2007 Legislation
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SENATE BILL NO. 1016 – Prudent mngmt of institutional fnds

SENATE BILL NO. 1016

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Bill Status



S1016aaH.............................................by JUDICIARY AND RULES
INSTITUTIONAL FUNDS - Repeals and adds to existing law to provide for the
"Uniform Prudent Management of Institutional Funds Act"; to define terms;
to provide a standard of conduct in managing and investing an institutional
fund; to provide for appropriation for expenditure or accumulation of an
endowment fund; to provide for the delegation of management and investment
functions; to provide for release or modification of restrictions on
management, investment or purpose of a fund; to provide for reviewing
compliance; to provide application to existing institutional funds; to
address relation to the Electronic Signatures in Global and National
Commerce Act; and to provide for uniformity of application and
construction.

01/16    Senate intro - 1st rdg - to printing
01/17    Rpt prt - to Jud
01/25    Rpt out - rec d/p - to 2nd rdg
01/26    2nd rdg - to 3rd rdg
02/01    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Hill
    Title apvd - to House
02/02    House intro - 1st rdg - to Jud
03/02    Rpt out - to Gen Ord
03/05    Rpt out amen - to 1st rdg as amen
03/06    1st rdg - to 2nd rdg as amen
03/07    2nd rdg - to 3rd rdg as amen
03/12    3rd rdg as amen - PASSED - 69-0-1
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
      Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
      LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
      Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould,
      Ring, Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(2),
      Shepherd(8), Shirley, Shively, Smith(30), Smith(24), Snodgrass,
      Stevenson, Thayn, Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr.
      Speaker
      NAYS -- None
      Absent and excused -- Clark
    Floor Sponsor - Labrador
    Title apvd - to Senate
03/13    Senate concurred in House amens - to engros
03/14    Rpt engros - 1st rdg - to 2nd rdg as amen
03/15    2nd rdg - to 3rd rdg as amen
    Rls susp - PASSED - 34-0-1
      AYES -- Andreason, Bair, Bilyeu, Broadsword, Burkett, Cameron,
      Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai, McGee, McKague, McKenzie, Pearce, Richardson,
      Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- Bastian
    Floor Sponsor - Hill
    Title apvd - to enrol
03/16    Rpt enrol - Pres signed
03/19    Sp signed
03/20    To Governor
03/26    Governor signed
         Session Law Chapter 173
         Effective: 07/01/07

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1016
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE MANAGEMENT OF INSTITUTIONAL FUNDS; REPEALING CHAPTER 50, TITLE
  3        33, IDAHO CODE, PROVIDING FOR  THE  UNIFORM  MANAGEMENT  OF  INSTITUTIONAL
  4        FUNDS  ACT;  AND  AMENDING  TITLE 33, IDAHO CODE, BY THE ADDITION OF A NEW
  5        CHAPTER 50, TITLE 33, IDAHO CODE, TO PROVIDE FOR THE UNIFORM PRUDENT  MAN-
  6        AGEMENT  OF  INSTITUTIONAL  FUNDS ACT, TO PROVIDE A SHORT TITLE, TO DEFINE
  7        TERMS, TO PROVIDE A STANDARD OF  CONDUCT  IN  MANAGING  AND  INVESTING  AN
  8        INSTITUTIONAL  FUND, TO PROVIDE FOR APPROPRIATION FOR EXPENDITURE OR ACCU-
  9        MULATION OF AN ENDOWMENT FUND, TO PROVIDE RULES OF CONSTRUCTION,  TO  PRO-
 10        VIDE FOR THE DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS, TO PROVIDE
 11        FOR  RELEASE  OR MODIFICATION OF RESTRICTIONS ON MANAGEMENT, INVESTMENT OR
 12        PURPOSE OF A FUND, TO PROVIDE FOR REVIEWING COMPLIANCE, TO PROVIDE  APPLI-
 13        CATION  TO EXISTING INSTITUTIONAL FUNDS, TO ADDRESS RELATION OF CHAPTER TO
 14        THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT AND TO  PRO-
 15        VIDE FOR UNIFORMITY OF APPLICATION AND CONSTRUCTION.
                                                                        
 16    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 17        SECTION  1.  That  Chapter  50,  Title 33, Idaho Code, be, and the same is
 18    hereby repealed.
                                                                        
