58-3614. Appropriation for expenditure or accumulation of endowment fund; rules of construction.
58-3614
58-3614. Appropriation for expenditure oraccumulation of endowment fund; rules of construction.(a) Subject to the intent of a donor expressed in the giftinstrument, an institution may appropriate for expenditure or accumulate somuch of an endowment fund as the institution determines is prudent for theuses, benefits, purposes and duration for which the endowment fund isestablished. In making a determination to appropriate or accumulate, theinstitution shall act in good faith, with the care that an ordinarily prudentperson in a like position would exercise under similar circumstances, and shallconsider, if relevant, the following factors:
(1) The duration and preservation of the endowment fund;
(2) the purposes of the institution and the endowment fund;
(3) general economic conditions;
(4) the possible effect of inflation or deflation;
(5) the expected total return from income and the appreciation ofinvestments;
(6) other resources of the institution; and
(7) the investment policy of the institution.
(b) To limit the authority to appropriate for expenditure or accumulate undersubsection (a), a gift instrument must specifically state the limitation.
(c) Terms in a gift instrument designating a gift as an endowment, or adirection or authorization in the gift instrument to use only "income","interest", "dividends", or "rents, issues, or profits", or "to preserve theprincipal intact", or words of similar import:
(1) Create an endowment fund of permanent duration unless other language inthe gift instrument limits the duration or purpose of the fund; and
(2) do not otherwise limit the authority to appropriate for expenditure oraccumulate under subsection (a).
History: L. 2008, ch. 20, § 4; July 1.