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2017 Mississippi Code
Title 79 - Corporations, Associations, and Partnerships
Chapter 11 - Nonprofit, Nonshare Corporations and Religious Societies
Uniform Prudent Management of Institutional Funds Act
§ 79-11-705. Standard of conduct in managing and investing institutional fund
Universal Citation: MS Code § 79-11-705 (2017)
- (1) Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.
- (2) In addition to complying with the duty of loyalty imposed by law other than Sections 79-11-701 through 79-11-719, each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
- (3) In managing and investing an institutional fund, an institution:
- (a) May incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution; and
- (b) Shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
- (4) Subject to the intent of a donor expressed in a gift instrument, an institution may pool two (2) or more institutional funds for purposes of management and investment.
- (5) Except as otherwise provided by a gift instrument, the following rules apply:
- (a) In managing and investing an institutional fund, the following factors, if relevant, must be considered:
- (i) General economic conditions;
- (ii) The possible effect of inflation or deflation;
- (iii) The expected tax consequences, if any, of investment decisions or strategies;
- (iv) The role that each investment or course of action plays within the overall investment portfolio of the fund;
- (v) The expected total return from income and the appreciation of investments;
- (vi) Other resources of the institution;
- (vii) The needs of the institution and the fund to make distributions and to preserve capital; and
- (viii) An asset's special relationship or special value, if any, to the charitable purposes of the institution.
- (b) Management and investment decisions about an individual asset must be made not in isolation but rather in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
- (c) Except as otherwise provided by law other than Sections 79-11-701 through 79-11-719, an institution may invest in any kind of property or type of investment consistent with this section.
- (d) An institution shall reasonably manage the risk of concentrated holdings of assets by diversifying the investments of the institutional fund or by using some other appropriate mechanism, except as provided as follows:
- (i) The duty imposed by this subsection (5) shall not apply if the institution reasonably determines that, because of special circumstances, or because of the specific purposes, terms, distribution requirements, and other circumstances of the institutional fund, the purposes of such fund are better served without complying with the duty. For purposes of this subparagraph, special circumstances shall include an asset's special relationship or special value, if any, to the charitable purposes of the institution or to the donor;
- (ii) No person responsible for managing and investing an institutional fund shall be liable for failing to comply with the duty imposed by this subsection (5) to the extent that the terms of the gift instrument or express written agreement between the donor and the institution limit or waive the duty; and
- (iii) The governing board of an institution may retain property contributed by a donor to an institutional fund for as long as the governing board deems advisable.
- (e) Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of Sections 79-11-701 through 79-11-719.
- (f) A person who has special skills or expertise, or is selected in reliance upon the person's representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds. This paragraph does not apply to a volunteer who is not compensated beyond reimbursement for expenses.
- (a) In managing and investing an institutional fund, the following factors, if relevant, must be considered:
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