 19        SECTION 2.  That Title 33, Idaho Code, be, and the same is hereby  amended
 20    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 21    ter 50, Title 33, Idaho Code, and to read as follows:
                                                                        
 22                                      CHAPTER 50
 23                UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
                                                                        
 24        33-5001.  SHORT TITLE. This chapter shall be known and may be cited as the
 25    "Uniform Prudent Management of Institutional Funds Act."
                                                                        
 26        33-5002.  DEFINITIONS. In this chapter:
 27        (1)  "Charitable purpose" means the relief of poverty, the advancement  of
 28    education  or religion, the promotion of health, the promotion of a governmen-
 29    tal purpose, or any other purpose the achievement of which  is  beneficial  to
 30    the community.
 31        (2)  "Endowment  fund"  means  an institutional fund or part thereof that,
 32    under the terms of a gift instrument, is not wholly expendable by the institu-
 33    tion on a current basis. The term does not include assets that an  institution
 34    designates  as an endowment fund for its own use nor permanent endowment funds
 35    managed pursuant to chapter 7, title 57, Idaho Code.
 36        (3)  "Gift instrument" means a record or records,  including  an  institu-
 37    tional  solicitation,  under  which property is granted to, transferred to, or
 38    held by an institution as an institutional fund.
 39        (4)  "Institution" means:
 40        (a)  A person, other than an individual,  organized  and  operated  exclu-
                                                                        
                                       2
                                                                        
  1        sively for charitable purposes;
  2        (b)  A  government or governmental subdivision, agency or instrumentality,
  3        to the extent that it holds funds exclusively for  a  charitable  purpose;
  4        and
  5        (c)  A  trust  that had both charitable and noncharitable interests, after
  6        all noncharitable interests have terminated.
  7        (5)  "Institutional fund" means a fund held by an institution  exclusively
  8    for charitable purposes. The term does not include:
  9        (a)  Program related assets;
 10        (b)  A  fund  held for an institution by a trustee that is not an institu-
 11        tion; or
 12        (c)  A fund in which a beneficiary that  is  not  an  institution  has  an
 13        interest,  other than an interest that could arise upon violation or fail-
 14        ure of the purposes of the fund.
 15        (6)  "Person" means an individual, corporation,  business  trust,  estate,
 16    trust,  partnership,  limited  liability  company, association, joint venture,
 17    public corporation, government or governmental subdivision, agency or  instru-
 18    mentality, or any other legal or commercial entity.
 19        (7)  "Program related asset" means an asset held by an institution primar-
 20    ily  to  accomplish  a charitable purpose of the institution and not primarily
 21    for investment.
 22        (8)  "Record" means information that is inscribed on a tangible medium  or
 23    that  is  stored  in  an  electronic  or  other  medium  and is retrievable in
 24    perceivable form.
                                                                        
 25        33-5003.  STANDARD OF CONDUCT  IN  MANAGING  AND  INVESTING  INSTITUTIONAL
 26    FUND. (1)  Subject to the intent of a donor expressed in a gift instrument, an
 27    institution,  in  managing and investing an institutional fund, shall consider
 28    the charitable purposes of the institution and the purposes  of  the  institu-
 29    tional fund.
 30        (2)  In  addition  to  complying  with  the duty of loyalty imposed by law
 31    other than this chapter, each person responsible for managing and investing an
 32    institutional fund shall manage and invest the fund in good faith and with the
 33    care an ordinarily prudent person in a like position would exercise under sim-
 34    ilar circumstances.
 35        (3)  In managing and investing an institutional fund, an institution:
 36        (a)  May incur only costs that are appropriate and reasonable in  relation
 37        to  the  assets, the purposes of the institution, and the skills available
 38        to the institution; and
 39        (b)  Shall make a reasonable effort to verify facts relevant to  the  man-
 40        agement and investment of the fund.
 41        (4)  An  institution may pool two (2) or more institutional funds for pur-
 42    poses of management and investment.
 43        (5)  Except as otherwise provided by  a  gift  instrument,  the  following
 44    rules apply:
 45        (a)  In  managing  and investing an institutional fund, the following fac-
 46        tors, if relevant, must be considered:
 47             (i)    General economic conditions;
 48             (ii)   The possible effect of inflation or deflation;
 49             (iii)  The expected tax consequences, if any, of investment decisions
 50             or strategies;
 51             (iv)   The role that each investment or course of action plays within
 52             the overall investment portfolio of the fund;
 53             (v)    The expected total return from income and the appreciation  of
 54             investments;
                                                                        
