CHAPTER 59-21UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT59-21-01. Definitions. In this chapter:1."Charitable purpose" means the relief of poverty, the advancement of education, the<br>advancement of religion, the promotion of health, or any other purpose the<br>achievement of which is beneficial to the community.2."Endowment fund" means an institutional fund or part thereof that, under the terms<br>of a gift instrument, is not wholly expendable by the institution on a current basis.<br>The term does not include assets that an institution designates as an endowment<br>fund for its own use.3."Gift instrument" means a record, including an institutional solicitation, under which<br>property is granted to, transferred to, or held by an institution as an institutional fund.4."Institution" means:a.A person, other than an individual, organized and operated exclusively for<br>charitable purposes;b.A government or governmental entity, to the extent that it holds funds<br>exclusively for a charitable purpose; orc.A trust that had both charitable and noncharitable interests, after all<br>noncharitable interests have terminated.5."Institutional fund" means a fund held by an institution exclusively for charitable<br>purposes. The term does not include:a.Program-related assets;b.A fund held for an institution by a trustee that is not an institution;c.A fund in which a beneficiary that is not an institution has an interest, other than<br>an interest that could arise upon violation or failure of the purposes of the fund;<br>ord.Perpetual trust funds established by article IX of the Constitution of North<br>Dakota.6."Program-related asset" means an asset held by an institution primarily to<br>accomplish a charitable purpose of the institution and not primarily for investment.7."Record" means information that is inscribed on a tangible medium or that is stored<br>in an electronic or other medium and is retrievable in perceivable form.59-21-02. Standard of conduct in managing and investing institutional fund.1.Subject to the intent of a donor expressed in a gift instrument, an institution, in<br>managing and investing an institutional fund, shall consider the charitable purposes<br>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 this<br>chapter, each person responsible for managing and investing an institutional fund<br>shall manage and invest the fund in good faith and with the care an ordinarily<br>prudent person in a like position would exercise under similar circumstances.Page No. 13.In managing and investing an institutional fund, an institution:a.May incur only costs that are appropriate and reasonable in relation to the<br>assets, the purposes of the institution, and the skills available to the institution;<br>andb.Shall make a reasonable effort to verify facts relevant to the management and<br>investment of the fund.4.An institution may pool two or more institutional funds for purposes of management<br>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,<br>must be considered:(1)General economic conditions;(2)The possible effect of inflation or deflation;(3)The expected tax consequences, if any, of investment decisions or<br>strategies;(4)The role that each investment or course of action plays within the overall<br>investment portfolio of the fund;(5)The expected total return from income and the appreciation of<br>investments;(6)Other resources of the institution;(7)The needs of the institution and the fund to make distributions and to<br>preserve capital; and(8)An asset's special relationship or special value, if any, to the charitable<br>purposes of the institution.b.Management and investment decisions about an individual asset must be<br>made not in isolation but rather in the context of the institutional fund's portfolio<br>of investments as a whole and as a part of an overall investment strategy<br>having risk and return objectives reasonably suited to the fund and to the<br>institution.c.Except as otherwise provided by law other than this chapter, an institution may<br>invest in any kind of property or type of investment consistent with this section.d.An institution shall diversify the investments of an institutional fund unless the<br>institution reasonably determines that, because of special circumstances, the<br>purposes of the fund are better-served without diversification.e.Within a reasonable time after receiving property, an institution shall make and<br>carry out decisions concerning the retention or disposition of the property or to<br>rebalance a portfolio, in order to bring the institutional fund into compliance with<br>the purposes, terms, and distribution requirements of the institution as<br>necessary to meet other circumstances of the institution and the requirements<br>of this chapter.Page No. 2f.A person that has special skills or expertise, or is selected in reliance upon the<br>person's representation that the person has special skills or expertise, has a<br>duty to use those skills or that expertise in managing and investing institutional<br>funds.59-21-03.Appropriation for expenditure or accumulation of endowment fund -Rules of construction.1.Subject to the intent of a donor, as expressed in the gift instrument and subject to<br>subsection 4, an institution may appropriate for expenditure or accumulate so much<br>of an endowment fund as the institution determines is prudent for the uses, benefits,<br>purposes, and duration for