such large firms from investingalongside selected VC funds. Large firms and the general public are encouraged to invest in these companies by purchasingAmerican Innovation Bonds as established by this Act, which includes provisions for other rigorous oversight mechanisms:

The Securities and Exchange Commission shall have an unprecedented level of input in the activities of theCorporation, whose chairman shall exercise a veto over decisions made by the Corporation if such decisions oractivities are deemed to violate SEC regulations, and shall appoint members to the Inspector General Oversight

Committee of the Corporation.

The Corporation shall make frequent reports to Congress on the nature of its investment activities. Recipient Financial Institutions are required to provide 50 percent matching funds, and of those funds which are

leveraged for this purpose, a 20 percent cash balance must be maintained and held in escrow by the U.S. Treasury.

Building on Existing Paradigms:

While this Act is modeled in part on the Corporation for National Service established by the National Service Trust Act of 1993,the Build America Bonds program established by the American Recovery and Reinvestment Act of 2009, and Ohios ThirdFrontier Program, the National Innovation Funds Act of 2011 is designed to address several flaws:

These programs must evaluate potential grant recipients, thereby creating the need for a large number of governmentemployees and greater use of resources for administrative purposes. This Act seeks to limit the organizational profile necessary to achieve its stated goals by creating separation between

potential innovators and government sponsorship via investment intermediaries. By transferring the responsibility foridentifying, mentoring, and partially funding companies to small investment firms, this program will lower costs andmaximize benefits for the American economy.


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RESHMA SAUJANI FOR CONGRESS 1

National Innovation Funds Act of 2011 (Introduced in House)HR ****

112th CONGRESS1st Session

H. R. ****

To establish a Corporation for National Innovation that shall be a Government Corporation as defined in section 103 of title 5,

USC, to administer the programs established under this Act, and to establish a National Innovation Bond program to partiallyfund such programs.

IN THE HOUSE OF REPRESENTATIVES

January 3, 2011

Ms. SAUJANI shall introduce the following bill; which shall be referred to the Committee on Small Business, and in addition to

the Committee on Science and Technology, for a period to be subsequently determined by the Speaker, in each case forconsideration of such provisions as fall within the jurisdiction of the committee concerned.

A BILL

To establish a Corporation for National Innovation that shall be a Government Corporation as defined in section 103 of title 5,

USC, to administer the programs established under this Act, and to establish a National Innovation Bond program to partiallyfund such programs.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SEC. 1. SHORT TITLE.

This Act may be cited as the `National Innovation Funds Act of 2011'.

SEC. 2. FINDINGS AND PURPOSE.

(a) FINDINGS THE CONGRESS FINDS

(1) America is no longer the global leader in technological innovation and lags in several key areas such asInternet connectivity and development and implementation of alternative power and fuel sources, as well asother environmentally sustainable initiatives.

(2) Promoting technological innovation will foster much needed diversification in the economy, create millionsof jobs, and ensure that America will remain a dynamic, competitive force in an increasingly global economy.

(3) Technological innovation requires large, long-term investment.

(4) The current financial system lacks incentive to provide funding for technological innovation and currentpublic investment strategies are insufficient.

(b) PURPOSE IT IS THE PURPOSE OF THE ACT TO

(1) Provide inventive and ability to small venture capital firms to lend monies and provide other support toAmerican innovators and entrepreneurs who have promising ideas but lack the funding and support necessaryto realize them.

(2) Increase the competitiveness of the American economy.


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(3) Diversify the American economy so as to lessen dependence on the financial sector and other industries thenation relies on for economic growth.

(4) Foster development of green technologies that will create new economic sectors and thousands of newjobs.

(5) Provide individual States with opportunities to invest in American innovation by matching investments forrecipients of funding, and create incentives for States to provide incubation hubs for innovation that will not

only fuel entrepreneurship and market growth, but will also foster industry innovation clusters.

(6) Provide a new opportunity for all Americans to invest in and profit from the future success of Americaninnovation through purchase of National Innovation Bonds.