                                       3
                                                                        
  1             (vi)   Other resources of the institution;
  2             (vii)  The  needs  of  the institution and the fund to make distribu-
  3             tions and to preserve capital; and
  4             (viii) An asset's special relationship or special value, if  any,  to
  5             the charitable purposes of the institution.
  6        (b)  Management and investment decisions about an individual asset must be
  7        made  not  in  isolation  but  rather  in the context of the institutional
  8        fund's portfolio of investments as a whole and as a  part  of  an  overall
  9        investment strategy having risk and return objectives reasonably suited to
 10        the fund and to the institution.
 11        (c)  Except  as  otherwise  provided  by  law  other than this chapter, an
 12        institution may invest in any kind of property or type of investment  con-
 13        sistent with this section.
 14        (d)  An  institution  shall  diversify the investments of an institutional
 15        fund unless the institution reasonably determines that, because of special
 16        circumstances, the purposes of the fund are better served without diversi-
 17        fication.
 18        (e)  Within a reasonable time after  receiving  property,  an  institution
 19        shall make and carry out decisions concerning the retention or disposition
 20        of  the property or to rebalance a portfolio, in order to bring the insti-
 21        tutional fund into compliance with the purposes,  terms  and  distribution
 22        requirements  of  the institution or necessary to meet other circumstances
 23        of the institution and the requirements of this chapter.
 24        (f)  A person that has special skills or  expertise,  or  is  selected  in
 25        reliance  upon  the  person's  representation  that the person has special
 26        skills or expertise, has a duty to use those skills or that  expertise  in
 27        managing and investing institutional funds.
                                                                        
 28        33-5004.  APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND
 29    -- RULES OF CONSTRUCTION. (1)  Subject to the intent of a donor  expressed  in
 30    the gift instrument, an institution may appropriate for expenditure or accumu-
 31    late so much of an endowment fund as the institution determines is prudent for
 32    the  uses,  benefits,  purposes  and  duration for which the endowment fund is
 33    established. Unless stated otherwise in the gift instrument, the assets in  an
 34    endowment  fund are donor restricted assets until appropriated for expenditure
 35    by the institution. In making a determination to  appropriate  or  accumulate,
 36    the institution shall act in good faith, with the care that an ordinarily pru-
 37    dent person in a like position would exercise under similar circumstances, and
 38    shall consider, if relevant, the following factors:
 39        (a)  The duration and preservation of the endowment fund;
 40        (b)  The purposes of the institution and the endowment fund;
 41        (c)  General economic conditions;
 42        (d)  The possible effect of inflation or deflation;
 43        (e)  The expected total return from income and the appreciation of invest-
 44        ments;
 45        (f)  Other resources of the institution; and
 46        (g)  The investment policy of the institution.
 47        (2)  To  limit  the authority to appropriate for expenditure or accumulate
 48    under subsection (1) of this section,  a  gift  instrument  must  specifically
 49    state the limitation.
 50        (3)  Terms  in  a gift instrument designating a gift as an endowment, or a
 51    direction or authorization in  the  gift  instrument  to  use  only  "income,"
 52    "interest,"  "dividends"  or  "rents,  issues or profits," or "to preserve the
 53    principal intact," or words of similar import:
 54        (a)  Create an endowment fund of permanent duration unless other  language
                                                                        
                                       4
                                                                        
  1        in the gift instrument limits the duration or purpose of the fund; and
  2        (b)  Do  not  otherwise limit the authority to appropriate for expenditure
  3        or accumulate under subsection (1) of this section.
                                                                        
