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As the philanthropic focus of the North Carolina State Bar, NC IOLTA — North Carolina Interest on Lawyers’ Trust Accounts — improves access to justice by funding high-quality legal assistance. We work directly with lawyers and financial partners across our state to set up interest-bearing accounts, with the interest funding programs for the public’s benefit. These funds are generated at no cost to attorneys, their clients or North Carolina taxpayers.

Since its inception, NC IOLTA has awarded more than $134 million to organizations that help provide legal aid to individuals, families and children. In 2025, more than 40 North Carolina legal services providers and other organizations received $12M in grant funding to support civil legal aid for low-income North Carolinians and improve the administration of justice across the state.

Legislative Action Freezing NC IOLTA Grantmaking

The North Carolina General Assembly included a provision in the July 2025 Public Safety Act that freezes IOLTA grantmaking for the period from July 1, 2025, through June 30, 2026. More information about this legislation and its impact can be found below.

OSA Performance Audit of NC IOLTA Grantmaking and Grant Monitoring

The North Carolina Office of the State Auditor published a report on the performance audit of NC IOLTA’s grantmaking and grant monitoring. While the State Auditor’s engagement team shared recommendations for strengthening the grant process as a result of its review, the audit report confirms that NC IOLTA’s grantmaking complies with the current rules, policies and procedures governing the program’s administration, including that all grantees met eligibility requirements, and does not identify any instance of a grantee misappropriating grant funds. More information about the performance audit can be found below.

For additional information on either of these issues, contact Executive Director Mary Irvine or Communications & Outreach Coordinator Karen Lewis Taylor.

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Updates From NC IOLTA

Office of State Auditor Releases Report on NC IOLTA Performance Audit (April 21, 2026)
Former NC IOLTA Board Chair Addresses Legislative Freeze on Grantmaking (April 2, 2026)
Grantees Report Impacts of Continued Freeze on NC IOLTA Grantmaking (Jan. 13, 2026)
Grantees Plan for Budget Shortfalls Amid Freeze on NC IOLTA Grantmaking (Nov. 13, 2025)
Important Update on the IOLTA Program and 2026 Grant Funding (Nov. 6, 2025)
General Assembly Freezes NC IOLTA Grantmaking for 2026 (Aug. 26, 2025)

FAQs About NC IOLTA

What is NC IOLTA?

As the philanthropic focus of the North Carolina State Bar, NC IOLTA provides access to justice by funding high-quality legal assistance. We work directly with lawyers and financial partners across our state to assist in establishing lawyers’ general trust accounts, generating income to fund civil legal services and other programs for the public’s benefit.

The NC State Bar and the North Carolina Supreme Court established NC IOLTA in 1983. The program is governed by a nine-member Board of Trustees appointed by the NC State Bar Council, which is itself made up of lawyers elected by peers in their communities plus three nonlawyer members appointed by the governor and other elected officials. Of the nine NC IOLTA trustees, at least six must be active members of the Bar. Trustees may serve up to two consecutive three-year terms.

Since its inception, NC IOLTA has awarded over $134 million to organizations that help provide legal aid to individuals, families and children. In 2025, more than 40 North Carolina legal services providers and other organizations received $12M in grant funding to support civil legal aid for low-income North Carolinians and improve the administration of justice across the state.
Where does the grant money come from?

IOLTA stands for “Interest on Lawyers’ Trust Accounts.” It is a critical way to increase access to justice for individuals and families living in poverty. Without use of taxpayer funds and at no cost to lawyers or their clients, the interest generated on IOLTA accounts is used to support civil legal aid and improvements in the justice system.

Lawyers routinely hold funds for clients. When the amount is large or if the funds are to be held for a long time, lawyers place these funds in interest-bearing trust accounts for the benefit of their clients.

When funds held for the client cannot practically earn income (for example, because the amount is so small or the funds are being held for so short a time), the funds are held collectively in a general, pooled trust account with funds belonging to other clients – referred to as IOLTA accounts – where interest will accrue. The income generated on the pooled funds is sent to NC IOLTA monthly by banks holding IOLTA accounts and used to make grants for civil legal aid and other programs that support access to justice for low-income people.

There are IOLTA programs in all United States jurisdictions, including the District of Columbia, Puerto Rico and U.S. Virgin Islands.