(7) Build on the existing organizational small business support infrastructure of Federal, State, and localprograms and agencies to expand opportunities for all citizens to turn innovative ideas into successfulbusinesses.

TITLE I: PROGRAMS AND RELATED PROVISIONS

SEC. 3. FEDERAL INVESTMENT IN SUPPORT OF NATIONAL INNOVATION.

(a) PROVISION OF ASSISTANCE- The Corporation for National Innovation (hereafter referred to as theCorporation) shall distribute funds to eligible Financial Institutions as defined by section 4 of this title to

(1) invest in Companies that fulfill the requirements established in section 5 of this title; and

(2) sell National Innovation Bonds as established in section 12 and facilitate and encourage the sale of suchinstruments by Financial Institutions for the sole purpose of raising required matching funds pursuant tosubsection (e).

(b) AGREEMENTS WITH FEDERAL AGENCIES- The Corporation may enter into a contract or cooperativeagreement with another Federal agency to support a national innovation program carried out by that agency. Thesupport provided by the Corporation pursuant to the contract or cooperative agreement may not include the transferto the Federal agency of funds available to the Corporation under this Act.

(c) RULES ON USE- The Corporation may by rule prescribe the manner and extent to which

(1) funds provided to Companies by Financial Institutions pursuant to section 4(a) of this title may be usedfor advertisement; and

(2) that portion of the assistance available to cover administrative costs should be distributed between

(A) the original recipient Financial Institution of the funds authorized under section 11; and

(B) the Companies receiving funds from such Financial Institutions.

(d) MATCHING FUNDS REQUIREMENTS-

(1) REQUIREMENTS- Financial Institutions must match Federal funds provided for investment at a rate ofno less than 50 percent.

(2) CALCULATION- In providing for matching funds the recipient Financial Institution

(A) shall provide for such share through a payment in cash or in kind, fairly evaluated, includingfacilities, equipment, or services, however payment in kind shall not exceed 15 percent of thematching funds required under this subsection;


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(B) may provide for such share through State sources, local sources, or other Federal sources

except where prohibited by law;

(C) may provide for such share through the sale of National Innovation Bonds; and

(D) may not provide for such share through funding provided by second or third party financialinstitution or any monies originating therein.

(3) DEBT LIMITS- In addition to its responsibility to raise matching funds, the recipient Financial

Institution

(A) must maintain a twenty percent cash balance for all leveraged funding used to fulfill the fiftypercent matching funds requirement;

(B) submit such monies to be held in escrow by the United States Treasury; and

(C) must maintain a twenty percent balance for all leveraged funds exceeding those used to fulfillthe matching funds requirement in cash, equity, or other verifiable assets.

SEC. 4. COMPANIES AND FINANCIAL INSTITUTIONS ELIGIBLE FOR

FUNDING.

(a) ELIGIBLE FINANCIAL INSTITUTIONS- The recipient of funding shall use such funds to directly invest in thetype of Companies determined by the Corporation Investment Council to have the potential to contribute innovativesolutions to technological shortfalls subject to subsection (b)(1) and according to criteria established in subsection(e). The Corporation shall authorize the distribution of funds based on the discretion of the Investment Council as setforth in subsection (d) and only to those financial institutions that meet the following criteria:

(1) ORGANIZATIONAL REQUIREMENTS THE RECIPIENT MUST BE AN ENTITY THAT

(A) operates or is willing and able to operate a fixed life-cycle venture capital fund registeredunder the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.);

(B) is an investment company, as defined in subsection (a)(1) of section 3 of such Act (15 U.S.C.80a-3);

(C) is organized or incorporated, and domiciled, in the United States, and the majority ownershipof which is composed of United States citizens or aliens lawfully admitted to the United States forpermanent residence;

(D) possesses the capacity to provide companies with active, hands-on assistance in all phases ofexpansion, including marketing, finance, and management development as determined by theCorporation according to criteria set forth in subsection (d);

(E) adhere to nondiscrimination policies as required by law and subsection (d)(3); and

(F) submit to an independent financial audit at intervals determined by the Corporation.

