Report Outlines Next Steps in Implementing IOLTA Program Changes

• Appointments to the NC IOLTA Board of Trustees. The program’s nine-member board, which reviews grant applications and makes all grant decisions, has traditionally been appointed by the State Bar Council, which is itself composed of lawyers elected by their peers across the state and three public members appointed by the governor to represent the public’s interest. The provision changes the authority for appointing NC IOLTA board members to include the appointment of two members each by the Chief Justice of the state Supreme Court, leadership of the NC House and leadership of the NC Senate. The Bar will appoint three members. The Chief Justice of the Supreme Court will appoint the board chair.
• Eligibility of grantees. The provision bars from grant eligibility any entity that provides any services in the following areas:
  • Representation, assistance or advocacy in matters governed by federal immigration law, including visas, lawful permanent residency, asylum, deportation defense, naturalization and any other immigration benefit or relief.
  • Representation, assistance or advocacy regarding surgical gender-transition procedures or the provision of puberty-blocking drugs or cross-sex hormones for minors.
  • Grassroots lobbying and public advocacy, defined as communication (written oral or electronic) or advertisements that directly suggest the public contact officials to support or oppose pending or proposed legislation, regulations, executive decisions or electoral matters.
• Use of IOLTA funds. The provision directs IOLTA earnings as follows:
  • Payment of the program’s administrative expenses, which include monitoring the collection of interest from IOLTA accounts, managing the eligible bank list, and grant administration and monitoring. NC IOLTA has historically worked to keep administrative expenses to less than 10% of annual program income, with 2025 expenses at 4.5%.
  • Up to $15 million per year of funds received after July 1, 2025, are directed to the state’s Office of Indigent Defense Services for the Private Assigned Counsel (PAC) Fund, which pays for court-appointed private attorneys to represent criminal defendants who cannot afford one on their own. Any funds received by NC IOLTA in excess of $15 million will carry over to the next fiscal year for this use by the state.
  • Up to $2 million per year of funds received prior to July 1, 2025, may be directed to grant support of programs designed to improve the administration of justice as recommended by the program’s trustees and approved by the state Supreme Court. (Note: Technical corrections to the budget, which became law on July 27, increase the annual cap to $2.5 million).

As Bolac notes, this provision “significantly restructures the governance, grant eligibility and funding allocation” of the program, which was established by the State Bar and approved by the state Supreme Court in 1983 to fund high-quality civil legal aid across North Carolina.

Since the program’s inception, NC IOLTA has distributed more than $134 million in grant funding under two categories: (1) organizations that provide free civil legal services to low-income North Carolinians in matters such as housing security, consumer finance, access to health care and wages, disability rights, and family law matters; and (2) other programs that improve the administration of justice, from supporting public interest law to educating the public about the law and legal matters. In 2025, the most recent year of NC IOLTA grantmaking under these categories, the program funded more than $11 million in civil legal aid grants and nearly $850,000 in administration of justice grants.

“The reallocation of institutional grant funds creates an unprecedented challenge for the delivery of free civil legal services,” Bolac writes, adding that members of the State Bar must “step up directly to help bridge anticipated service gaps.”