  4        33-5005.  DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.  (1)  Subject
  5    to any specific limitation set forth in a gift instrument or in law other than
  6    this  chapter, an institution may delegate to an external agent the management
  7    and investment of an institutional fund to  the  extent  that  an  institution
  8    could  prudently delegate under the circumstances. An institution shall act in
  9    good faith, with the care that an ordinarily prudent person in a like position
 10    would exercise under similar circumstances, in:
 11        (a)  Selecting an agent;
 12        (b)  Establishing the scope and terms of the delegation,  consistent  with
 13        the purposes of the institution and the institutional fund; and
 14        (c)  Periodically  reviewing  the  agent's actions in order to monitor the
 15        agent's performance and compliance with the scope and terms of the delega-
 16        tion.
 17        (2)  In performing a delegated function, an  agent  owes  a  duty  to  the
 18    institution  to exercise reasonable care to comply with the scope and terms of
 19    the delegation.
 20        (3)  An institution that complies with subsection (1) of this  section  is
 21    not  liable for the decisions or actions of an agent to which the function was
 22    delegated.
 23        (4)  By accepting delegation of a management or investment  function  from
 24    an  institution that is subject to the laws of this state, an agent submits to
 25    the jurisdiction of the courts of this state in all proceedings  arising  from
 26    or related to the delegation or the performance of the delegated function.
 27        (5)  An  institution  may  delegate management and investment functions to
 28    its committees, officers or employees as authorized by law of this state other
 29    than this chapter.
                                                                        
 30        33-5006.  RELEASE OR MODIFICATION OF RESTRICTIONS ON  MANAGEMENT,  INVEST-
 31    MENT  OR  PURPOSE.  (1)  If the donor consents in a record, an institution may
 32    release or modify, in whole or in part, a  restriction  contained  in  a  gift
 33    instrument  on the management, investment or purpose of an institutional fund.
 34    A release or modification may not allow a fund to be used for a purpose  other
 35    than a charitable purpose of the institution.
 36        (2)  The  court, upon application of an institution, may modify a restric-
 37    tion contained in a gift instrument regarding the management or investment  of
 38    an institutional fund if the restriction has become impracticable or wasteful,
 39    if it impairs the management or investment of the fund, or if, because of cir-
 40    cumstances  not anticipated by the donor, a modification of a restriction will
 41    further the purposes of the fund. The institution shall  notify  the  attorney
 42    general of the application, and the attorney general must be given an opportu-
 43    nity  to be heard. To the extent practicable, any modification must be made in
 44    accordance with the donor's probable intention.
 45        (3)  If a particular charitable purpose or a restriction  contained  in  a
 46    gift  instrument on the use of an institutional fund becomes unlawful, imprac-
 47    ticable, impossible to achieve, or wasteful, the court, upon application of an
 48    institution,  may modify the purpose of the fund or the restriction on the use
 49    of the fund in a manner consistent with the charitable purposes  expressed  in
 50    the  gift instrument. The institution shall notify the attorney general of the
 51    application, and the attorney general must  be  given  an  opportunity  to  be
 52    heard.
 53        (4)  If  an  institution determines that a restriction contained in a gift
                                                                        
                                       5
                                                                        
  1    instrument on the management, investment or purpose of an  institutional  fund
  2    is  unlawful,  impracticable, impossible to achieve, or wasteful, the institu-
  3    tion, sixty (60) days after notification to the attorney general, may  release
  4    or modify the restriction, in whole or part, if:
  5        (a)  The  institutional  fund subject to the restriction has a total value
  6        of less than twenty-five thousand dollars ($25,000);
  7        (b)  More than twenty (20) years have elapsed since the  fund  was  estab-
  8        lished; and
  9        (c)  The  institution  uses  the  property in a manner consistent with the
 10        charitable purposes expressed in the gift instrument.
                                                                        
 11        33-5007.  REVIEWING COMPLIANCE. Compliance with this chapter is determined
 12    in light of the facts and circumstances existing at the  time  a  decision  is
 13    made or action is taken, and not by hindsight.
                                                                        
 14        33-5008.  APPLICATION   TO  EXISTING  INSTITUTIONAL  FUNDS.  This  chapter
 15    applies to institutional funds existing on or established after July 1,  2007.
 16    As  applied to institutional funds existing on July 1, 2007, this chapter gov-
 17    erns only decisions made or actions taken on or after that date.
                                                                        
 18        33-5009.  RELATION TO ELECTRONIC SIGNATURES IN GLOBAL  AND  NATIONAL  COM-
 19    MERCE ACT. This chapter modifies, limits, and supersedes the electronic signa-
 20    tures in global and national commerce act, 15 U.S.C. section 7001 et seq., but
 21    does  not  modify, limit, or supersede section 101 of that act, 15 U.S.C. sec-
 22    tion 7001(a), or authorize electronic delivery of any of the notices described
 23    in section 103 of that act, 15 U.S.C. section 7003(b).
                                                                        
 24        33-5010.  UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and con-
 25    struing this uniform act, consideration must be given to the need  to  promote
 26    uniformity  of  the  law  with respect to its subject matter among states that
 27    enact it.