which the endowment fund is established. Unless stated<br>otherwise in the gift instrument, the assets in an endowment fund are<br>donor-restricted assets until appropriated for expenditure by the institution.Inmaking a determination to appropriate or accumulate, the institution shall act in good<br>faith, with the care that an ordinarily prudent person in a like position would exercise<br>under similar circumstances, and shall consider, if relevant, the following factors:a.The duration and preservation of the endowment fund;b.The purposes of the institution and the endowment fund;c.General economic conditions;d.The possible effect of inflation or deflation;e.The expected total return from income and the appreciation of investments;f.Other resources of the institution; andg.The investment policy of the institution.2.To limit the authority to appropriate for expenditure or accumulate under<br>subsection 1, a gift instrument specifically must state the limitation.3.Terms in a gift instrument designating a gift as an endowment, or a direction or<br>authorization in the gift instrument to use only income, interest, dividends, or rents,<br>issues, or profits, or to preserve the principal intact, or words of similar import create<br>an endowment fund of permanent duration unless other language in the gift<br>instrument limits the duration or purpose of the fund and do not otherwise limit the<br>authority to appropriate for expenditure or accumulate under subsection 1.4.The appropriation for expenditure in any year of an amount greater than seven<br>percent of the fair market value of an endowment fund, calculated on the basis of<br>market values determined at least quarterly and averaged over a period of not less<br>than three years immediately preceding the year in which the appropriation for<br>expenditure is made, creates a rebuttable presumption of imprudence.For anendowment fund in existence for fewer than three years, the fair market value of the<br>endowment fund must be calculated for the period the endowment fund has been in<br>existence. This subsection does not:a.Apply to an appropriation for expenditure permitted under law other than this<br>chapter or by the gift instrument; orb.Create a presumption of prudence for an appropriation for expenditure of an<br>amount less than or equal to seven percent of the fair market value of the<br>endowment fund.59-21-04. Management and investment functions - Delegation.Page No. 31.Except as otherwise provided in a gift instrument or by law other than this chapter,<br>an institution may delegate to an external agent the management and investment of<br>an institutional fund to the extent that an institution could prudently delegate under<br>the circumstances.An institution shall act in good faith, with the care that anordinarily prudent person in a like position would exercise under similar<br>circumstances, in:a.Selecting an agent;b.Establishing the scope and terms of the delegation, consistent with the<br>purposes of the institution and the institutional fund; andc.Periodically reviewing the agent's actions in order to monitor the agent's<br>performance and compliance with the scope and terms of the delegation.2.In performing a delegated function, an agent owes a duty to the institution to<br>exercise reasonable care to comply with the scope and terms of the delegation.3.An institution that complies with subsection 1 is not liable for the decisions or actions<br>of an agent to which the function was delegated.4.By accepting delegation of a management or investment function from an institution<br>that is subject to the laws of this state, an agent submits to the jurisdiction of the<br>courts of this state in all proceedings arising from or related to the delegation or the<br>performance of the delegated function.5.An institution may delegate management and investment functions to its<br>committees, officers, or employees as authorized by law.59-21-05. Release or modification of restrictions on management, investment, orpurpose.1.If the donor consents in a record, an institution may release or modify, in whole or in<br>part, a restriction contained in a gift instrument on the management, investment, or<br>purpose of an institutional fund. A release or modification may not allow a fund to be<br>used for a purpose other than a charitable purpose of the institution.2.The court, upon application of an institution, may modify a restriction contained in a<br>gift instrument regarding the management or investment of an institutional fund if the<br>restriction has become impracticable or wasteful, if it impairs the management or<br>investment of the fund, or if, because of circumstances not anticipated by the donor,<br>a modification of a restriction will further the purposes of the fund. The institution<br>shall notify the attorney general of the application.The court shall provide theattorney general with the opportunity to be heard. To the extent practicable, any<br>modification must be made in accordance with the donor's probable intention.3.If a particular charitable purpose or a restriction contained in a gift instrument on the<br>use of an institutional fund becomes unlawful, impracticable, impossible to achieve,<br>or wasteful, the court, upon application of an institution, may modify the purpose of<br>the fund or the restriction on the use of the fund in a manner consistent with the<br>charitable purposes expressed in the