2005 California Probate Code Sections 18500-18509 PART 7. UNIFORM MANAGEMENT OF INSTITUTIONAL FUNDS ACT

PROBATE CODE
SECTION 18500-18509

18500.  This part may be cited as the Uniform Management of
Institutional Funds Act.
18501.  As used in this part:
   (a) "Endowment fund" means an institutional fund, or any part
thereof, not wholly expendable by the institution on a current basis
under the terms of the applicable gift instrument.
   (b) "Gift instrument" means a will, deed, grant, conveyance,
agreement, memorandum, writing, or other governing document
(including the terms of any institutional solicitations from which an
institutional fund resulted) under which property is transferred to
or held by an institution as an institutional fund.
   (c) "Governing board" means the body responsible for the
management of an institution or of an institutional fund.
   (d) "Historic dollar value" means the aggregate fair value in
dollars of (1) an endowment fund at the time it became an endowment
fund, (2) each subsequent donation to the endowment fund at the time
it is made, and (3) each accumulation made pursuant to a direction in
the applicable gift instrument at the time the accumulation is added
to the endowment fund.
   (e) "Institution" means an incorporated or unincorporated
organization organized and operated exclusively for educational,
religious, charitable, or other eleemosynary purposes, or a
governmental organization to the extent that it holds funds
exclusively for any of these purposes.
   (f) "Institutional fund" means a fund held by an institution for
its exclusive use, benefit, or purposes, but does not include (1) a
fund held for an institution by a trustee that is not an institution
or (2) a fund in which a beneficiary that is not an institution has
an interest, other than possible rights that could arise upon
violation or failure of the purposes of the fund.
18502.  The governing board may appropriate for expenditure for the
uses and purposes for which an endowment fund is established so much
of the net appreciation, realized and unrealized, in the fair value
of the assets of an endowment fund over the historic dollar value of
the fund as is prudent under the standard established by Section
18506.  This section does not limit the authority of the governing
board to expend funds as permitted under other law, the terms of the
applicable gift instrument, or the charter of the institution.
18503.  (a) Section 18502 does not apply if the applicable gift
instrument indicates the donor's intention that net appreciation
shall not be expended.
   (b) If the gift instrument includes a designation of the gift as
an endowment or a direction or authorization to use only "income,"
"interest," "dividends," or "rents, issues, or profits," or "to
preserve the principal intact," or a direction or authorization that
contains other words of similar meaning:
   (1) A restriction on the expenditure of net appreciation need not
be implied solely from the designation, direction, or authorization,
if the gift instrument became effective before the Uniform Management
of Institutional Funds Act became applicable to the institution.
   (2) A restriction on the expenditure of net appreciation may not
be implied solely from the designation, direction, or authorization,
if the gift instrument becomes effective after the Uniform Management
of Institutional Funds Act became applicable to the institution.
   (c) The effective dates of the Uniform Management of Institutional
Funds Act are the following:
   (1) January 1, 1974, with respect to a private incorporated or
unincorporated organization organized and operated exclusively for
educational purposes and accredited by the Association of Western
Colleges and Universities.
   (2) January 1, 1991, with respect to an institution not described
in paragraph (1).
18504.  In addition to an investment otherwise authorized by law or
by the applicable gift instrument, the governing board, subject to
any specific limitations set forth in the applicable gift instrument,
may do any or all of the following:
   (a) Invest and reinvest an institutional fund in any real or
personal property deemed advisable by the governing board, whether or
not it produces a current return, including mortgages, deeds of
trust, stocks, bonds, debentures, and other securities of profit or
nonprofit corporations, shares in or obligations of associations or
partnerships, and obligations of any government or subdivision or
instrumentality thereof.
   (b) Retain property contributed by a donor to an institutional
fund for as long as the governing board deems advisable.
   (c) Include all or any part of an institutional fund in any pooled
or common fund maintained by the institution.
   (d) Invest all or any part of an institutional fund in any other
pooled or common fund available for investment, including shares or
interests in regulated investment companies, mutual funds, common
trust funds, investment partnerships, real estate investment trusts,
or similar organizations in which funds are commingled and investment
determinations are made by persons other than the governing board.
18505.  Except as otherwise provided by the applicable gift
instrument or by applicable law relating to governmental institutions
or funds, the governing board may do the following:
   (a) Delegate to its committees, officers, or employees of the
institution or the fund, or agents, including investment counsel, the
authority to act in place of the board in investment and
reinvestment of institutional funds.
   (b) Contract with independent investment advisers, investment
counsel or managers, banks, or trust companies, so to act.
   (c) Authorize the payment of compensation for investment advisory
or management services.
18506.  (a) When investing, reinvesting, purchasing, acquiring,
exchanging, selling, and managing property, appropriating
appreciation, and delegating investment management for the benefit of
an institution, the members of the governing board shall act with
the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with these matters would use in the conduct of an enterprise
of like character and with like aims to accomplish the purposes of
the institution.  In the course of administering the fund pursuant to
this standard, individual investments shall be considered as part of
an overall investment strategy.
   (b) In exercising judgment under this section, the members of the
governing board shall consider the long- and short-term needs of the
institution in carrying out its educational, religious, charitable,
or other eleemosynary purposes, its present and anticipated financial
requirements, expected total return on its investments, general
economic conditions, the appropriateness of a reasonable proportion
of higher risk investment with respect to institutional funds as a
whole, income, growth, and long-term net appreciation, as well as the
probable safety of funds.
18507.  (a) With the written consent of the donor, the governing
board may release, in whole or in part, a restriction imposed by the
applicable gift instrument on the use or investment of an
institutional fund.
   (b) If written consent of the donor cannot be obtained by reason
of the donor's death, disability, unavailability, or impossibility of
identification, the governing board may apply in the name of the
institution to the superior court of the county in which the
principal activities of the institution are conducted, or other court
of competent jurisdiction, for release of a restriction imposed by
the applicable gift instrument on the use or investment of an
institutional fund.  No court has jurisdiction to release a
restriction on an institutional fund under this part unless the
Attorney General is a party to the proceedings.  If the court finds
that the restriction is obsolete or impracticable, it may by order
release the restriction in whole or in part.  A release under this
subdivision may not change an endowment fund to a fund that is not an
endowment fund.
   (c) A release under this section may not allow a fund to be used
for purposes other than the educational, religious, charitable, or
other eleemosynary purposes of the institution affected.
   (d) This section does not limit the application of the doctrine of
cy pres.
18508.  Nothing in this part alters the status of governing boards,
or the duties and liabilities of directors, under other laws of this
state.
18509.  Nothing in this part limits the application of any law
relating to the expenditure of public funds.


Disclaimer: These codes may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.