Amendment


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                                                     Moved by    Labrador            
                                                                        
                                                     Seconded by Smith (24)          
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                              HOUSE AMENDMENT TO S.B. NO. 1016
                                                                        
  1                               AMENDMENTS TO SECTION 2
  2        On page 1 of the printed bill, in line 34, delete "permanent"; on page  5,
  3    in  line  3,  following "general" insert: "and the donor if available"; and in
  4    line 7, delete "twenty (20)" and insert: "ten (10)".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                       SENATE BILL NO. 1016, As Amended in the House
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE MANAGEMENT OF INSTITUTIONAL FUNDS; REPEALING CHAPTER 50, TITLE
  3        33, IDAHO CODE, PROVIDING FOR  THE  UNIFORM  MANAGEMENT  OF  INSTITUTIONAL
  4        FUNDS  ACT;  AND  AMENDING  TITLE 33, IDAHO CODE, BY THE ADDITION OF A NEW
  5        CHAPTER 50, TITLE 33, IDAHO CODE, TO PROVIDE FOR THE UNIFORM PRUDENT  MAN-
  6        AGEMENT  OF  INSTITUTIONAL  FUNDS ACT, TO PROVIDE A SHORT TITLE, TO DEFINE
  7        TERMS, TO PROVIDE A STANDARD OF  CONDUCT  IN  MANAGING  AND  INVESTING  AN
  8        INSTITUTIONAL  FUND, TO PROVIDE FOR APPROPRIATION FOR EXPENDITURE OR ACCU-
  9        MULATION OF AN ENDOWMENT FUND, TO PROVIDE RULES OF CONSTRUCTION,  TO  PRO-
 10        VIDE FOR THE DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS, TO PROVIDE
 11        FOR  RELEASE  OR MODIFICATION OF RESTRICTIONS ON MANAGEMENT, INVESTMENT OR
 12        PURPOSE OF A FUND, TO PROVIDE FOR REVIEWING COMPLIANCE, TO PROVIDE  APPLI-
 13        CATION  TO EXISTING INSTITUTIONAL FUNDS, TO ADDRESS RELATION OF CHAPTER TO
 14        THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT AND TO  PRO-
 15        VIDE FOR UNIFORMITY OF APPLICATION AND CONSTRUCTION.
                                                                        
 16    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 17        SECTION  1.  That  Chapter  50,  Title 33, Idaho Code, be, and the same is
 18    hereby repealed.
                                                                        
 19        SECTION 2.  That Title 33, Idaho Code, be, and the same is hereby  amended
 20    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 21    ter 50, Title 33, Idaho Code, and to read as follows:
                                                                        
 22                                      CHAPTER 50
 23                UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
                                                                        
 24        33-5001.  SHORT TITLE. This chapter shall be known and may be cited as the
 25    "Uniform Prudent Management of Institutional Funds Act."
                                                                        
 26        33-5002.  DEFINITIONS. In this chapter:
 27        (1)  "Charitable purpose" means the relief of poverty, the advancement  of
 28    education  or religion, the promotion of health, the promotion of a governmen-
 29    tal purpose, or any other purpose the achievement of which  is  beneficial  to
 30    the community.
 31        (2)  "Endowment  fund"  means  an institutional fund or part thereof that,
 32    under the terms of a gift instrument, is not wholly expendable by the institu-
 33    tion on a current basis. The term does not include assets that an  institution
 34    designates  as  an  endowment fund for its own use nor endowment funds managed
 35    pursuant to chapter 7, title 57, Idaho Code.
 36        (3)  "Gift instrument" means a record or records,  including  an  institu-
 37    tional  solicitation,  under  which property is granted to, transferred to, or
 38    held by an institution as an institutional fund.
 39        (4)  "Institution" means:
 40        (a)  A person, other than an individual,  organized  and  operated  exclu-
                                                                        