gift instrument. The institution shall notify the<br>attorney general of the application, and the court shall provide the attorney general<br>with the opportunity to be heard.4.If an institution determines that a restriction contained in a gift instrument on the<br>management, investment, or purpose of an institutional fund is unlawful,<br>impracticable, impossible to achieve, or wasteful, the institution, sixty days after<br>notification to the attorney general, may release or modify the restriction, in whole or<br>part, if:Page No. 4a.The institutional fund subject to the restriction has a total value of less than<br>twenty-five thousand dollars;b.More than twenty years have elapsed since the fund was established; andc.The institution uses the property in a manner consistent with the charitable<br>purposes expressed in the gift instrument.59-21-06. Compliance - Determination. Compliance with this chapter is determined inlight of the facts and circumstances existing at the time a decision is made or at the time action is<br>taken, and not by hindsight.59-21-07.Application to existing institutional funds.This chapter applies toinstitutional funds existing on or established after April 22, 2009. As applied to institutional funds<br>existing on April 22, 2009, this chapter governs only decisions made or actions taken on or after<br>that date.59-21-08. Relation to Electronic Signatures in Global and National Commerce Act.This chapter modifies, limits, and supersedes the Electronic Signatures in Global and National<br>Commerce Act [15 U.S.C. 7001 et seq.] but does not modify, limit, or supersede 15 U.S.C.<br>7001(a) or authorize electronic delivery of any of the notices described in 15 U.S.C. 7003(b).Page No. 5Document Outlinechapter 59-21 uniform prudent management of institutional funds act
CHAPTER 59-21UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT59-21-01. Definitions. In this chapter:1."Charitable purpose" means the relief of poverty, the advancement of education, the<br>advancement of religion, the promotion of health, or any other purpose the<br>achievement of which is beneficial to the community.2."Endowment fund" means an institutional fund or part thereof that, under the terms<br>of a gift instrument, is not wholly expendable by the institution on a current basis.<br>The term does not include assets that an institution designates as an endowment<br>fund for its own use.3."Gift instrument" means a record, including an institutional solicitation, under which<br>property is granted to, transferred to, or held by an institution as an institutional fund.4."Institution" means:a.A person, other than an individual, organized and operated exclusively for<br>charitable purposes;b.A government or governmental entity, to the extent that it holds funds<br>exclusively for a charitable purpose; orc.A trust that had both charitable and noncharitable interests, after all<br>noncharitable interests have terminated.5."Institutional fund" means a fund held by an institution exclusively for charitable<br>purposes. The term does not include:a.Program-related assets;b.A fund held for an institution by a trustee that is not an institution;c.A fund in which a beneficiary that is not an institution has an interest, other than<br>an interest that could arise upon violation or failure of the purposes of the fund;<br>ord.Perpetual trust funds established by article IX of the Constitution of North<br>Dakota.6."Program-related asset" means an asset held by an institution primarily to<br>accomplish a charitable purpose of the institution and not primarily for investment.7."Record" means information that is inscribed on a tangible medium or that is stored<br>in an electronic or other medium and is retrievable in perceivable form.59-21-02. Standard of conduct in managing and investing institutional fund.1.Subject to the intent of a donor expressed in a gift instrument, an institution, in<br>managing and investing an institutional fund, shall consider the charitable purposes<br>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 this<br>chapter, each person responsible for managing and investing an institutional fund<br>shall manage and invest the fund in good faith and with the care an ordinarily<br>prudent person in a like position would exercise under similar circumstances.Page No. 13.In managing and investing an institutional fund, an institution:a.May incur only costs that are appropriate and reasonable in relation to the<br>assets, the purposes of the institution, and the skills available to the institution;<br>andb.Shall make a reasonable effort to verify facts relevant to the management and<br>investment of the fund.4.An institution may pool two or more institutional funds for purposes of management<br>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,<br>must be considered:(1)General economic conditions;(2)The possible effect of inflation or deflation;(3)The expected tax consequences, if any, of investment decisions or<br>strategies;(4)The role that each investment or course of action plays within the overall<br>investment portfolio of the fund;(5)The expected total return from income and the appreciation of<br>investments;(6)Other resources of the institution;(7)The needs of the institution and the fund to make distributions and to<br>preserve capital; and(8)An asset's special relationship or special value, if any, to the charitable<br>purposes of the institution.b.Management