CS/CS/CS/HB 599

1	A bill to be entitled
2	An act relating to corporations not for profit; creating
3	s. 617.2104, F.S.; providing a short title; providing
4	definitions; providing requirements for the management of
5	funds held by an institution exclusively for charitable
6	purposes; providing standards of conduct in managing and
7	investing institutional funds; providing requirements for
8	appropriation for expenditure or accumulation of an
9	endowment fund by an institution; authorizing an
10	institution to delegate to an external agent the
11	management and investment of an institutional fund;
12	authorizing the release or modification of a restriction
13	on management, investment, or purpose of an institutional
14	fund; providing for determination of compliance; providing
15	for application to existing or newly established
16	institutional funds; providing relationship to federal
17	law; providing requirements for uniformity of application
18	and construction of the act; creating s. 617.2105, F.S.;
19	authorizing reversion of real property to the Board of
20	Trustees of the Internal Improvement Trust Fund if a not-
21	for-profit corporation holding a deed subject to a
22	reverter clause violates deed restrictions; providing for
23	retroactive and prospective application; repealing s.
24	1010.10, F.S., relating to the Florida Uniform Management
25	of Institutional Funds Act; providing effective dates.
26
27	Be It Enacted by the Legislature of the State of Florida:
28
29	Section 1.  Section 617.2104, Florida Statutes, is created
30	to read:
31	617.2104  Florida Uniform Prudent Management of
32	Institutional Funds Act.-
33	(1)  SHORT TITLE.-This section may be cited as the "Florida
34	Uniform Prudent Management of Institutional Funds Act."
35	(2)  DEFINITIONS.-For purposes of this section:
36	(a)  "Charitable purpose" means the relief of poverty, the
37	advancement of education or religion, the promotion of health,
38	the promotion of a governmental purpose, or any other purpose
39	the achievement of which is beneficial to the community.
40	(b)  "Endowment fund" means an institutional fund or part
41	thereof that, under the terms of a gift instrument, is not
42	wholly expendable by the institution on a current basis. The
43	term does not include assets that an institution designates as
44	an endowment fund for its own use.
45	(c)  "Gift instrument" means a record or records, including
46	an institutional solicitation, under which property is granted
47	to, transferred to, or held by an institution as an
48	institutional fund.
49	(d)  "Institution" means:
50	1.  A person organized and operated exclusively for
51	charitable purposes, other than:
52	a.  An individual; or
53	b.  A trust subject to s. 518.11;
54
55	2.  A government or governmental subdivision, agency, or
56	instrumentality to the extent that it holds funds exclusively
57	for a charitable purpose; or
58	3.  A trust that had both charitable and noncharitable
59	interests after all noncharitable interests have been terminated
60	if the trust is not subject to s. 518.11.
61	(e)  "Institutional fund" means a fund held by an
62	institution exclusively for charitable purposes. The term does
63	not include:
64	1.  Program-related assets;
65	2.  A fund held for an institution by a trustee that is not
66	an institution;
67	3.  A fund in which a beneficiary that is not an
68	institution has an interest, other than an interest that could
69	arise upon violation or failure of the purposes of the fund; or
70	4.  A fund managed or administered by the State Board of
71	Administration pursuant to its constitutional or statutory
72	authority.
73	(f)  "Person" means an individual, corporation, business
74	trust, estate, trust, partnership, limited liability company,
75	association, joint venture, public corporation, government or
76	governmental subdivision, agency, or instrumentality, or any
77	other legal or commercial entity.
78	(g)  "Program-related asset" means an asset held by an
79	institution primarily to accomplish a charitable purpose of the
80	institution and not primarily for investment.
81	(h)  "Record" means information that is inscribed on a
82	tangible medium or that is stored in an electronic or other
83	medium and is retrievable in perceivable form.
84	(3)  STANDARD OF CONDUCT IN MANAGING AND INVESTING
85	INSTITUTIONAL FUND.-
86	(a)  Subject to the intent of a donor expressed in a gift
87	instrument, an institution, in managing and investing an
88	institutional fund, shall consider the charitable purposes of
89	the institution and the purposes of the institutional fund.
90	(b)  In addition to complying with the duty of loyalty
91	imposed by law other than this section, each person responsible
92	for managing and investing an institutional fund shall manage
93	and invest the fund in good faith and with the care an
94	ordinarily prudent person in a like position would exercise
95	under similar circumstances.
96	(c)  In managing and investing an institutional fund, an
97	institution:
98	1.  May incur only costs that are appropriate and
99	reasonable in relation to the assets, the purposes of the
100	institution, and the skills available to the institution.
101	2.  Shall make a reasonable effort to verify facts relevant
102	to the management and investment of the fund.
103	(d)  An institution may pool two or more institutional
104	funds for purposes of management and investment.
