S.B. 165 Enrolled

MANAGEMENT OF INSTITUTIONAL FUNDS ACT
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: Lyle W. Hillyard
AN ACT RELATING TO COMMERCE AND TRADE; CREATING THE UNIFORM
MANAGEMENT OF INSTITUTIONAL FUNDS ACT; REGULATING TRUST FUNDS
FOR GIFTS RECEIVED BY CHARITABLE INSTITUTIONS.
This act affects sections of Utah Code Annotated 1953 as follows:
ENACTS:
13-29-1, Utah Code Annotated 1953
13-29-2, Utah Code Annotated 1953
13-29-3, Utah Code Annotated 1953
13-29-4, Utah Code Annotated 1953
13-29-5, Utah Code Annotated 1953
13-29-6, Utah Code Annotated 1953
13-29-7, Utah Code Annotated 1953
13-29-8, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 13-29-1 is enacted to read:
CHAPTER 29. UNIFORM MANAGEMENT OF INSTITUTIONAL FUNDS ACT
13-29-1. Title.
This chapter shall be known as the "Uniform Management of Institutional Funds Act."
Section 2. Section 13-29-2 is enacted to read:
13-29-2. Definitions.
As used in this chapter:
(1) "Endowment fund" means an institutional fund, or any part of it, not wholly
expendable by the institution on a current basis under the terms of the applicable gift instrument.
(2) "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.
(3) "Governing board" means the body responsible for the management of an institution or
of an institutional fund.
(4) (a) "Historic dollar value" means the aggregate fair value in dollars of:
(i) an endowment fund at the time it became an endowment fund;
(ii) each subsequent donation to the fund at the time it is made; and
(iii) each accumulation made pursuant to a direction in the applicable gift instrument at the
time the accumulation is added to the fund.
(b) The determination of historic dollar value made in good faith by the institution is
conclusive.
(5) "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.
(6) "Institutional fund" means a fund held by an institution for its exclusive use, benefit, or
purposes, but does not include:
(a) a fund held for an institution by a trustee that is not an institution; or
(b) 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.
Section 3. Section 13-29-3 is enacted to read:
13-29-3. Appropriation of appreciation.
(1) The governing board may appropriate for expenditure for the uses and purposes for
which an endowment fund is established as 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 13-29-7.
(2) Unless affirmatively appropriated by the governing board, 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 may not be used or available for use for operating expenses. Net appreciation from funds

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not otherwise donor restricted shall be considered restricted by operation of this chapter.
(3) 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.
Section 4. Section 13-29-4 is enacted to read:
13-29-4. Rule of construction.
(1) Section 13-29-3 does not apply if the applicable gift instrument indicates the donor's
intention that net appreciation may not be expended.
(2) A restriction upon the expenditure of net appreciation may not be implied from a
designation of a gift as an endowment, or from a direction or authorization in the applicable gift
instrument to use only "income," "interest," "dividends," or "rents, issues, or profits," or "to preserve
the principal intact," or a direction which contains other words of similar meaning.
(3) This rule of construction applies to gift instruments executed or in effect after May 5,
1997.
(4) Nothing in Section 13-29-3 or this section may be construed to require any institution
or governing board to treat net appreciation, realized or unrealized, in the fair value of the assets of
an endowment fund over the historic dollar value of the fund as income or revenue from operations
for the purpose of ascertaining net financial results from operation or as unrestricted assets.
Section 5. Section 13-29-5 is enacted to read:
13-29-5. Investment authority.
In addition to an investment otherwise authorized by law or by the applicable gift instrument,
and without restriction to investments a fiduciary may make, the governing board, subject to any
specific limitations set forth in the applicable gift instrument or in Title 51, Chapter 7, State Money
Management Act, for governmental organizations or in the applicable law other than law relating
to investments by a fiduciary, may:
(1) invest and reinvest an institutional fund in any real or personal property considered
advisable by the governing board, whether or not it produces a current return, including mortgages,
stocks, bonds, debentures, and other securities of profit or nonprofit corporations, shares in or

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obligations of associations, partnerships, or individuals, and obligations of any state government or
political subdivision;
(2) retain property contributed by a donor to an institutional fund for as long as the
governing board considers advisable;
(3) include all or any part of an institutional fund in any pooled or common fund maintained
by the institution; and
(4) 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.
Section 6. Section 13-29-6 is enacted to read:
13-29-6. Delegation of investment management.
Except as otherwise provided by the applicable gift instrument or by applicable law relating
to governmental institutions or funds, the governing board may:
(1) 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;
(2) contract with independent investment advisors, investment counsel or managers, banks,
or trust companies, to invest and reinvest institutional funds; and
(3) authorize the payment of compensation for investment advisory or management services.
Section 7. Section 13-29-7 is enacted to read:
13-29-7. Standard of conduct.
In the administration of the powers to appropriate appreciation, to make and retain
investments, and to delegate investment management of institutional funds, members of the
governing board shall exercise ordinary business care and prudence under the facts and
circumstances prevailing at the time of the action or decision. In doing so they shall consider the
long and short-term needs of the institution in carrying out its educational, religious, charitable, or

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other eleemosynary purposes, its present and anticipated financial requirements, expected total return
on its investments, price level trends, and general economic conditions.
Section 8. Section 13-29-8 is enacted to read:
13-29-8. Release of restriction on use or investment.
(1) 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.
(2) If written consent of the donor cannot be obtained by reason of his death, disability,
unavailability, or impossibility of identification, the governing board may apply in the name of the
institution to the district court for release of a restriction imposed by the applicable gift instrument
on the use or investment of an institutional fund. The attorney general shall be notified by the
governing board of this application and shall be given an opportunity to be heard. If the court finds
that the restriction is obsolete, inappropriate, or impracticable, it may by order release the restriction
in whole or in part. A release under this section may not change an endowment fund to a fund that
is not an endowment fund.
(3) 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.
(4) This section does not limit the application of the doctrine of cy pres.

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