and investment decisions about an individual asset must be<br>made not in isolation but rather in the context of the institutional fund's portfolio<br>of investments as a whole and as a part of an overall investment strategy<br>having risk and return objectives reasonably suited to the fund and to the<br>institution.c.Except as otherwise provided by law other than this chapter, an institution may<br>invest in any kind of property or type of investment consistent with this section.d.An institution shall diversify the investments of an institutional fund unless the<br>institution reasonably determines that, because of special circumstances, the<br>purposes of the fund are better-served without diversification.e.Within a reasonable time after receiving property, an institution shall make and<br>carry out decisions concerning the retention or disposition of the property or to<br>rebalance a portfolio, in order to bring the institutional fund into compliance with<br>the purposes, terms, and distribution requirements of the institution as<br>necessary to meet other circumstances of the institution and the requirements<br>of this chapter.Page No. 2f.A person that has special skills or expertise, or is selected in reliance upon the<br>person's representation that the person has special skills or expertise, has a<br>duty to use those skills or that expertise in managing and investing institutional<br>funds.59-21-03.Appropriation for expenditure or accumulation of endowment fund -Rules of construction.1.Subject to the intent of a donor, as expressed in the gift instrument and subject to<br>subsection 4, an institution may appropriate for expenditure or accumulate so much<br>of an endowment fund as the institution determines is prudent for the uses, benefits,<br>purposes, and duration for which the endowment fund is established. Unless stated<br>otherwise in the gift instrument, the assets in an endowment fund are<br>donor-restricted assets until appropriated for expenditure by the institution.Inmaking a determination to appropriate or accumulate, the institution shall act in good<br>faith, with the care that an ordinarily prudent person in a like position would exercise<br>under similar circumstances, and shall consider, if relevant, the following factors:a.The duration and preservation of the endowment fund;b.The purposes of the institution and the endowment fund;c.General economic conditions;d.The possible effect of inflation or deflation;e.The expected total return from income and the appreciation of investments;f.Other resources of the institution; andg.The investment policy of the institution.2.To limit the authority to appropriate for expenditure or accumulate under<br>subsection 1, a gift instrument specifically must state the limitation.3.Terms in a gift instrument designating a gift as an endowment, or a direction or<br>authorization in the gift instrument to use only income, interest, dividends, or rents,<br>issues, or profits, or to preserve the principal intact, or words of similar import create<br>an endowment fund of permanent duration unless other language in the gift<br>instrument limits the duration or purpose of the fund and do not otherwise limit the<br>authority to appropriate for expenditure or accumulate under subsection 1.4.The appropriation for expenditure in any year of an amount greater than seven<br>percent of the fair market value of an endowment fund, calculated on the basis of<br>market values determined at least quarterly and averaged over a period of not less<br>than three years immediately preceding the year in which the appropriation for<br>expenditure is made, creates a rebuttable presumption of imprudence.For anendowment fund in existence for fewer than three years, the fair market value of the<br>endowment fund must be calculated for the period the endowment fund has been in<br>existence. This subsection does not:a.Apply to an appropriation for expenditure permitted under law other than this<br>chapter or by the gift instrument; orb.Create a presumption of prudence for an appropriation for expenditure of an<br>amount less than or equal to seven percent of the fair market value of the<br>endowment fund.59-21-04. Management and investment functions - Delegation.Page No. 31.Except as otherwise provided in a gift instrument or by law other than this chapter,<br>an institution may delegate to an external agent the management and investment of<br>an institutional fund to the extent that an institution could prudently delegate under<br>the circumstances.An institution shall act in good faith, with the care that anordinarily prudent person in a like position would exercise under similar<br>circumstances, in:a.Selecting an agent;b.Establishing the scope and terms of the delegation, consistent with the<br>purposes of the institution and the institutional fund; andc.Periodically reviewing the agent's actions in order to monitor the agent's<br>performance and compliance with the scope and terms of the delegation.2.In performing a delegated function, an agent owes a duty to the institution to<br>exercise reasonable care to comply with the scope and terms of the delegation.3.An institution that complies with subsection 1 is not liable for the decisions or actions<br>of an agent to which the function was delegated.4.By accepting delegation of a management or investment function from an institution<br>that is subject to the laws of this