Legal Aid of North Carolina is reducing services statewide after a freeze on Interest on Lawyers’ Trust Accounts (IOLTA) funding created a multimillion-dollar shortfall in its budget. The nonprofit plans to close nine local offices and cut approximately 40 positions, which could result in about 8,000 fewer people receiving legal assistance next year. Lawmakers have not indicated when or if the funding will be restored, leaving rural courts and domestic-violence programs particularly affected.
Funding pause tucked into last summer's public-safety law
Republican lawmakers included a one-year pause on North Carolina IOLTA grantmaking in last summer’s Public Safety Act, preventing the board from issuing new grants through June 30, 2026, according to The Assembly. The action followed an October House oversight hearing in which Republicans raised questions about whether some grantees had deviated from IOLTA’s original purpose.
Legal Aid says the freeze blew a $6 million hole in its budget
Legal Aid of North Carolina says the funding pause created an estimated $6 million budget shortfall, prompting a statewide restructuring, according to CEO Ashley Campbell. The plan involves closing nine offices and reducing staff, with the organization noting that services for domestic-violence survivors, homeowners facing eviction, and disaster victims will be affected. Public radio reports that the changes could result in roughly 8,000 fewer people receiving assistance next year.
Grants had been propping up dozens of local providers
In 2025, NC IOLTA distributed approximately $12 million in grants to around 40 organizations statewide. Reporting from NC Newsline notes that many smaller grantees have already reduced hours or staff due to the funding freeze. Advocates say the program has historically helped fill gaps in rural counties that lack local government support for civil legal services.
Lawmakers give no clear timetable for relief
House staff and Republican leaders have not provided NC IOLTA officials with a schedule for additional hearings or a plan to resume grant funding, spokespeople told The News & Observer. NC IOLTA’s executive director has stated that the freeze remains in effect through the end of June, and agency leaders say they have not received guidance on when or how funding might be restored.
Rural communities already feeling the fallout
Managers at offices closing in locations such as Rocky Mount, Pembroke, Goldsboro, and Boone report that clients will face longer travel distances for in-person services and fewer court dates with attorney representation. Legal Aid statements and local reporting note that disaster-response services and protective-order cases are among the programs most affected by the office closures and staff reductions.
What comes next: tighter rules or policy reversal
At the October oversight hearing, some state bar officials suggested implementing stricter grant rules that could limit funding for organizations involved in grassroots lobbying. Lawmakers could choose to end the funding pause, make exceptions for core civil-legal services, or revise the grant criteria. Advocates note, however, that even if funding is fully restored, previously closed offices and staff reductions would not be immediately reversed.
Legal Aid is advising individuals who need assistance to call its statewide helpline at 1-866-219-5262 or visit the organization’s website for updates and intake information. The organization says it is coordinating with local partners to maintain remote and pro bono services while the funding freeze continues.
