Indiana marks a milestone in pro bono funding and looks ahead to future needs
Chuck Dunlap, Executive Director | Indiana Bar Foundation
IOLTA in Indiana
In the fall of 1999, Indiana’s Interest on Lawyers Trust Accounts (IOLTA) program recorded its first revenue of $129.99 from Bank One (now Chase Bank). Since its inception, the Indiana Bar Foundation has managed the IOLTA program. It has generated over $17 million to support civil legal aid and pro bono efforts in Indiana, designed to assure the promise of “justice for all” regardless of one’s economic status.
The IOLTA program supports legal service efforts that impact workforce development, family safety, access to healthcare, economic and community security, and safe, affordable housing.
IOLTA annual revenue is dependent on unpredictable and uncontrollable economic variables and has fluctuated from a low of $263,000 to a high of $3 million. In fiscal year ending June 30, 2019, it was just over $1 million.
Two variables directly impact IOLTA program revenue: principal balances of the attorney trust accounts and the interest rates that financial institutions pay on those balances. Financial institutions must pay a rate on IOLTA accounts comparable to other similarly situated accounts, which can vary by institution due to their individual product pricing.
We have learned this about IOLTA revenue:
- 90% of the revenue comes from the 10 largest banks operating in Indiana. There are 116 financial institutions currently participating in Indiana’s IOLTA program.
- 80% of the revenue comes from IOLTA accounts with principal balances above $100,000. Only 14% of the total IOLTA accounts in Indiana have principal balances above $100,000.
This translates to a program that is sensitive to slight changes in interest rates and can fluctuate dramatically based on a relatively small number of IOLTA accounts and financial institutions.
The Foundation’s challenge is to smooth out these dramatic revenue swings so that the legal aid organizations depending on these funds can plan their operations more efficiently. Its role is to assure a consistently high level of fiscal and program oversight that will enable the delivery of quality legal services in an effective and sustainable manner.
The IOLTA revenue for this past fiscal year is the highest since 2009. Our goal in this next phase of the IOLTA program is to continue working with our banking partners, grantees, and civil legal aid allies to ensure all Hoosiers have effective assistance for their essential legal needs and know where to go to find it.