The report on the monthslong review, NC State Bar Executive Director Peter Bolac noted, “demonstrates NC IOLTA’s steady, focused commitment to achieving our mission with the highest standards for how we work ... [and] affirms that our grantmaking meets all eligibility requirements.”
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Office of State Auditor Releases Report on NC IOLTA Performance Audit
On April 21, 2026, the North Carolina Office of the State Auditor (OSA) released the report on a monthslong performance audit of NC IOLTA, the program of the North Carolina State Bar that has funded civil legal aid for low-income residents since 1983.
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 audit scope originally included the State Bar’s disciplinary program as well as the Bar’s overall finances. In December 2025, OSA narrowed the scope of this review to three areas of NC IOLTA’s operations: procedures for awarding grants to organizations that further access to justice across the state; oversight of how that funding is spent by grantees; and the financial processes of the program itself. That last area, NC IOLTA’s financial processes, was later also removed.
Between August 2025 and April of this year, the State Bar and NC IOLTA provided tens of thousands of pages of records and documentation, and leadership and staff participated in multiple 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 audit found that IOLTA’s grant award process complied with applicable eligibility requirements, such as limiting awards to organizations serving North Carolina residents, meeting charitable organization criteria under Section 501(c)(3) of the Internal Revenue Code and aligning funded activities to IOLTA’s authorized purposes,” the audit report states.
The audit did not identify any instances of funds being improperly disbursed by the Board or being misused by grantee organizations, which are prohibited from using IOLTA funding “for any political campaign or to support attempts to influence legislation or any governmental body.”
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.
NC IOLTA’s response to findings
State Bar and NC IOLTA leadership addressed OSA’s findings in a formal response that 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, 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.
NC IOLTA and State Bar leadership said they appreciated the opportunity to share information about this vital philanthropic program and its impact across the state with the OSA engagement team.
“Since the program’s inception in 1983, our board and staff have strived to follow best practices as an IOLTA program and funder,” NC IOLTA Executive Director Mary Irvine said. “We were gratified to have the opportunity to demonstrate that commitment — and our adherence to all current NC IOLTA regulations — throughout the audit. We believe this transparent and open process has provided the Office of State Auditor with a clear and thorough understanding of our important work and will result in an even stronger program going forward.”
“We share the Office of State Auditor’s goal of ensuring that IOLTA funding goes exclusively toward providing civil legal services to North Carolinians who can’t afford them,” Bolac said. “With this shared goal in mind, we’re looking forward to making updates and thank the Office of State Auditor for their partnership in this productive audit process.”
The audit report, including NC IOLTA’s formal statement in response to the reported findings and recommendations, is available online.
Continued legislative freeze on NC IOLTA grantmaking
The OSA’s report comes as the North Carolina General Assembly’s freeze on NC IOLTA’s grantmaking stretches into the second quarter of the funding year.
The provision barring grantmaking was included in legislation enacted in July 2025. In October, Irvine and Bolac were called to testify before the House Select Committee on Oversight and Reform about the structure, governance and history of the program as well as its role in supporting access to civil legal services across the state. No further hearings have occurred.
NC IOLTA was established in 1983 by the State Bar and the North Carolina Supreme Court. The program is governed by a nine-member Board of Trustees appointed by the State Bar Council. Since its inception, NC IOLTA has awarded more than $134M to organizations that help provide legal aid to individuals, families and children. In 2025, more than 40 organizations across the state were awarded $12M in grants.
The loss of anticipated NC IOLTA funding for 2026 has led to budget shortfalls for numerous legal aid organizations, which are often the only providers of free and sliding-scale civil legal services in rural and high-poverty communities.
Due to the legislative freeze, North Carolina is currently the only state in the nation that does not fund civil legal aid through IOLTA grantmaking, which comes at no cost to attorneys, their clients or taxpayers. NC IOLTA and State Bar leadership remain committed to the program’s mission to improve the lives of North Carolinians by strengthening the justice system as a leader, partner and funder and continue to seek a resolution to reopen funding opportunities for the providers of these critical services.
“We at NC IOLTA are very proud of our decades-long partnership with North Carolina’s legal aid community as we work in service of equal justice under the law,” Irvine emphasized. “Providing steady support to our grant partners remains our highest priority.”
Learn more and find the most recent updates on our Media Resources page.
Stories exploring the impact of NC IOLTA funding are available on our Stories page. 2025 Grantee Highlights are being shared on our Grantees page.