                                       2
                                                                        
  1        sively for charitable purposes;
  2        (b)  A  government or governmental subdivision, agency or instrumentality,
  3        to the extent that it holds funds exclusively for  a  charitable  purpose;
  4        and
  5        (c)  A  trust  that had both charitable and noncharitable interests, after
  6        all noncharitable interests have terminated.
  7        (5)  "Institutional fund" means a fund held by an institution  exclusively
  8    for charitable purposes. The term does not include:
  9        (a)  Program related assets;
 10        (b)  A  fund  held for an institution by a trustee that is not an institu-
 11        tion; or
 12        (c)  A fund in which a beneficiary that  is  not  an  institution  has  an
 13        interest,  other than an interest that could arise upon violation or fail-
 14        ure of the purposes of the fund.
 15        (6)  "Person" means an individual, corporation,  business  trust,  estate,
 16    trust,  partnership,  limited  liability  company, association, joint venture,
 17    public corporation, government or governmental subdivision, agency or  instru-
 18    mentality, or any other legal or commercial entity.
 19        (7)  "Program related asset" means an asset held by an institution primar-
 20    ily  to  accomplish  a charitable purpose of the institution and not primarily
 21    for investment.
 22        (8)  "Record" means information that is inscribed on a tangible medium  or
 23    that  is  stored  in  an  electronic  or  other  medium  and is retrievable in
 24    perceivable form.
                                                                        
 25        33-5003.  STANDARD OF CONDUCT  IN  MANAGING  AND  INVESTING  INSTITUTIONAL
 26    FUND. (1)  Subject to the intent of a donor expressed in a gift instrument, an
 27    institution,  in  managing and investing an institutional fund, shall consider
 28    the charitable purposes of the institution and the purposes  of  the  institu-
 29    tional fund.
 30        (2)  In  addition  to  complying  with  the duty of loyalty imposed by law
 31    other than this chapter, each person responsible for managing and investing an
 32    institutional fund shall manage and invest the fund in good faith and with the
 33    care an ordinarily prudent person in a like position would exercise under sim-
 34    ilar circumstances.
 35        (3)  In managing and investing an institutional fund, an institution:
 36        (a)  May incur only costs that are appropriate and reasonable in  relation
 37        to  the  assets, the purposes of the institution, and the skills available
 38        to the institution; and
 39        (b)  Shall make a reasonable effort to verify facts relevant to  the  man-
 40        agement and investment of the fund.
 41        (4)  An  institution may pool two (2) or more institutional funds for pur-
 42    poses of management and investment.
 43        (5)  Except as otherwise provided by  a  gift  instrument,  the  following
 44    rules apply:
 45        (a)  In  managing  and investing an institutional fund, the following fac-
 46        tors, if relevant, must be considered:
 47             (i)    General economic conditions;
 48             (ii)   The possible effect of inflation or deflation;
 49             (iii)  The expected tax consequences, if any, of investment decisions
 50             or strategies;
 51             (iv)   The role that each investment or course of action plays within
 52             the overall investment portfolio of the fund;
 53             (v)    The expected total return from income and the appreciation  of
 54             investments;
                                                                        
                                       3
                                                                        
  1             (vi)   Other resources of the institution;
  2             (vii)  The  needs  of  the institution and the fund to make distribu-
  3             tions and to preserve capital; and
  4             (viii) An asset's special relationship or special value, if  any,  to
  5             the charitable purposes of the institution.
  6        (b)  Management and investment decisions about an individual asset must be
  7        made  not  in  isolation  but  rather  in the context of the institutional
  8        fund's portfolio of investments as a whole and as a  part  of  an  overall
  9        investment strategy having risk and return objectives reasonably suited to
 10        the fund and to the institution.
 11        (c)  Except  as  otherwise  provided  by  law  other than this chapter, an
 12        institution may invest in any kind of property or type of investment  con-
 13        sistent with this section.
 14        (d)  An  institution  shall  diversify the investments of an institutional
 15        fund unless the institution reasonably determines that, because of special
 16        circumstances, the purposes of the fund are better served without diversi-
 17        fication.
 18        (e)  Within a reasonable time after  receiving  property,  an  institution
 19        shall make and carry out decisions concerning the retention or disposition
 20        of  the property or to rebalance a portfolio, in order to bring the insti-
 21        tutional fund into compliance with the purposes,  terms  and  distribution
 22        requirements  of  the institution or necessary to meet other circumstances
 23        of the institution and the requirements of this chapter.
 24        (f)  A person that has special skills or  expertise,  or  is  selected  in
 25        reliance  upon  the  person's  representation  that the person has special
 26        skills or expertise, has a duty to use those skills or that  expertise  in
 27        managing and investing institutional funds.
                                                                        
