[§517E-3]  Standard of conduct in managing
and investing an institutional fund.  (a)  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.



(b)  In addition to complying with the duty of
loyalty imposed by law other than this chapter, 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.



(c)  In managing and investing an institutional
fund, an institution shall:



(1)  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



(2)  Make a reasonable effort to verify facts relevant
to the management and investment of the fund.



(d)  An institution may pool two or more
institutional funds for purposes of management and investment.



(e)  Except as otherwise provided by a gift
instrument, the following rules apply:



(1)  In managing and investing an institutional fund,
the following factors, if relevant, shall be considered:



(A)  General economic conditions;



(B)  The possible effect of inflation or
deflation;



(C)  The expected tax consequences, if any, of
investment decisions or strategies;



(D)  The role that each investment or course of
action plays within the overall investment portfolio of the fund;



(E)  The expected total return from income and
the appreciation of investments;



(F)  Other resources of the institution;



(G)  The needs of the institution and the fund
to make distributions and to preserve capital; and



(H)  An asset's special relationship or special
value, if any, to the charitable purposes of the institution;



(2)  Management and investment decisions about an
individual asset shall not be made in isolation but rather in the context of
the institutional fund's portfolio of investments as a whole and an overall
investment strategy having risk and return objectives reasonably suited to the
fund and to the institution;



(3)  Except as otherwise provided by law other than
this chapter, an institution may invest in any kind of property or type of
investment consistent with this section;



(4)  An institution shall diversify the investments of
an institutional fund unless the institution reasonably determines that,
because of special circumstances, the purposes of the fund are better served
without diversification;



(5)  Within a reasonable time after receiving
property, an institution shall make and carry out decisions concerning the
retention or disposition of the property or the rebalancing of a portfolio, 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 this chapter; and



(6)  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. [L 2009, c 135, pt of §1]