state, an agent submits to the jurisdiction of the<br>courts of this state in all proceedings arising from or related to the delegation or the<br>performance of the delegated function.5.An institution may delegate management and investment functions to its<br>committees, officers, or employees as authorized by law.59-21-05. Release or modification of restrictions on management, investment, orpurpose.1.If the donor consents in a record, an institution may release or modify, in whole or in<br>part, a restriction contained in a gift instrument on the management, investment, or<br>purpose of an institutional fund. A release or modification may not allow a fund to be<br>used for a purpose other than a charitable purpose of the institution.2.The court, upon application of an institution, may modify a restriction contained in a<br>gift instrument regarding the management or investment of an institutional fund if the<br>restriction has become impracticable or wasteful, if it impairs the management or<br>investment of the fund, or if, because of circumstances not anticipated by the donor,<br>a modification of a restriction will further the purposes of the fund. The institution<br>shall notify the attorney general of the application.The court shall provide theattorney general with the opportunity to be heard. To the extent practicable, any<br>modification must be made in accordance with the donor's probable intention.3.If a particular charitable purpose or a restriction contained in a gift instrument on the<br>use of an institutional fund becomes unlawful, impracticable, impossible to achieve,<br>or wasteful, the court, upon application of an institution, may modify the purpose of<br>the fund or the restriction on the use of the fund in a manner consistent with the<br>charitable purposes expressed in the gift instrument. The institution shall notify the<br>attorney general of the application, and the court shall provide the attorney general<br>with the opportunity to be heard.4.If an institution determines that a restriction contained in a gift instrument on the<br>management, investment, or purpose of an institutional fund is unlawful,<br>impracticable, impossible to achieve, or wasteful, the institution, sixty days after<br>notification to the attorney general, may release or modify the restriction, in whole or<br>part, if:Page No. 4a.The institutional fund subject to the restriction has a total value of less than<br>twenty-five thousand dollars;b.More than twenty years have elapsed since the fund was established; andc.The institution uses the property in a manner consistent with the charitable<br>purposes expressed in the gift instrument.59-21-06. Compliance - Determination. Compliance with this chapter is determined inlight of the facts and circumstances existing at the time a decision is made or at the time action is<br>taken, and not by hindsight.59-21-07.Application to existing institutional funds.This chapter applies toinstitutional funds existing on or established after April 22, 2009. As applied to institutional funds<br>existing on April 22, 2009, this chapter governs only decisions made or actions taken on or after<br>that date.59-21-08. Relation to Electronic Signatures in Global and National Commerce Act.This chapter modifies, limits, and supersedes the Electronic Signatures in Global and National<br>Commerce Act [15 U.S.C. 7001 et seq.] but does not modify, limit, or supersede 15 U.S.C.<br>7001(a) or authorize electronic delivery of any of the notices described in 15 U.S.C. 7003(b).Page No. 5Document Outlinechapter 59-21 uniform prudent management of institutional funds act
CHAPTER 59-21UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT59-21-01. Definitions. In this chapter:1."Charitable purpose" means the relief of poverty, the advancement of education, the<br>advancement of religion, the promotion of health, or any other purpose the<br>achievement of which is beneficial to the community.2."Endowment fund" means an institutional fund or part thereof that, under the terms<br>of a gift instrument, is not wholly expendable by the institution on a current basis.<br>The term does not include assets that an institution designates as an endowment<br>fund for its own use.3."Gift instrument" means a record, including an institutional solicitation, under which<br>property is granted to, transferred to, or held by an institution as an institutional fund.4."Institution" means:a.A person, other than an individual, organized and operated exclusively for<br>charitable purposes;b.A government or governmental entity, to the extent that it holds funds<br>exclusively for a charitable purpose; orc.A trust that had both charitable and noncharitable interests, after all<br>noncharitable interests have terminated.5."Institutional fund" means a fund held by an institution exclusively for charitable<br>purposes. The term does not include:a.Program-related assets;b.A fund held for an institution by a trustee that is not an institution;c.A fund in which a beneficiary that is not an institution has an interest, other than<br>an interest that could arise upon violation or failure of the purposes of the fund;<br>ord.Perpetual trust funds established by article IX of the Constitution of North<br>Dakota.6."Program-related asset" means an asset held by an institution primarily to<br>accomplish a charitable purpose of the institution and not primarily for investment.7."Record" means