105	(e)  Except as otherwise provided by a gift instrument, the
106	following rules apply:
107	1.  In managing and investing an institutional fund, the
108	following factors, if relevant, must be considered:
109	a.  General economic conditions.
110	b.  The possible effect of inflation or deflation.
111	c.  The expected tax consequences, if any, of investment
112	decisions or strategies.
113	d.  The role that each investment or course of action plays
114	within the overall investment portfolio of the fund.
115	e.  The expected total return from income and the
116	appreciation of investments.
117	f.  Other resources of the institution.
118	g.  The needs of the institution and the fund to make
119	distributions and to preserve capital.
120	h.  An asset's special relationship or special value, if
121	any, to the charitable purposes of the institution.
122	2.  Management and investment decisions about an individual
123	asset must be made not in isolation but rather in the context of
124	the institutional fund's portfolio of investments as a whole and
125	as a part of an overall investment strategy having risk and
126	return objectives reasonably suited to the fund and to the
127	institution.
128	3.  Except as otherwise provided by law other than this
129	section, an institution may invest in any kind of property or
130	type of investment consistent with this section.
131	4.  An institution shall diversify the investments of an
132	institutional fund unless the institution reasonably and
133	prudently determines under this section that the purposes of the
134	fund are better served without diversification.
135	5.  Within a reasonable time after receiving property, an
136	institution shall make and carry out decisions concerning the
137	retention or disposition of the property or to rebalance a
138	portfolio in order to bring the institutional fund into
139	compliance with the purposes, terms, and distribution
140	requirements of the institution as necessary to meet other
141	circumstances of the institution and the requirements of this
142	section.
143	6.  A person that has special skills or expertise, or is
144	selected in reliance upon the person's representation that the
145	person has special skills or expertise, has a duty to use those
146	skills or that expertise in managing and investing institutional
147	funds.
148	(4)  APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF
149	ENDOWMENT FUND; RULES OF CONSTRUCTION.-
150	(a)  Subject to the intent of a donor expressed in the gift
151	instrument, an institution may appropriate for expenditure or
152	accumulate so much of an endowment fund as the institution
153	determines is prudent for the uses, benefits, purposes, and
154	duration for which the endowment fund is established. Unless
155	stated otherwise in the gift instrument, the assets in an
156	endowment fund are donor-restricted assets until appropriated
157	for expenditure by the institution. In making a determination to
158	appropriate or accumulate, the institution shall act in good
159	faith with the care that an ordinarily prudent person in a like
160	position would exercise under similar circumstances and shall
161	consider, if relevant, the following factors:
162	1.  The duration and preservation of the endowment fund.
163	2.  The purposes of the institution and the endowment fund.
164	3.  General economic conditions.
165	4.  The possible effect of inflation or deflation.
166	5.  The expected total return from income and the
167	appreciation of investments.
168	6.  Other resources of the institution.
169	7.  The investment policy of the institution.
170	(b)  To limit the authority to appropriate for expenditure
171	or accumulate under paragraph (a), a gift instrument must
172	specifically state the limitation.
173	(c)  Terms in a gift instrument designating a gift as an
174	endowment, or a direction or authorization in the gift
175	instrument to use only "income," "interest," "dividends," or
176	"rents, issues, or profits," or "to preserve the principal
177	intact," or words of similar import:
178	1.  Create an endowment fund of permanent duration unless
179	other language in the gift instrument limits the duration or
180	purpose of the fund.
181	2.  Do not otherwise limit the authority to appropriate for
182	expenditure or accumulate under paragraph (a).
183	(5)  DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.-
184	(a)  Subject to any specific limitation set forth in a gift
185	instrument or in law other than this section, an institution may
186	delegate to an external agent the management and investment of
187	an institutional fund to the extent that an institution could
188	prudently delegate under the circumstances. An institution shall
189	act in good faith, with the care that an ordinarily prudent
190	person in a like position would exercise under similar
191	circumstances, in:
192	1.  Selecting an agent.
193	2.  Establishing the scope and terms of the delegation,
194	consistent with the purposes of the institution and the
195	institutional fund.
196	3.  Periodically reviewing the agent's actions in order to
197	monitor the agent's performance and compliance with the scope
198	and terms of the delegation.
199	(b)  In performing a delegated function, an agent owes a
200	duty to the institution to exercise reasonable care to comply
201	with the scope and terms of the delegation.
202	(c)  An institution that complies with paragraph (a) is not
203	liable for the decisions or actions of an agent to which the
204	function was delegated.
205	(d)  By accepting delegation of a management or investment
206	function from an institution that is subject to the laws of this
207	state, an agent submits to the jurisdiction of the courts of
208	this state in all proceedings arising from or related to the
209	delegation or the performance of the delegated function.
210	(e)  An institution may delegate management and investment
211	functions to its committees, officers, or employees as
212	authorized by law other than this section.