(2) LIMITATIONS

(A) A recipient Financial Institution shall not be a publicly traded company or a subsidiary inwhole or in part of a publicly traded company.

(B) Recipient Financial Institutions must not hold at the time of application, or at any time prior,

funds in excess of an amount that would place them higher than the lowest quartile of all FinancialInstitutions which operate or have operated a fixed life-cycle venture capital fund, in terms ofoverall value and average deal value, when duly evaluated by the Corporation, whether as aLimited Partnership, Limited Liability Company, or any other form of legal partnership.


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(C) Recipient Financial Institutions must be exempt from registration under subsection (c)(1) or

(c)(7) of section 3 of Investment Company Act of 1940 (15 U.S.C. 80a-3), and is not registered assuch.

(b) QUALIFICATION CRITERIA TO DETERMINE ELIGIBILITY-

(1) ESTABLISHMENT BY CORPORATION- Based on national priorities established under subsection(c) the Corporation shall establish criteria for different types of technological needs for the purpose ofdetermining whether a particular Financial Institution be considered eligible to receive funds under this

Act.

(2) CONSULTATION- In establishing qualification criteria under paragraph (1), the Corporation shallconsult with

(A) organizations and individuals with extensive experience in financial investment in high techindustries.

(B) organizations and individuals with expert knowledge of the technology or science identified in

paragraph (1).

(3) APPLICATION TO INVESTMENTS- The qualification criteria established by paragraph (1) shall alsobe used by each Financial Institution in receipt of funds when determining which Companies are eligiblefor investment.

(c) TECHNOLOGICAL PRIORITIES

(1) ESTABLISHMENT BY CORPORATION- In order to concentrate national efforts on meeting certainunmet technological needs and to achieve the other purposes of this Act, the Corporation shall establish,and periodically alter, priorities regarding the types of technology companies eligible for receipt of fundsunder this subsection and the purposes for which such assistance may be used.

(A) The Corporation will adhere to priorities set forth by Congress or the President; and

(B) in the absence of such guidance, will establish priorities with consultation set forth insubsection (a)(2).

(2) LIMITATIONS- Neither Congress nor the President shall set forth priorities that do have commercialapplication, however

(A) such limitations shall not be construed as to contradict section 3(b); and

(2) NOTICE TO APPLICANTS- The Corporation shall provide advance notice to potential applicants ofany national technological priorities to be in effect under this subsection for a fiscal year. The notice shallspecifically include

(A) a description of any alteration made in the priorities since the previous notice;

(B) a description of the national technological priorities that are designated by the Corporationunder subsection (c) as eligible for priority consideration in the next competitive selection ofFinancial Institutions pursuant to this section; and

(C) guidelines for investment in Companies as established in subsection (e).

(d) PROCESS OF SELECTION-

(1) REQUESTS FOR PROPOSALS- Pursuant to subsection (c) the Corporation shall solicit proposals fromFinancial Institutions meeting the requirements set forth in this section. In addition to the informationrequired by section 4(c)(2) requests for proposals shall include

(A) a deadline for submission not to exceed a period of 6 months from time of issuance;


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(B) information regarding the eligibility requirements set forth in this section;

(C) the stage of development a company must be in to receive funds; and

(D) any other information as deemed appropriate by the Investment Council.

(2) EVALUATION- The Corporation must render selection decisions, drawing only from the pool ofsubmitted proposals, within 2 months from the passage of the submission deadline.

(A) The Corporation may choose to reissue a request for proposals if the Corporation judges thatsuch action is warranted by a lack of acceptable proposals.

(3) NONDESCRIMINATION

(A) BASIS- In rendering decisions on applications and in general The Corporation shall notdiscriminate against an applicant for funds or an applicant for employment with the Corporationon the basis of race, color, national origin, sex, age, or political affiliation, or on the basis of

disability, if the applicant is a qualified individual with a disability.

