Background
The North Carolina Interest on Lawyers’ Trust Accounts Program (“NC IOLTA” or “the Program”) plays a crucial role in providing legal services in the state. NC IOLTA is the “philanthropic focus of the North Carolina State Bar,” and it “provide[s] access to justice by funding high-quality legal assistance.”[i] The Program was established by the North Carolina State Bar and the North Carolina Supreme Court in 1983, and it “generate[s] income from lawyers’ general trust accounts in order to fund civil legal services and other programs for the public’s benefit.”[ii]
North Carolina law requires that when lawyers receive funds from clients, they deposit the funds into either a general trust account or a dedicated trust account.[iii] Every general trust account “must be an interest or dividend-bearing account.”[iv] Under the N.C. IOLTA Program, banks forward the interest from these trust accounts to the state’s IOLTA program, which, in turn, uses the money “to fund law-related charitable causes” through grants.[v] Grant decisions are made by the N.C. IOLTA Board of Trustees, who are appointed by the North Carolina State Bar Council.[vi] As of 2018, there were over 9,200 IOLTA accounts open at seventy-nine financial institutions across the state.[vii]
The N.C. IOLTA Program is crucial to ensuring that North Carolinians have access to justice. Specifically, “[N.C. IOLTA’s] primary focus is on individuals who are under-resourced” and lack the ability to pay for an attorney.[viii] Since its founding just over forty years ago, N.C. IOLTA has awarded $134 million in grants across the state, addressing issues such as economic stability, education, elder abuse, healthcare access, and housing.[ix] For example, in 2024, the Program allocated over $12 million in funding, supporting causes such as Hurricane Helene disaster relief, public interest legal internships, and civil legal aid for low-income individuals, families, and children.[x]
Politics, Senate Bill 429, and the Uncertain Future of N.C. IOLTA.
Now, despite the crucial benefits the Program provides, it finds itself in the middle of a partisan fight, leaving its future uncertain. Thanks to a one-paragraph provision in North Carolina’s Senate Bill 429, known as the “Public Safety Act,” the N.C. IOLTA Program is facing a year-long freeze on grantmaking, putting millions of dollars of grants on hold.[xi] Section 25 of the Bill provides that “[a]ll funds received by the North Carolina State Bar, and administered by the North Carolina Interest on Lawyers’ Trust Accounts (NC IOLTA) Board of Trustees . . . shall not be encumbered or expended for the purpose of awarding grants or for any purpose other than administrative costs during the period beginning July 1, 2025, and ending June 30, 2026.”[xii] The Bill was signed by Governor Josh Stein, despite his concern that it “punishes organizations providing civil legal services to low-income North Carolinians.”[xiii]
Statements from lawmakers indicate that the freeze was motivated, in part, by political and ideological concerns. Specifically, Republicans have expressed concern over N.C. IOLTA’s funding of progressive legal causes.[xiv]Republican Representative Harry Warren accused the state’s IOLTA Program of “awarding grants to leftist groups with leftist ideologies.”[xv] Representative Warren criticized several of the Program’s grant recipients: the Amica Center for Immigrant Rights, the Carolina Migrant Network, and Emancipate NC, noting, for example, that the Amica Center has expressed controversial views about the history of the United States and systemic racism.[xvi] In response, N.C. State Bar executive director Peter Bolac has pointed out that the Program does not allow funds to be used for political purposes.[xvii]Moreover, although N.C. IOLTA claims that political affiliation is not a factor in selection on its board of advisors, Republicans have taken issue with the historical lack of Republican representation on its board.[xviii]
Nonprofit Legal Services Organization Feel the Impact in 2026.
While grants issued in 2025 were still paid out, none will be issued in 2026, and organizations across the state have already felt the impact.[xix] N.C. Legal Aid, which provides free legal services to low-income individuals throughout North Carolina, is expected to lose $6.5 million in funding due to the Bill.[xx] As a result, the organization has closed nine offices, primarily in rural communities, and laid off approximately fifty staff members.[xxi] According to the organization, thousands of North Carolinians will no longer be able to access low-cost civil legal services. Similarly, Pisgah Legal Services, another nonprofit legal services organization that has provided crucial services in the aftermath of Hurricane Helene, has expressed deep concern over the Bill.[xxii] Despite serving Western North Carolina since 1978, the organization is now considering closing offices and laying off staff, as it expects to serve 5,000 fewer people due to the funding freeze.[xxiii]
While the full extent of the impacts remains to be seen, rural communities are expected to take the biggest hit. Forty-five of North Carolina’s 100 counties are classified as legal deserts, with fewer than one attorney per 1,000 residents.[xxiv] Residents in these areas now face the daunting challenge of navigating the legal system without the support they have depended on for decades. Specifically, “[w]ithout legal aid, courthouses across NC will see a surge of unrepresented people trying to navigate complex procedures without guidance.”[xxv] As a result, there will likely be “slower dockets, longer hearings, and a system stretched to its limits.”[xxvi] The N.C. State Bar and N.C. IOLTA are working towards a resolution that will allow vital non-profits to continue receiving the funds they desperately need to serve North Carolinians.[xxvii] In the meantime, one thing is clear: state officials must reject an all-or-nothing approach to the N.C. IOLTA Program. Pausing the entire program for a few grant decisions is an extreme solution that fails to consider the important role it plays in supporting access to justice in the state.