information that is inscribed on a tangible medium or that is stored<br>in an electronic or other medium and is retrievable in perceivable form.59-21-02. Standard of conduct in managing and investing institutional fund.1.Subject to the intent of a donor expressed in a gift instrument, an institution, in<br>managing and investing an institutional fund, shall consider the charitable purposes<br>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 this<br>chapter, each person responsible for managing and investing an institutional fund<br>shall manage and invest the fund in good faith and with the care an ordinarily<br>prudent person in a like position would exercise under similar circumstances.Page No. 13.In managing and investing an institutional fund, an institution:a.May incur only costs that are appropriate and reasonable in relation to the<br>assets, the purposes of the institution, and the skills available to the institution;<br>andb.Shall make a reasonable effort to verify facts relevant to the management and<br>investment of the fund.4.An institution may pool two or more institutional funds for purposes of management<br>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,<br>must be considered:(1)General economic conditions;(2)The possible effect of inflation or deflation;(3)The expected tax consequences, if any, of investment decisions or<br>strategies;(4)The role that each investment or course of action plays within the overall<br>investment portfolio of the fund;(5)The expected total return from income and the appreciation of<br>investments;(6)Other resources of the institution;(7)The needs of the institution and the fund to make distributions and to<br>preserve capital; and(8)An asset's special relationship or special value, if any, to the charitable<br>purposes of the institution.b.Management and investment decisions about an individual asset must be<br>made not in isolation but rather in the context of the institutional fund's portfolio<br>of investments as a whole and as a part of an overall investment strategy<br>having risk and return objectives reasonably suited to the fund and to the<br>institution.c.Except as otherwise provided by law other than this chapter, an institution may<br>invest in any kind of property or type of investment consistent with this section.d.An institution shall diversify the investments of an institutional fund unless the<br>institution reasonably determines that, because of special circumstances, the<br>purposes of the fund are better-served without diversification.e.Within a reasonable time after receiving property, an institution shall make and<br>carry out decisions concerning the retention or disposition of the property or to<br>rebalance a portfolio, in order to bring the institutional fund into compliance with<br>the purposes, terms, and distribution requirements of the institution as<br>necessary to meet other circumstances of the institution and the requirements<br>of this chapter.Page No. 2f.A person that has special skills or expertise, or is selected in reliance upon the<br>person's representation that the person has special skills or expertise, has a<br>duty to use those skills or that expertise in managing and investing institutional<br>funds.59-21-03.Appropriation for expenditure or accumulation of endowment fund -Rules of construction.1.Subject to the intent of a donor, as expressed in the gift instrument and subject to<br>subsection 4, an institution may appropriate for expenditure or accumulate so much<br>of an endowment fund as the institution determines is prudent for the uses, benefits,<br>purposes, and duration for which the endowment fund is established. Unless stated<br>otherwise in the gift instrument, the assets in an endowment fund are<br>donor-restricted assets until appropriated for expenditure by the institution.Inmaking a determination to appropriate or accumulate, the institution shall act in good<br>faith, with the care that an ordinarily prudent person in a like position would exercise<br>under similar circumstances, and shall consider, if relevant, the following factors:a.The duration and preservation of the endowment fund;b.The purposes of the institution and the endowment fund;c.General economic conditions;d.The possible effect of inflation or deflation;e.The expected total return from income and the appreciation of investments;f.Other resources of the institution; andg.The investment policy of the institution.2.To limit the authority to appropriate for expenditure or accumulate under<br>subsection 1, a gift instrument specifically must state the limitation.3.Terms in a gift instrument designating a gift as an endowment, or a direction or<br>authorization in the gift instrument to use only income, interest, dividends, or rents,<br>issues, or profits, or to preserve the principal intact, or words of similar import create<br>an endowment fund of permanent duration unless other language in the gift<br>instrument limits the duration or purpose of the fund and do not otherwise limit the<br>authority to appropriate for expenditure or accumulate under subsection 1.4.The appropriation for expenditure in any year of an amount greater than seven<br>percent of the fair market value of an endowment fund, calculated on the basis of<br>market values determined at least quarterly and averaged over a period of not less<br>than three years immediately preceding the year in which the appropriation