 28        33-5004.  APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND
 29    -- RULES OF CONSTRUCTION. (1)  Subject to the intent of a donor  expressed  in
 30    the gift instrument, an institution may appropriate for expenditure or accumu-
 31    late so much of an endowment fund as the institution determines is prudent for
 32    the  uses,  benefits,  purposes  and  duration for which the endowment fund is
 33    established. Unless stated otherwise in the gift instrument, the assets in  an
 34    endowment  fund are donor restricted assets until appropriated for expenditure
 35    by the institution. In making a determination to  appropriate  or  accumulate,
 36    the institution shall act in good faith, with the care that an ordinarily pru-
 37    dent person in a like position would exercise under similar circumstances, and
 38    shall consider, if relevant, the following factors:
 39        (a)  The duration and preservation of the endowment fund;
 40        (b)  The purposes of the institution and the endowment fund;
 41        (c)  General economic conditions;
 42        (d)  The possible effect of inflation or deflation;
 43        (e)  The expected total return from income and the appreciation of invest-
 44        ments;
 45        (f)  Other resources of the institution; and
 46        (g)  The investment policy of the institution.
 47        (2)  To  limit  the authority to appropriate for expenditure or accumulate
 48    under subsection (1) of this section,  a  gift  instrument  must  specifically
 49    state the limitation.
 50        (3)  Terms  in  a gift instrument designating a gift as an endowment, or a
 51    direction or authorization in  the  gift  instrument  to  use  only  "income,"
 52    "interest,"  "dividends"  or  "rents,  issues or profits," or "to preserve the
 53    principal intact," or words of similar import:
 54        (a)  Create an endowment fund of permanent duration unless other  language
                                                                        
                                       4
                                                                        
  1        in the gift instrument limits the duration or purpose of the fund; and
  2        (b)  Do  not  otherwise limit the authority to appropriate for expenditure
  3        or accumulate under subsection (1) of this section.
                                                                        
  4        33-5005.  DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.  (1)  Subject
  5    to any specific limitation set forth in a gift instrument or in law other than
  6    this  chapter, an institution may delegate to an external agent the management
  7    and investment of an institutional fund to  the  extent  that  an  institution
  8    could  prudently delegate under the circumstances. An institution shall act in
  9    good faith, with the care that an ordinarily prudent person in a like position
 10    would exercise under similar circumstances, in:
 11        (a)  Selecting an agent;
 12        (b)  Establishing the scope and terms of the delegation,  consistent  with
 13        the purposes of the institution and the institutional fund; and
 14        (c)  Periodically  reviewing  the  agent's actions in order to monitor the
 15        agent's performance and compliance with the scope and terms of the delega-
 16        tion.
 17        (2)  In performing a delegated function, an  agent  owes  a  duty  to  the
 18    institution  to exercise reasonable care to comply with the scope and terms of
 19    the delegation.
 20        (3)  An institution that complies with subsection (1) of this  section  is
 21    not  liable for the decisions or actions of an agent to which the function was
 22    delegated.
 23        (4)  By accepting delegation of a management or investment  function  from
 24    an  institution that is subject to the laws of this state, an agent submits to
 25    the jurisdiction of the courts of this state in all proceedings  arising  from
 26    or related to the delegation or the performance of the delegated function.
 27        (5)  An  institution  may  delegate management and investment functions to
 28    its committees, officers or employees as authorized by law of this state other
 29    than this chapter.
                                                                        