In North Carolina, IOLTA is a program of the State Bar. Attorneys who hold general trust accounts are required to hold them in IOLTA accounts at an approved bank. They must certify each year as to whether they hold IOLTA accounts and must notify NC IOLTA when they open or close a trust account or change employment.
How are grants for Civil Legal Aid and Administration of Justice made?
NC IOLTA currently awards grants under two of the grant purposes identified in the rules governing NC IOLTA, Section .1300 of the Governing Rules of the North Carolina State Bar codified in Chapter 1 of Title 27 of the North Carolina Administrative Code. The two grant programs are:

Civil Legal Aid Grant Program: NC IOLTA’s Civil Legal Aid Grant Program funds general support for a network of organizations, including both civil legal aid organizations and agencies that offer civil legal aid services, that together provide basic access to the justice system for low-income people residing in every county in North Carolina. Civil legal aid includes direct representation of eligible clients and client groups as well as related training and technical assistance. An organization or program may be providing services through staff attorneys and advocates or using volunteer lawyers on a pro bono basis.

Administration of Justice Grant Program: NC IOLTA’s Administration of Justice Grants provide support for programs seeking to improve the administration of justice in North Carolina, focusing grants in areas where they can have a measurable impact. This includes improvement in the operation and management of the justice system; public education and understanding about the law, including law-related education; promotion and support for a full range of dispute resolution techniques and alternatives; and promotion and support for public interest legal representation. Administration of Justice Grants must initially be approved by the NC Supreme Court.

The grant application window typically opens in July, and the application deadline generally falls in early September. Information about the timeline is published in the State Bar Journal, updated on the NC IOLTA website and shared through social media. NC IOLTA also sends emails to current grantees and others interested in receiving the application. NC IOLTA hosts a grant information session to review the funding opportunity and timeline, address commonly asked questions and hear from interested applicants. Grant applications and reports are submitted online through an online grant portal.

The NC IOLTA Board of Trustees meets in early December to review grant applications and make grant awards for the following calendar year. Staff notify all applicants of the board’s decisions and prepare grant agreements for those organizations to receive grant funds.
How are grantees held accountable for the use of these funds?
The grant agreement signed by all grantees prior to disbursement sets forth grant requirements. Requirements include, but are not limited to, the following:

All funds must be used to provide representation and services to North Carolina residents;

Clients must be indigent or low-income;

No funds may be used for political campaigns or attempts to influence a governmental body;

In addition to regular financial and programmatic reporting, grantees that meet a particular threshold must submit an audit to NC IOLTA.

Throughout the year, grantees submit reports to NC IOLTA staff regarding use of grant funds, progress on goals as outlined in the grant application, and other relevant organizational updates. A Final Report is submitted by each grantee one month after the close of the grant. NC IOLTA staff members review all submitted reports and address any questions or issues identified. Staff also review submitted audits.

NC IOLTA staff conduct periodic site visits of grantee organizations. In advance of the site visit, staff members request documentation from the grantee organization and work with grantee staff to create an agenda for the visit, often meeting with multiple people, depending on the size of the organization. Following the meeting, staff prepare a summary of the visit and conduct any necessary follow-up with the organization. Staff members may also attend board meetings of grantee organizations for additional insight on their governance, sustainability and current challenges.

FAQs About Civil Legal Aid in NC

Why is civil legal aid important?
While a right to counsel in criminal matters is mandated by the Sixth Amendment, no such right exists in civil cases, even those impacting the most basic needs of individuals, including safety, food and shelter.

In the 2022 Justice Gap Report, funded by the federal Legal Services Corporation, the University of Chicago found that “low-income Americans do not get legal help for 92% of their substantive legal aid problems.”

From the survivor of domestic violence trying to find safety for themselves and their children to the senior citizen facing eviction from their home, civil legal aid exists to ensure that all people have access to the civil justice system.

North Carolina’s 2020 Civil Legal Needs Assessment reported that:

More than 2 million low-income North Carolinians were eligible for the services of legal aid providers in 2018.

Seventy-one percent of low-income families will experience at least one civil legal problem in a given year.

There is only one legal aid attorney for every 8,000 eligible residents in the state.

Eighty-six percent of these legal needs go unmet because of limited resources for civil legal aid providers.

Research shows that low-income and underserved populations are more likely to face serious challenges — such as predatory consumer scams, evictions and health care challenges — that require legal intervention. Without equal access to justice, many people are forced to navigate a complex and often intimidating legal system on their own, unaware of their rights or lacking the guidance needed to protect them. This puts their basic needs and rights in jeopardy.