(B) DEFINITION- As used in subparagraph (A), the term qualified individual with a disabilityhas the meaning given the term in section 101(8) of the Americans with Disabilities Act of 1990(42 U.S.C. 12111(8)).

(e) ELIGIBLE COMPANIES- Recipient Financial Institutions shall only invest such funds received from theCorporation in Companies that meet the following criteria

(1) Recipient Financial Institutions shall not invest such funds in a publicly traded Company or asubsidiary in whole or in part of a publicly traded company.

(2) Recipient Financial Institutions shall invest such funds in early, mid, or late stage developmentcompanies as directed by the Corporation and only those Companies in such stages ofdevelopment will be eligible during any given cycle of requests for proposals to receive suchfunds.

(3) Recipient Financial Institutions shall not invest such funds in a Company that is not registered

in the United States of America.

TITLE II: ORGANIZATION

SEC. 5. CORPORATION FOR NATIONAL INNOVATION.

There is established a Corporation for National Service that shall administer the programs established under Title I ofthis Act. The Corporation shall be a Government Corporation, as defined in section 103 of title 5, USC.

SEC. 6. INVESTMENT COUNCIL.

(a) COMPOSITION-

(1) IN GENERAL- There shall be in the Corporation an Investment Council (hereafter referred to as theCouncil) that shall be composed of

(A) 15 members, including the Chairperson appointed under section 2(A), to be appointed by the

President by and with the advice and consent of the Senate; and

(B) the ex-officio members described in paragraph (3).

(2) QUALIFICATIONS- To the maximum extent practicable, the President shall appoint members


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(A) who are experts in financial investment strategies;

(B) who have extensive experience providing technology companies with capital, resources andmentorship;

(C) who have experience in a broad range of high-tech industries; so that

(D) the Council shall consist of experts from academia, the private sector, and government.

(3) EX OFFICIO MEMBERS- The Secretary of the Treasury, the Chairman of the Federal Reserve, theChairman of the Federal Trade Commission, the Secretary of the Department of Energy, the Secretary ofAgriculture, the Director of the National Science Foundation, the Administrator of the National Oceanic andAtmospheric Administration, the Chairman of the Federal Communications Commission, the Administrator ofthe Environmental Protection Agency, and the White House Chief Technology Officer shall serve as ex-officionon-voting members of the Council.

(A) The Chairman of the United States Securities and Exchange Commission shall serve as an ex-

officio member of the Council and shall wield the power to veto decisions made by the Council if theChairman determines such decisions violate Public Law 107-204 or any other Federal or State statute.

(b) TERMS- Each appointed member of the Council shall serve for a term of 5 years, except that, as designated bythe President

(1) 3 of the members first appointed to the Board shall serve for a term of 1 year;

(2) 3 of the members first appointed to the Board shall serve for a term of 2 years;


(4) 3 of the members first appointed to the Board shall serve for a term of 4 years; and


(c) VACANCIES- As vacancies occur on the Council, new members shall be appointed by the President, by and

with the advice and consent of the Senate, and serve for a term of 5 years or the remainder of the term for which the

predecessor of such member was appointed. The vacancy shall not affect the power of the remaining members toexecute the duties of the Council.

SEC. 7. AUTHORITIES AND DUTIES OF THE COUNCIL OF INVESTORS.

(a) MEETINGS- The Council shall meet not less than once each month. The Council shall hold additional meetingsat the call of the Chairperson or if a majority of the members of the Council request such meetings in writing. Inaddition, the Council (or designated members of the Council) shall conduct periodic public hearings throughout the

United States to examine and review operation of the Corporation.

(b) QUORUM- A majority of the appointed members of the Council shall constitute a quorum.

(c) OFFICERS

(1) VICE CHAIRPERSON- The Council shall elect a Vice Chairperson from among its membership. TheVice Chairperson may conduct meetings of the Council in the absence of the Chairperson.

(2) OTHER OFFICERS- The Council may elect from among its membership such additional officers of theBoard as the Board determines to be appropriate.