[i] About Us, N.C. IOLTA, https://nciolta.org/about-nc-iolta/ (last visited Jan. 12, 2025).
[ii] Id.
[iii] See 27 N.C. Admin Code 1.15-2 (2025).
[iv] 27 N.C. Admin Code 1D.1316 (2025).
[v] The North Carolina State Bar, Lawyer’s Trust Account Handbook 47 (2017).
[vi] Id. at 49.
[vii] N.C. IOLTA, 2018 Annual Report 2 (2018).
[viii] Brandon Kingdollar, Rural NC legal aid offices close after General Assembly freezes public assistance fund over politics, N.C. Newsline(Oct. 30, 2025, 9:00 AM), https://ncnewsline.com/2025/10/30/rural-nc-legal-aid-offices-close-after-general-assembly-freezes-public-assistance-fund-over-politics/.
[ix] Impact, N.C. IOLTA, https://nciolta.org/impact/ (last visited Jan. 12, 2025).
[x] Id.
[xi] See S.B. 429, 2025 Gen. Assemb., Reg. Sess. § 25 (N.C. 2025).
[xii] Id.
[xiii] Governor Stein Takes Action on 12 Bills, Office of Governor Josh Stein (July 9, 2025), https://governor.nc.gov/news/press-releases/2025/07/09/governor-stein-takes-action-12-bills
[xiv] Kingdollar, supra note 8.
[xv] Anne Blythe, State Lawmakers Put Funding for Nonprofit Legal Help on Ice, The Assembly (Nov. 4, 2025), https://www.theassemblync.com/news/politics/legal-aid-nc-iolta-general-assembly-funding/.
[xvi] Kingdollar, supra note 8.
[xvii] Id.
[xviii] Id.
[xix] Brandon Kingdollar, NC House, Senate vote to freeze use of legal fund that goes to aid low-income residents, N.C. Newsline (June. 27, 2025, 5:00 AM), https://ncnewsline.com/briefs/nc-house-senate-freeze-use-of-iolta-legal-fund-for-charitable-purposes/.
[xx] Lucas Tomae, Legal aid groups feel pinch of NC legislature freezing millions of dollars, Carolina Pub. Press (Dec. 13, 2025), https://www.northcarolinahealthnews.org/2025/12/13/legal-aid-groups-feel-pinch-of-nc-legislature-freezing-millions-of-dollars/.
[xxi] Kelly Kenoyer, After North Carolina froze funds, Legal Aid has closed nine offices and laid off dozens of attorneys, WUNC News (Dec. 9, 2025, 2:38 PM), https://www.wunc.org/2025-12-09/after-north-carolina-froze-funds-legal-aid-has-closed-nine-offices-and-laid-off-dozens-of-attorneys.
[xxii] Kyle Perroti, Pisgah Legal’s bind: IOLTA funding freeze leaves nonprofit’s leader uncertain, Smoky Mountain News (Dec. 17, 2025), https://smokymountainnews.com/news/item/40651-pisgah-legal-s-bind-iolta-funding-freeze-leaves-nonprofit-s-leader-uncertain.
[xxiii] Id.
[xxiv] Tomae, supra note 20.
[xxv] Ashley Campbell, North Carolina’s IOLTA Freeze Puts Rural Justice at Risk, Att’y at L. Mag. (Dec. 26, 2025), https://attorneyatlawmagazine.com/legal/opinion/north-carolinas-iolta-freeze-puts-rural-justice-at-risk.
[xxvi] Id.
[xxvii] Grantees Plan for Budget Shortfalls Amid Freeze on NC IOLTA Grantmaking, N.C. IOLTA (Nov. 13, 2025), https://nciolta.org/grantees-plan-for-budget-shortfalls-amid-freeze-on-nc-iolta-grant-making/.