This 2018 video produced by the Illinois Equal Justice Foundation and The Kresge Foundation provides some helpful information about the importance of civil legal aid.
What kinds of legal matters does this include?
High-quality legal assistance provides access to justice in important civil matters and protects basic human rights in areas including:

Disaster relief;

Domestic violence and family law;

Employment and income maintenance;

Elder abuse;

Evictions and foreclosure;

Health care access.

Civil legal aid includes:

Direct legal services provided by legal aid attorneys and pro bono (volunteer) attorneys, ranging from brief advice and services to extended representation;

Self-help information and resources for people unable to afford an attorney;

Community legal education programs.
What is a legal desert?

A legal desert is defined as an area that has less than one lawyer per 1,000 residents. In 2023, when Chief Justice Paul Newby and then-Bar President Marcia Armstrong called a Legal Desert Summit to explore and address the issue, nearly half of North Carolina’s 100 counties were legal deserts. The challenge persists today.

While they can occur anywhere, legal deserts are often rural areas. A significant portion of needs in both civil and criminal matters go unmet as a result of this shortage of attorneys, and low-income residents who cannot afford to pay for private representation rely on legal aid — resources for which are severely strained. According to North Carolina’s 2020 Civil Legal Needs Assessment, there is only one legal aid attorney for every 8,000 eligible residents in the state.
What value does access to affordable civil legal aid provide?

Without equal access to justice, many people are forced to navigate a complex and often intimidating legal system on their own, unaware of their rights or lacking the guidance needed to protect them. This puts their basic needs and rights in jeopardy.

Research consistently shows that even a small amount of legal help can make a big difference — helping families stay in their homes, preventing unjust trial outcomes and lifting individuals out of poverty.

Legal aid also makes a positive economic impact on municipalities and the state. According to a report by the federal Legal Services Corporation, “The Economic Case for Civil Legal Aid”:

For every $1 invested, civil legal aid returns an average of $7.

Every one of over 50 studies conducted on the return on investment (ROI) of civil legal aid in the last 25 years demonstrates that civil legal aid provides a positive return on investment. In state after state, investment in civil legal aid has paid for itself many times over. By helping individuals resolve legal challenges, legal aid reduces the burden on government services and strengthens communities.

Civil legal aid delivers immediate and measurable direct returns to families, individuals and taxpayers, as well as powerful indirect benefits that fuel long-term economic growth and strengthen community stability.

FAQs About the One-Year Freeze on Grantmaking

What is the timeline of legislative action on this matter?
In May 2025, the House version of the state budget (S257) included a provision directing that all IOLTA interest income be remitted to the Office of Indigent Defense Services for the Private Assigned Counsel Fund. Although the Senate did not concur (and no budget has been passed as of April 1, 2026), a subsequent measure regarding IOLTA was included in the Public Safety Act, enacted in July 2025. That law contains a provision that freezes IOLTA grantmaking for the period from July 1, 2025, through June 30, 2026.

NC State Bar and NC IOLTA leadership have been in communication, both formally and informally, with legislators to share information about the program and its structure. At the request of, and in conjunction with, members of the General Assembly, they have proposed compromise legislation that addresses the concerns raised by members of the General Assembly.

On Oct. 22, 2025, the House Select Committee on Oversight and Reform held a hearing on the IOLTA program. NC IOLTA Executive Director Mary Irvine and NC State Bar Executive Director Peter Bolac were called to testify about the structure, governance and history of the program, as well as its role in supporting access to civil legal services across the state. The materials and recordings from that hearing are available at these links:

Hearing Transcript

Video Recording

Peter Bolac Statement

Mary Irvine Statement

As of April 1, 2026, no further legislative hearings have been held or scheduled on this matter. It is unknown when legislators might revisit the funding freeze.
What does the legislation do/mean?

The measure freezes IOLTA grantmaking for the period from July 1, 2025, through June 30, 2026.

Pursuant to the legislation, the 2026 grant application process, which would have run from July to September 2025, did not take place, and no grants were awarded by the Board of Trustees in December 2025.

At this time, the state’s numerous legal aid organizations — including Legal Aid of NC, which serves all 100 counties — will not receive any NC IOLTA funding for the grant period beginning Jan. 1, 2026.

North Carolina is currently the only state in the nation that does not provide funding for civil legal aid through IOLTA grantmaking.
What is the impact of this legislation on grantees?
NC IOLTA has played a critical role in the access to justice community since its inception in 1983, and many legal aid organizations across the state view the program as a reliable and valued partner in the work they do to provide legal assistance to North Carolina’s most vulnerable residents: the one million-plus low-income residents who cannot afford a private attorney.

