In almost 20 years of research, it has been the home of some of the most daring ideas to aid exploration: space elevators, crops that could grow on Mars and a shield to protect our planet from global warming. But now Nasa's Institute for Advanced Concepts (Niac) has fallen victim to a very down-to-earth problem - a lack of money.

The US space agency is set to close its futuristic ideas factory as part of a cost-cutting exercise which it hopes will help pay for ambitious plans to explore the moon and Mars. Bobby Mitchell, who works at Niac's headquarters in Atlanta, told the Guardian: "From what I understand, Nasa are out of money. We haven't got an official notice yet but we have heard from Nasa that they are going to discontinue funding."

Former Nasa scientist Keith Cowing said the decision to close Niac was "just plain stupid". Writing on his Nasa Watch website, he directed comments to Nasa's administrator, Mike Griffin: "Advanced spacesuits ... will open the surface of the moon - and then Mars - to meaningful and productive human exploration. Where are you going to get all of the things you need to put on those Ares rockets so as to allow their crews to carry out their missions, Mike? Or do you 'just need a good map'? Explorers without the right tools die - or turn around - and head back home. Wrong answer, Mike."

Niac was set up in 1988 as a way to brainstorm revolutionary ideas that go beyond anything Nasa does today. It draws $4m (£2.04m) every year from the agency's $16bn budget and funds about a dozen projects every year for long-term ideas, things that could come to fruition within 10 to 40 years.

The institute is most interested in grand visions and big ideas that might inspire new technologies - and scientists have traditionally been told they should not feel encumbered by what is possible today. Ideas where the technology to make something work has not yet been developed or the science is not entirely understood are welcomed.

Despite this wide remit, Niac has kickstarted several ideas that have subsequently been picked up for further development by Nasa. Most recently, Nasa got interested in a Niac project called the New Worlds Imager, a space probe designed to take pictures of planets outside our solar system.

Taking such pictures is difficult because light coming from the planets is obscured by stars. To get around this, Webster Cash, of the University of Colorado at Boulder, planned a pair of spacecraft - a starshade (the astronomical equivalent of sunglasses) and a collector - that works as a giant pinhole camera. The starshade would be half a mile in diameter with a 10-metre hole at its centre and would sit more than 124,000 miles (200,000km) from the collector, blocking the stars' dazzling light.

Wendy Boss and Amy Grunden, microbiologists at North Carolina State University, worked on Niac-funded projects that looked at ways of growing food on other planets. Taking her inspiration from organisms that live in the most extreme environments on Earth, Prof Grunden genetically modified plants such as rye. In theory, astronauts on long missions could take the GM seeds with them, saving on the cost of taking food supplies into space.

Many of Niac's projects fall into the realm of science fiction. The institute is famously home to the space elevator, an idea first proposed by Arthur C Clarke in his 1978 novel Fountains of Paradise, to transport people and equipment cheaply into space.

In the Niac proposal, a cable would be attached from the ground to a satellite in geostationary orbit around the Earth. Vehicles could then climb the tether and escape gravity without the need for rockets. But no one has yet designed materials that would be strong enough for the elevator to work.

Roger Angel of the University of Arizona was recently funded to look into creating a 1,243-mile-wide shield to protect the Earth from the sun's rays and counteract global warming. "Such a space-based solution might become an urgent priority, worth trillions of dollars if abrupt climate failures appear otherwise inevitable," he wrote in the outline for this project. "We propose to identify near-term research and space missions needed to understand whether a shield could be completed within a few decades at an affordable cost."

Martin Barstow, head of physics and astronomy at Leicester University, said it was important to have a mechanism for scientists to think about radical ideas. "It's important that people have the freedom to be able to do this [but] I don't think you need a separate entity. You just need the mental framework, the capacity for people to have time made available." Nasa has been reorganising its activities since 2004, to pay for the technology it needs to meet its goal of getting humans back to the moon and then on to Mars.

The plans include developing the new Orion exploration vehicle, shaped like the Apollo space capsules last used in 1972 but three times bigger, to replace the space shuttle, and two new Ares I rockets that will blast the astronauts and equipment separately into space. Nasa has slashed more than $300m from the International Space Station's science budget and many robotic exploration missions have been either cancelled or put on indefinite hold.

Far-sighted or far out? Proposals and projects

Mesicopter

A helicopter around 1cm wide, being developed at Stanford University to be used to fly into clouds or storms to monitor the weather

New Worlds Imager

Developed at the University of Colorado to take pictures of planets outside our solar system by blocking out light from the stars with a 'starshade'

GM plants for Mars

A project which would use the genes from organisms which live in extreme conditions on Earth to modify plants such as rye for growing off-world

Caves of Mars

A project which is looking for safe places to site bases on the red planet. The project is also looking at how to create inflatable modules for Mars explorers to live in

Bouncing robots

A proposal from MIT for sets of spherical robots which would be used to explore other planets

Shield

A Johns Hopkins proposal which would protect the Earth from asteroid impacts

Antimatter sail

HBar Technologies is proposing that a sail driven by antimatter could power deep-space exploration

Solar shield

Proposed by Roger Angel of the University of Arizona, this would use a cloud of 'flyers' in space to divert sunlight and lessen the effects of global warming

Space elevator

Bradley Edwards of Eureka Scientific Inc proposes using a super-strong cable tethered to Earth to take material into space

Bio-suit

Developed by Professor Dava Newman, an aeronautics and astronautics engineer at MIT in Boston. The suit is designed to be more flexible and lighter than present space suits, to make it easier to explore the moon and Mars

Entomopter

A flying and crawling robot that flaps its wings to explore new terrain. Prototypes have already been developed at Nasa and American universities