(d) INSPECTOR GENERAL OVERSIGHT COMMITTEE- The Council shall establish an Inspector Generaloversight committee (hereafter referred to as the Oversight Committee). Such Oversight Committee shall be


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comprised of the Vice Chairperson and two members selected by the Chairman of the United States Securities and

Exchange Commission.

(1) DUTIES THE OVERSIGHT COMMITTEE SHALL

(A) provide detailed quarterly reports on the activities of the Council and the disbursement ofmonies, to the Chairman of the United States Securities and Exchange Commission and anyadditional officials designated by the Chairman of the United States Securities and Exchange

Commission;

(B) carry out other evaluations of the activities of the Council as determined to be appropriate bythe Chairman of the United States Securities and Exchange Commission or the President of theUnited States;

(C) make recommendations with respect to the compliance with regulations established undersection 3(c) and 4(d)(3); and

(D) inform the Chairperson of any aspects of the actions of the Corporation that are not incompliance with the annual strategic plan described in subsection (g)(1), the recommendationsdescribed in subparagraph (C), or are not consistent with the objectives of this Act;

(e) SPECIAL GOVERNMENT EMPLOYEES- Members of the Council (to whom such provisions would not

otherwise apply except for this subsection) shall be special Government employees as under section 202 of title 8,USC.

(f) STATUS OF MEMBERS

(1) OTHER CLAIMS- A member of the Council has no personal liability under Federal law with respect toany claim arising out of or resulting from any act or omission by such person, within the scope of theservice of the member on the Council, in connection with any transaction involving the provision offinancial assistance by the Corporation. This paragraph shall not be construed to limit personal liability forcriminal acts or omissions, willful or malicious misconduct, acts or omissions for private gain, or any otheract or omission outside the scope of the service of such member on the Council.

(2) EFFECT ON OTHER LAW THIS SUBSECTION SHALL NOT BE CONSTRUED

(A) to affect any other immunities and protections that may be available to such member underapplicable law with respect to such transactions;

(B) to affect any other right or remedy against the Corporation, against the United States underapplicable law, or against any person other than a member of the Council participating in suchtransactions; or

(C) to limit or alter in any way the immunities that are available under applicable law for Federalofficials and employees not described in this subsection.

(g) DUTIES THE COUNCIL SHALL

(1) Solicit requests for proposals from Financial Institutions based on the technological priorities set forthin section 4(c);

(2) By process of a majority vote and processes of consultation pursuant to section 4(b)(2), select FinancialInstitutions from those having submitted proposals to receive funds based on the guidelines established insection 4;

(3) PREPARE AND SUBMIT TO CONGRESS

(A) a strategic plan every year, and quarterly updates of the plan, for the Corporation with respectto the grants, allotments, contracts, assistance, and payments made by the Corporation and


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financial institutions selected to receive funds, and with respect to such standards, policies,

procedures, programs, and initiatives as are necessary or appropriate to carry out this Act;

(B) an annual report with respect to the manner in which the Corporation used or distributed suchservices, money, and property at its disposal;

(4) receive reports issued by the Oversight Committee and review actions taken by the Chairperson withrespect to such reports;

(5) make recommendations for research with respect to national technological priorities pursuant to section

4(c);

(6) advise the President and the Congress concerning advances in technological innovation that merit theirattention;

(7) disseminate information regarding the programs and initiatives of the Corporation and the FinancialInstitutions selected to receive funds as well as the technological priorities set forth in section 4)(c); and

(8) carry out any other activities determined to be appropriate by the Chairperson in order to implement thisAct.

SEC. 8. CHAIRPERSON AND DIRECTOR.

(a) APPOINTMENT- The Corporation shall be headed by an individual who shall serve as Chairperson of theCouncil and as Director of the Corporation, and who shall be appointed by the President, by and with the advice andconsent of the Senate.

(b) COMPENSATION- The Chairperson shall be compensated at the rate provided for level III of the ExecutiveSchedule under section 5314 of title 5, United States Code.