NC IOLTA funding decisions are made on an annual basis. However, a number of grantee organizations — such as Legal Aid of NC, Pisgah Legal Services, Disability Rights NC and Charlotte Center for Legal Advocacy — are longtime or repeat grantees that consistently deliver measurable positive results with IOLTA funding and had intended to apply for funding for 2026 as well.

The freeze also affects prospective first-time grantees planning to launch new programs and/or expand existing successful programs that either improve access to civil legal aid for low-income North Carolinians or enhance the administration of justice.

In some cases, the lack of this critical funding has necessitated office closures, staff reductions and program cuts.

The following announcements by 2025 grantees speak to the impact of the IOLTA freeze on their operations:

Legal Aid of NC (Dec. 17, 2025)

Pisgah Legal Services (December 2025)

Disability Rights NC (Nov. 19, 2025)

Charlotte Center for Legal Advocacy (Oct. 13, 2025)

Lists of 2025 grantees are available at the links below:

Civil Legal Aid

Administration of Justice

Stories exploring the impact of our grantees are on our website.
What is the impact of this legislation on low-income North Carolinians?

U.S. Census Bureau reporting indicates that 12.5% of North Carolinians — 1.3 million people, the 17^th highest number nationwide — were living in poverty in 2024. The child poverty rate was higher, at 16.2% or 374,000 children, the 15^th highest poverty rate in the nation.

For many of these individuals and families, the cost of a private attorney is prohibitive. In regions where the percentage of the population living in poverty is high, access to civil legal support to secure and protect basic needs such as housing, health care, employment and safety from violence can be even harder to obtain. In the nearly one-half of North Carolina counties classified as legal deserts, legal aid attorneys provide a lifeline for thousands of residents.

Research consistently shows that even a small amount of legal help can make a big difference — helping families stay in their homes, preventing unjust trial outcomes and lifting individuals out of poverty.

Grantee organizations have indicated that the loss of IOLTA funding for 2026 is likely to negatively impact thousands of low-income and vulnerable North Carolinians, including seniors, veterans, people with disabilities, survivors of domestic violence and people who live in communities affected by natural disasters.
What is the impact of this legislation on North Carolina’s court system?

State Bar leadership and some court officials have noted that the reduction in funding for civil legal services will not only adversely affect clients and communities but likely will also adversely affect the functioning of the state’s court system.

“Fewer legal aid attorneys mean more individuals will appear in court without representation, resulting in longer hearings, more continuances and increased administrative burdens on clerks, judges and attorneys. The absence of legal assistance can also lead to more procedural errors and a rise in filings that might otherwise have been resolved without the necessity of court intervention,” NC State Bar Executive Director Peter Bolac wrote in his Nov. 6 communication to members. “Over time, these challenges will strain judicial resources and diminish the efficiency of court proceedings. Lawyers in both the public and private sectors are likely to see the effects firsthand through heavier caseloads, slower case movement and the growing presence of unrepresented litigants across all civil dockets.”

FAQs About the 2025-26 Performance Audit

What is a performance audit?

The North Carolina Office of the State Auditor website states that performance audits “provide independent and objective appraisals of agency management practices and operational results to state leaders and the public. They help improve performance, strengthen accountability and enhance transparency of state government programs. Performance audits evaluate broad topics that could include program outcome but can also have narrower scopes that do not evaluate program outcomes.”

Performance audit reports — like those generated by other types of audits conducted by the Office of the State Auditor — are a matter of public record and are available on the state government’s website at https://www.auditor.nc.gov/auditsreports/.
Is NC IOLTA a state agency?

While NC IOLTA’s operations and grantmaking are funded solely by interest earned on North Carolina lawyers’ IOLTA accounts, it is a program of the North Carolina State Bar, which was created in 1933 by the North Carolina General Assembly as the state government agency responsible for the regulation of the legal profession in North Carolina. The State Bar is subject to legislative oversight.
What is the timeline of the performance audit of NC IOLTA?

The North Carolina Office of the State Auditor (OSA) initiated a performance audit on Aug. 4, 2025.

The initial objectives of the audit outlined in the Aug. 4 letter include whether: (1) IOLTA program grants were awarded and monitored in accordance with NC Administrative Code and State Bar policies and procedures; (2) State Bar disciplinary investigations were completed in accordance with state law, NC Administrative Code and State Bar policies and procedures; and (3) State Bar expenditures were reasonable, properly authorized, supported by adequate documentation and aligned with State Bar statutory responsibilities.

