Ehringhaus will return in the fall to teach at the School of Law.
The UNC-Chapel Hill Foundation, part of the University's Endowment Fund, will provide the money to pay more than $376,000 over the next two years to Ehringhaus, who has an annual salary of $188,321.
Until recently, it was unclear to the public whether the funds would come from private or state money.
But Nancy Davis, associate vice chancellor for university affairs, said it always was clear to administrators that taxpayers' money would not be used.
"It was assumed all along that it would be private and not public funds," Davis said.
The UNC-CH Foundation, one of many foundations in the Endowment Fund, holds unrestricted private gifts made to the University from a variety of sources, including individuals, foundations, corporations and estates.
Chancellor James Moeser was unavailable for comment Sunday, but Provost Robert Shelton said Moeser made the decision to use private funds to cover Ehringhaus' salary and likely informed the UNC Board of Trustees of this decision at last week's meeting.
"The chancellor is the person responsible for making the decisions, not the BOT," he said. "The BOT would have just been informed of his decision."
The salary agreement has sparked criticism because it comes at a time when the state is suffering from severe budgetary problems.