(c) REGULATIONS- The Chairperson shall prescribe such rules and regulations as are necessary or appropriate tocarry out this Act.

SEC. 9. AUTHORITIES AND DUTIES OF THE CHAIRPERSON.

(a) GENERAL POWERS AND DUTIES- The Chairperson shall be responsible for the exercise of the powers andthe discharge of the duties of the Corporation that are not reserved to the Council, and shall have authority andcontrol over all personnel of the Corporation.

(b) DUTIES- In addition to the duties conferred on the Chairperson under any other provision of this Act, theChairperson shall

(1) submit proposals to the Council regarding, such standards, policies, and procedures, as are necessary orappropriate to carry out this Act;

(2) establish and administer such programs and initiatives as the Chairperson, acting on therecommendation of the Council, may determine to be necessary or appropriate to carry out this Act;

(3) consult with appropriate Federal agencies in administering such programs and initiatives;

(4) on the recommendation of the Council or the direction of the Chairman of the Federal Reserve, suspendor terminate payments to recipient Financial Institutions, in accordance with section 6(a)(3)(A); and

(5) prepare and submit to the appropriate committees of Congress an annual report, and such interimreports as required by section 7(g)(3).

(c) POWERS- In addition to the authority conferred on the Chairperson under any other provision of this Act, theChairperson may


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(1) establish, alter, consolidate, or discontinue such organizational units or components within the

Corporation as the Chairperson considers necessary or appropriate;

(2) with their consent, utilize the services and facilities of Federal agencies without reimbursement, and,with the consent of any State, or political subdivision of a State, accept and utilize the services and facilitiesof the agencies of such State or subdivisions without reimbursement;

(3) disseminate, without regard to the provisions of section 3204 of title 39, United States Code, data andinformation, in such form as the Chairperson shall determine to be appropriate to public agencies, private

organizations, and the general public;

(4) collect or compromise all obligations to or held by the Chairperson and all legal or equitable rightsaccruing to the Chairperson in connection with the payment of obligations in accordance with chapter 37 oftitle 31, United States Code (commonly known as the `Federal Claims Collection Act of 1966');

(5) file a civil action in any court of record of a State having general jurisdiction or in any district court ofthe United States, with respect to a claim arising under this Act on behalf of the Corporation;

(6) exercise the authorities of the Corporation under section 7; and

(7) generally perform such functions and take such steps consistent with the objectives and provisions ofthis Act, as the Chairperson determines to be necessary or appropriate to carry out such provisions.

SEC. 10. OFFICERS.

(a) MANAGING DIRECTORS

(1) IN GENERAL- There shall be in Council 2 Managing Directors, who shall be appointed by thePresident, by and with the advice and consent of the Senate.

(2) COMPENSATION- The Managing Directors shall be compensated at the rate provided for level IV ofthe Executive Schedule under section 5315 of title 5, United States Code.

(3) DUTIES

(A) INVESTMENT PROGRAMS- A Managing Director shall be primarily responsible for

monitoring the funds distributed by the Corporation.

(B) MENTORING AND ADVISEMENT PROGRAMS- A Managing Director shall be primarilyresponsible for monitoring the mentoring and advisement programs implemented by FinancialInstitutions selected to receive funds.

(c) CHIEF FINANCIAL OFFICER

(1) IN GENERAL- There shall be in the Council a Chief Financial Officer, who shall be appointed by thePresident, by and with the advice and consent of the Senate.

(2) COMPENSATION- The Chief Financial Officer shall be compensated at the rate provided for level IVof the Executive Schedule under section 5315 of title 5, United States Code.

(3) DUTIES- THE CHIEF FINANCIAL OFFICER SHALL

(A) report directly to the Chairperson regarding financial management matters;

(B) oversee all financial management activities relating to the programs and operations of theCorporation;

(C) develop and maintain an integrated accounting and financial management system for theCorporation, including financial reporting and internal controls;


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(D) develop and maintain any joint financial management systems with Financial Institutions

selected to receive funds as necessary to carry out the of the provisions of this Act; and

(E) direct, manage, and provide policy guidance and oversight of the financial managementpersonnel, activities, and operations of the Corporation.

