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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
]]]] 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.
]]]] 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)".
]]]] 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
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