for<br>expenditure is made, creates a rebuttable presumption of imprudence.For anendowment fund in existence for fewer than three years, the fair market value of the<br>endowment fund must be calculated for the period the endowment fund has been in<br>existence. This subsection does not:a.Apply to an appropriation for expenditure permitted under law other than this<br>chapter or by the gift instrument; orb.Create a presumption of prudence for an appropriation for expenditure of an<br>amount less than or equal to seven percent of the fair market value of the<br>endowment fund.59-21-04. Management and investment functions - Delegation.Page No. 31.Except as otherwise provided in a gift instrument or by law other than this chapter,<br>an institution may delegate to an external agent the management and investment of<br>an institutional fund to the extent that an institution could prudently delegate under<br>the circumstances.An institution shall act in good faith, with the care that anordinarily prudent person in a like position would exercise under similar<br>circumstances, in:a.Selecting an agent;b.Establishing the scope and terms of the delegation, consistent with the<br>purposes of the institution and the institutional fund; andc.Periodically reviewing the agent's actions in order to monitor the agent's<br>performance and compliance with the scope and terms of the delegation.2.In performing a delegated function, an agent owes a duty to the institution to<br>exercise reasonable care to comply with the scope and terms of the delegation.3.An institution that complies with subsection 1 is not liable for the decisions or actions<br>of an agent to which the function was delegated.4.By accepting delegation of a management or investment function from an institution<br>that is subject to the laws of this state, an agent submits to the jurisdiction of the<br>courts of this state in all proceedings arising from or related to the delegation or the<br>performance of the delegated function.5.An institution may delegate management and investment functions to its<br>committees, officers, or employees as authorized by law.59-21-05. Release or modification of restrictions on management, investment, orpurpose.1.If the donor consents in a record, an institution may release or modify, in whole or in<br>part, a restriction contained in a gift instrument on the management, investment, or<br>purpose of an institutional fund. A release or modification may not allow a fund to be<br>used for a purpose other than a charitable purpose of the institution.2.The court, upon application of an institution, may modify a restriction contained in a<br>gift instrument regarding the management or investment of an institutional fund if the<br>restriction has become impracticable or wasteful, if it impairs the management or<br>investment of the fund, or if, because of circumstances not anticipated by the donor,<br>a modification of a restriction will further the purposes of the fund. The institution<br>shall notify the attorney general of the application.The court shall provide theattorney general with the opportunity to be heard. To the extent practicable, any<br>modification must be made in accordance with the donor's probable intention.3.If a particular charitable purpose or a restriction contained in a gift instrument on the<br>use of an institutional fund becomes unlawful, impracticable, impossible to achieve,<br>or wasteful, the court, upon application of an institution, may modify the purpose of<br>the fund or the restriction on the use of the fund in a manner consistent with the<br>charitable purposes expressed in the gift instrument. The institution shall notify the<br>attorney general of the application, and the court shall provide the attorney general<br>with the opportunity to be heard.4.If an institution determines that a restriction contained in a gift instrument on the<br>management, investment, or purpose of an institutional fund is unlawful,<br>impracticable, impossible to achieve, or wasteful, the institution, sixty days after<br>notification to the attorney general, may release or modify the restriction, in whole or<br>part, if:Page No. 4a.The institutional fund subject to the restriction has a total value of less than<br>twenty-five thousand dollars;b.More than twenty years have elapsed since the fund was established; andc.The institution uses the property in a manner consistent with the charitable<br>purposes expressed in the gift instrument.59-21-06. Compliance - Determination. Compliance with this chapter is determined inlight of the facts and circumstances existing at the time a decision is made or at the time action is<br>taken, and not by hindsight.59-21-07.Application to existing institutional funds.This chapter applies toinstitutional funds existing on or established after April 22, 2009. As applied to institutional funds<br>existing on April 22, 2009, this chapter governs only decisions made or actions taken on or after<br>that date.59-21-08. Relation to Electronic Signatures in Global and National Commerce Act.This chapter modifies, limits, and supersedes the Electronic Signatures in Global and National<br>Commerce Act [15 U.S.C. 7001 et seq.] but does not modify, limit, or supersede 15 U.S.C.<br>7001(a) or authorize electronic delivery of any of the notices described in 15 U.S.C. 7003(b).Page No. 5Document Outlinechapter 59-21 uniform prudent management of institutional funds act