TITLE III: AUTHORIZATION OF APPROPRIATIONS

SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

(a) There are authorized to be appropriated to carry out the provisions of the Act $200,000,000 for each fiscal yearfor 5 years beginning in 2012, and such sums as may be necessary for each of the fiscal years proceeding 2017 asdetermined and approved by Congress.

(b) ADMINISTRATION AND COORDINATION-

(1) IN GENERAL- For each fiscal year, there are authorized to be used for the administration of this Act, 15percent of the total amount appropriated under subsection (a) with respect to such year.

(2) RECIPIENTS OF FUNDING- The Corporation shall direct Financial Institutions to limit administrativeexpenditures to 15 percent of the total funds issued to them by the Corporation and further direct recipients onthe disposal of such funds as pursuant to section 3(d).

SEC. 12. UNITED STATES NATIONAL INNOVATION BONDS.

(a) IN GENERAL- There is established a National Innovation Bond that shall be marketable directly by the Corporation

for National Innovation, the United States Treasury, and such Financial Institutions designated to receive funds underthis Act.

(b) DEFINITION- For purposes of this Act, the term `National Innovation Bond' means an obligation

(1) issued and guaranteed by the United States Treasury except when issued by a recipient FinancialInstitution as according to subsection (c)(3); and

(2) marketed and sold by the Corporation, the United States Treasury or such Financial Institutionsdesignated to receive funds under this Act for the express and sole purpose of providing the Corporation,and Financial Institutions selected to receive funds, with capital for investment in Companies that meet thequalifications established in sections 4(c) and 4(e).

(c) LIMITATIONS

(1) FEDERAL GUARANTEE- National Innovation Bonds shall be considered Federally guaranteedfinancial instruments except when issued by Financial Institutions in receipt of funds from the Corporation.

(2) PROCEEDS- 100 percent of the proceeds from National Innovation Bonds must be used for investmentin Companies eligible for funding under sections 4(c) and 4(e).

(3) COMPLIANCE- The issuer must make an irrevocable election to have the provisions of subsection (c)and section 13(c) apply.

(d) INTEREST ON NATIONAL INNOVATION BONDS INCLUDIBLE IN GROSS INCOME FOR FEDERALINCOME TAX PURPOSES- For purposes of this title, interest on any National Innovation Bond shall be includiblein gross income.

SEC. 13. TAX CREDIT FOR NATIONAL INNOVATION BONDS.


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(a) IN GENERAL- In the case of a National Innovation Bond issued by a recipient of funds from the Corporation,

the owner of such a bond shall receive a portion of the interest, with respect to each interest payment under suchbond, in the form of a Federal tax credit pursuant to Internal Revenue Code 54AA.

(b) AMOUNT OF CREDIT- The maximum amount of the credit determined under this subsection with respect toany interest payment date for a National Innovation Bond is 35 percent of the amount of interest payable by theissuer with respect to such date.

(c) LIMITATIONS

(1) TAX CREDIT LIMIT- The tax credit established by subsection (a) shall not exceed 50 percent of thetotal Federal tax liability of the bondholder.

(2) APPLICATION OF TAX CREDITS- Tax credits established by subsection (a) shall first be appliedto

(A) Federal tax liability resulting from interest accrued on the National Innovation Bond itself inaccordance with section 12(d); and

(B) then to all other Federal tax liability except where prohibited by law.

SEC. 14. RECIPIENT OBLIGATIONS.

(a) RECOUP OF FUNDS- Financial Institutions selected to receive funds shall enter into an agreement to return a

percentage of profits attained through investment in Companies with such funds back to the Corporation.

(b) DATE OF PAYMENT- Recipient Financial Institutions shall be required to make payments of all sums owed tothe Corporation pursuant to subsection (a) no later than 6 months subsequent to the life-cycle of the fund.

national innovation funds act of 2011

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