58-3613. Standard of conduct in managing and investing institutional fund.

58-3613

Chapter 58.--PERSONAL AND REAL PROPERTY
Part 6.--MISCELLANEOUS PROVISIONS
Article 36.--UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT

      58-3613.   Standard of conduct in managing andinvesting institutional fund.(a) Subject to the intent of a donor expressed in a giftinstrument, an institution, in managing and investing an institutional fund,shall consider the charitable purposes of the institution and the purposes ofthe institutional fund.

      (b)   In addition to complying with the duty of loyalty imposed by law otherthan this act, each person responsible for managing and investing aninstitutional fund shall manage and invest the fund in good faith and with thecare an ordinarily prudent person in a like position would exercise undersimilar circumstances.

      (c)   In managing and investing an institutional fund, an institution:

      (1)   May incur only costs that are appropriate and reasonable in relation tothe assets, the purposes of the institution and the skills available to theinstitution; and

      (2)   shall make a reasonable effort to verify facts relevant to the managementand investment of the fund.

      (d)   An institution may pool two or more institutional funds for purposes ofmanagement and investment.

      (e)   Except as otherwise provided by gift instrument, the following rulesapply:

      (1)   In managing and investing an institutional fund, the following factors,if relevant, must be considered:

      (A)   General economic conditions;

      (B)   the possible effect of inflation or deflation;

      (C)   the expected tax consequences, if any, of investment decisions orstrategies;

      (D)   the role that each investment or course of action plays within theoverall investment portfolio of the fund;

      (E)   the expected total return from income and the appreciation ofinvestments;

      (F)   other resources of the institution;

      (G)   the needs of the institution and the fund to make distributions and topreserve capital; and

      (H)   an asset's special relationship or special value, if any, to thecharitable purposes of the institution.

      (2)   Management and investment decisions about an individual asset must bemade not in isolation but rather in the context of the institutional fund'sportfolio of investments as a whole and as a part of an overall investmentstrategy having risk and return objectives reasonably suited to the fund and tothe institution.

      (3)   Except as otherwise provided by law other than this act, an institutionmay invest in any kind of property or type of investment consistent with thissection.

      (4)   An institution shall diversify the investments of an institutional fundunless the institution reasonably determines that, because of specialcircumstances, the purposes of the fund are better served withoutdiversification.

      (5)   Within a reasonable time after receiving property, an institution shallmake and carry out decisions concerning the retention or disposition of theproperty or to rebalance a portfolio, in order to bring the institutional fundinto compliance with the purposes, terms and distribution requirements of theinstitution as necessary to meet other circumstances of the institution and therequirements of this act.

      History:   L. 2008, ch. 20, § 3; July 1.