 30        33-5006.  RELEASE OR MODIFICATION OF RESTRICTIONS ON  MANAGEMENT,  INVEST-
 31    MENT  OR  PURPOSE.  (1)  If the donor consents in a record, an institution may
 32    release or modify, in whole or in part, a  restriction  contained  in  a  gift
 33    instrument  on the management, investment or purpose of an institutional fund.
 34    A release or modification may not allow a fund to be used for a purpose  other
 35    than a charitable purpose of the institution.
 36        (2)  The  court, upon application of an institution, may modify a restric-
 37    tion contained in a gift instrument regarding the management or investment  of
 38    an institutional fund if the restriction has become impracticable or wasteful,
 39    if it impairs the management or investment of the fund, or if, because of cir-
 40    cumstances  not anticipated by the donor, a modification of a restriction will
 41    further the purposes of the fund. The institution shall  notify  the  attorney
 42    general of the application, and the attorney general must be given an opportu-
 43    nity  to be heard. To the extent practicable, any modification must be made in
 44    accordance with the donor's probable intention.
 45        (3)  If a particular charitable purpose or a restriction  contained  in  a
 46    gift  instrument on the use of an institutional fund becomes unlawful, imprac-
 47    ticable, impossible to achieve, or wasteful, the court, upon application of an
 48    institution,  may modify the purpose of the fund or the restriction on the use
 49    of the fund in a manner consistent with the charitable purposes  expressed  in
 50    the  gift instrument. The institution shall notify the attorney general of the
 51    application, and the attorney general must  be  given  an  opportunity  to  be
 52    heard.
 53        (4)  If  an  institution determines that a restriction contained in a gift
                                                                        
                                       5
                                                                        
  1    instrument on the management, investment or purpose of an  institutional  fund
  2    is  unlawful,  impracticable, impossible to achieve, or wasteful, the institu-
  3    tion, sixty (60) days after notification to the attorney general and the donor
  4    if available, may release or modify the restriction, in whole or part, if:
  5        (a)  The institutional fund subject to the restriction has a  total  value
  6        of less than twenty-five thousand dollars ($25,000);
  7        (b)  More than ten (10) years have elapsed since the fund was established;
  8        and
  9        (c)  The  institution  uses  the  property in a manner consistent with the
 10        charitable purposes expressed in the gift instrument.
                                                                        
 11        33-5007.  REVIEWING COMPLIANCE. Compliance with this chapter is determined
 12    in light of the facts and circumstances existing at the  time  a  decision  is
 13    made or action is taken, and not by hindsight.
                                                                        
 14        33-5008.  APPLICATION   TO  EXISTING  INSTITUTIONAL  FUNDS.  This  chapter
 15    applies to institutional funds existing on or established after July 1,  2007.
 16    As  applied to institutional funds existing on July 1, 2007, this chapter gov-
 17    erns only decisions made or actions taken on or after that date.
                                                                        
 18        33-5009.  RELATION TO ELECTRONIC SIGNATURES IN GLOBAL  AND  NATIONAL  COM-
 19    MERCE ACT. This chapter modifies, limits, and supersedes the electronic signa-
 20    tures in global and national commerce act, 15 U.S.C. section 7001 et seq., but
 21    does  not  modify, limit, or supersede section 101 of that act, 15 U.S.C. sec-
 22    tion 7001(a), or authorize electronic delivery of any of the notices described
 23    in section 103 of that act, 15 U.S.C. section 7003(b).
                                                                        
 24        33-5010.  UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and con-
 25    struing this uniform act, consideration must be given to the need  to  promote
 26    uniformity  of  the  law  with respect to its subject matter among states that
 27    enact it.

Statement of Purpose / Fiscal Impact



                        STATEMENT OF PURPOSE

                             RS 16549c1        

The legislation adopts the new Uniform Prudent Management of
Institutional Funds Act to replace the existing Uniform
Management of Institutional Funds Act that was adopted in Idaho
in 1996 and covers the same subjects.  The new uniform law was
approved by the National Conference of Commissioners on Uniform
Laws in 2006 and provides guidance to charitable organizations
concerning the management and investment of funds held by those
organizations.  The new uniform law does not apply to corporate
and other fiduciaries that are not charities and does not apply
to the investment of endowment funds managed by the Endowment
Fund Investment Board.


                          FISCAL NOTE

There will be no fiscal impact on the state or local government
funds.



Contact
Name:  Senator Bart M. Davis
Phone: 208/332-1305
Name:  Mike Brassey: Uniform Law Commissioner
Phone: 208/336-7930


STATEMENT OF PURPOSE/FISCAL NOTE                         S 1016