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[Utah Code Table of Contents]
[TITLE 13. Table of Contents]
13-29-1 Title.
This chapter shall be known as the "Uniform Management
of Institutional Funds Act."
1997
13-29-2 Definitions.
As used in this chapter:
(1) (a) "Endowment funds" 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.
(b) "Endowment funds" includes gifts, devises, or bequests of property of any kind donated to a higher education institution from any source.
(c) "Endowment funds" does not mean monies used for the general operation of a higher education institution that are received by the higher education institution from:
(i) state appropriations;
(ii) federal contracts;
(iii) federal grants; or
(iv) tuition and fees collected from students.
(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) (a) "Governing board" means the body responsible for the management of an institution or of an institutional fund.
(b) "Governing board" means, for a higher education institution, the board of trustees of the higher education institution.
(4) "Higher education institution" means the institutions specified in Section 53B-1-102 .
(5) (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.
(6) "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.
(7) "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.
(8) "Manager" means either:
(a) the state treasurer; or
(b) a higher education institution that accepts the responsibility
for the management of the endowment funds of a different
higher education institution.
2005
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 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.
1997
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.
1997
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 this chapter, 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 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.
2005
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.
1997
13-29-7 Standard of conduct.
(1) 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.
(2) In exercising those powers, they shall consider:
(a) the long and short-term needs of the institution in carrying out its educational, religious, charitable, or other eleemosynary purposes;
(b) its present and anticipated financial requirements;
(c) the expected total return on its investments;
(d) price level trends; and
(e) general economic conditions.
(3) Except in cases of willful misconduct or gross negligence,
members of the governing board are not liable for any loss
that results from the execution of their responsibilities
under this chapter.
2005
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.
1997
13-29-9 Transfer of endowment funds.
(1) A higher education institution may only transfer the management of any endowment fund to a manager if the transferring higher education institution:
(a) retains sufficient funds to cover its cash requirements; and
(b) continues to be responsible for the proper collection, deposit, and disbursement of the endowment fund in the manner provided by law.
(2) The endowment funds transferred as provided in this section are subject to all applicable provisions of this chapter and are under the jurisdiction of the manager until the transferring higher education institution withdraws these endowment funds from the manager.
(3) A higher education institution may withdraw all or
any part of the endowment funds transferred to the manager,
subject to any rules established by the manager governing
notice or limits on the amount of endowment funds that may
be withdrawn.
2005
13-29-10 Requirements of member institutions of the state system of higher education.
(1) The State Board of Regents shall:
(a) establish asset allocations for the endowment funds;
(b) in consultation with the commissioner of higher education, establish guidelines for investing the funds; and
(c) establish a written policy governing conflicts of interest.
(2) (a) A higher education institution may not invest its endowment funds in violation of the State Board of Regents' guidelines unless the State Board of Regents approves an investment policy that has been adopted by the higher education institution's board of trustees.
(b) A higher education institution and its employees shall comply with the State Board of Regents' conflict of interest requirements unless the State Board of Regents approves the conflict of interest policy that has been adopted by the higher education institution's board of trustees.
(3) (a) The board of trustees of a higher education institution may adopt:
(i) an investment policy to govern the investment of the higher education institution's endowment funds; and
(ii) a conflict of interest policy.
(b) The investment policy shall:
(i) define the groups, and the responsibilities of those groups, that must be involved with investing the endowment funds;
(ii) ensure that the groups defined under Subsection (3)(b)(i) at least include the board of trustees, an investment committee, institutional staff, and a custodian bank;
(iii) create an investment committee that includes not more than two members of the board of trustees and no less than two independent investment management professionals;
(iv) determine an appropriate risk level for the endowment funds;
(v) establish allocation ranges for asset classes considered suitable for the endowment funds;
(vi) determine prudent diversification of the endowment funds; and
(vii) establish performance objectives and a regular review process.
(c) Each higher education institution that adopts an investment policy, a conflict of interest policy, or both shall submit the policy, and any subsequent amendments, to the State Board of Regents for its approval.
(4) Each higher education institution shall make monthly reports detailing the deposit and investment of funds in its custody or control to:
(a) its board of trustees; and
(b) the State Board of Regents.
(5) The state auditor may conduct or cause to be conducted an annual audit of the investment program of each higher education institution.
(6) The State Board of Regents shall submit an annual
report to the governor and the Legislature summarizing all
investments by higher education institutions under its jurisdiction.
2005