On Dec. 2, 2025, the OSA narrowed the objectives of the audit to focus on whether: (1) IOLTA program grants were awarded in accordance with NC Administrative Code and State Bar policies and procedures; (2) IOLTA program grants were monitored in accordance with NC Administrative Code and State Bar policies and procedures; and (3) IOLTA expenditures were reasonable, properly authorized, supported by adequate documentation and aligned with IOLTA and State Bar statutory responsibilities. That third revised objective was subsequently removed from the scope of the audit, leaving only the IOLTA grantmaking and grant monitoring objectives.

During this period, State Bar and NC IOLTA staff provided tens of thousands of pages of documents and participated in multiple in-person interviews with the OSA’s engagement team. The review included records, policies and procedures for the period of Jan. 1, 2023, to June 30, 2025.

The final report of the performance audit was released to the public on April 21, 2026, and includes findings from its review of NC IOLTA’s grant awarding and grant monitoring processes. The full report is available on the OSA’s website.

This performance audit and release of the report comes as the North Carolina General Assembly’s one-year freeze on NC IOLTA’s grantmaking, enacted on July 9, 2025, stretches into the second quarter of the funding year. As of April 15, 2026, no further legislative hearings have been scheduled on this matter. NC IOLTA and State Bar leadership continue to seek a resolution to reopen funding opportunities for the providers of civil legal aid, which serves as a lifeline to millions of low-income North Carolinians each year and helps ensure that all people have access to the civil justice system.
What findings are shared in the April 2026 audit report?
State Bar Executive Director Peter Bolac said, “We’re pleased to share that the report demonstrates NC IOLTA’s steady, focused commitment to achieving our mission with the highest standards for how we work. The audit affirms that our grantmaking meets all eligibility requirements. We welcome opportunities to further strengthen how we measure and report the impact of this important work.”

The report offers two areas for improvement – expansion of measurable outcomes-based goals and stricter monitoring procedures – and recommends NC IOLTA staff present proposed changes in procedures to the program’s Board of Trustees within six months.

State Bar and NC IOLTA leadership have addressed these findings in a formal response, which is part of the public record. The response includes the following clarifications:

Requiring measurable goals in grant applications: Civil Legal Aid grant applications currently require grantees to estimate the number of clients they will serve with the support of grant funds, and grant recipients are also required to provide quarterly or semi-annual reports documenting their progress toward that core goal. In December 2025, after the close of the audit review period, NC IOLTA incorporated and standardized additional outcome-based reporting metrics. NC IOLTA will continue to incorporate and standardize measurable goals into the grant application and grant monitoring process.

Monitoring the use of NC IOLTA funds by grantees: In addition to other monitoring procedures in place, NC IOLTA currently receives third-party audits for all grantees with annual revenue of more than $500,000 who receive in excess of $100,000 in NC IOLTA grant funds. NC IOLTA anticipates implementing additional monitoring for these grantees, including a post-award verification model that requires grantees to provide a separate audit report to confirm sufficient internal controls and conduct compliance testing specific to IOLTA funding. For grantees whose funding falls below that threshold, NC IOLTA anticipates implementing additional monitoring measures including compliance testing as part of regular site visits to verify the accuracy of grantee reports and confirm compliance with grant restrictions. These more limited oversight measures are designed to ensure compliance without imposing additional expenses for these grantees.

State Bar and NC IOLTA leadership have committed to bringing the OSA’s findings and recommendations to NC IOLTA’s Board of Trustees with proposed changes to build on and strengthen existing policies. NC IOLTA remains committed to its mission to improve the lives of North Carolinians by strengthening the justice system as a leader, partner and funder in service of its vision of a North Carolina where all people can effectively meet their legal needs.

In 2025 NC IOLTA awarded more than $134M to more than 40 organizations across the state that serve veterans, small business owners, families, people with disabilities and more. With support from NC IOLTA, these organizations provided legal services that helped more than 87,000 North Carolinians, closed more than 30,000 cases and served North Carolinians in all 100 counties.

For More Information

For additional information, contact Executive Director Mary Irvine or Communications & Outreach Coordinator Karen Lewis Taylor.

Sources:

NC IOLTA
National Association of IOLTA Programs (NAIP)
Legal Services Corporation: The Justice Gap Report; The Economic Case for Civil Legal Aid
North Carolina Equal Justice Alliance: Civil Legal Needs Assessment
U.S. Census Bureau: 2024 American Community Survey