213	(6)  RELEASE OR MODIFICATION OF RESTRICTIONS ON MANAGEMENT,
214	INVESTMENT, OR PURPOSE.-
215	(a)  If the donor consents in a record, an institution may
216	release or modify, in whole or in part, a restriction contained
217	in a gift instrument on the management, investment, or purpose
218	of an institutional fund. A release or modification may not
219	allow a fund to be used for a purpose other than a charitable
220	purpose of the institution.
221	(b)  If consent of the donor in a record cannot be obtained
222	by reason of the donor's death, disability, unavailability, or
223	impossibility of identification, a governing board may modify a
224	restriction contained in a gift instrument regarding the
225	management, investment, or use of an institutional fund if the
226	fund has a total value of $100,000 or less and the restriction
227	has become impracticable or wasteful, impairs the management,
228	investment, or use of the fund or if, because of circumstances
229	not anticipated by the donor, a modification of a restriction
230	will further the purposes of the fund.
231	(c)  If an institution determines that a restriction
232	contained in a gift instrument on the management, investment, or
233	purpose of an institutional fund is unlawful, impracticable,
234	impossible to achieve, or wasteful, the institution, after
235	providing written notice to the Attorney General, may release or
236	modify the restriction, in whole or part, if:
237	1.  The institutional fund subject to the restriction has a
238	total value of at least $100,000 and not more than $250,000;
239	2.  More than 20 years have elapsed since the fund was
240	established; and
241	3.  The institution uses the property in a manner
242	consistent with the charitable purposes expressed in the gift
243	instrument.
244	(d)  The circuit court for the circuit in which an
245	institution is located, upon application of that institution,
246	may modify a restriction contained in a gift instrument
247	regarding the management or investment of an institutional fund
248	if the restriction has become impracticable or wasteful, if it
249	impairs the management or investment of the fund, or if, because
250	of circumstances not anticipated by the donor, a modification of
251	a restriction will further the purposes of the fund. The
252	institution shall notify the Attorney General of the
253	application. To the extent practicable, any modification must be
254	made in accordance with the donor's probable intention.
255	(e)  If a particular charitable purpose or a restriction
256	contained in a gift instrument on the use of an institutional
257	fund becomes unlawful, impracticable, impossible to achieve, or
258	wasteful, the circuit court for the circuit in which an
259	institution is located, upon application of that institution,
260	may modify the purpose of the fund or the restriction on the use
261	of the fund in a manner consistent with the charitable purposes
262	expressed in the gift instrument. The institution shall notify
263	the Attorney General of the application.
264	(7)  REVIEWING COMPLIANCE.-Compliance with this section is
265	determined in light of the facts and circumstances existing at
266	the time a decision is made or action is taken, and not by
267	hindsight.
268	(8)  APPLICATION TO EXISTING INSTITUTIONAL FUNDS.-This
269	section applies to institutional funds existing on or
270	established after the effective date of this section. As applied
271	to institutional funds existing on the effective date of this
272	section, this section governs only decisions made or actions
273	taken on or after that date.
274	(9)  RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND
275	NATIONAL COMMERCE ACT.-This section modifies, limits, and
276	supersedes the federal Electronic Signatures in Global and
277	National Commerce Act, 15 U.S.C. ss. 7001 et seq., but does not
278	modify, limit, or supersede s. 101(c) of that act, 15 U.S.C. s.
279	7001(c), or authorize electronic delivery of any of the notices
280	described in s. 103(b) of that act, 15 U.S.C. s. 7003(b).
281	(10)  UNIFORMITY OF APPLICATION AND CONSTRUCTION.-In
282	applying and construing this uniform act, consideration must be
283	given to the need to promote uniformity of the law with respect
284	to its subject matter among states that enact it.
285	Section 2.  Effective upon this act becoming a law, section
286	617.2105, Florida Statutes, is created to read:
287	617.2105  Corporation issued a deed to real property.-When
288	a corporation or foreign corporation subject to this chapter is
289	issued a deed to real property in the state by the Board of
290	Trustees of the Internal Improvement Trust Fund containing a
291	reverter clause that restricts the use of property to specified
292	uses in the deed, the failure to put the property to the
293	required use within a period of 3 years after the grant, unless
294	a stricter time period is contained in the deed, is prima facie
295	evidence that the restriction is violated, subjecting the
296	property to reversion to the Board of Trustees of the Internal
297	Improvement Trust Fund at its discretion. This section applies
298	retroactively and prospectively and may not be construed to
299	excuse for any period of time a use of the property in violation
300	of the restrictive use.
301	Section 3.  Section 1010.10, Florida Statutes, is repealed.
302	Section 4.  Except as otherwise expressly provided in this
303	act and except for this section, which shall take effect upon
304	this act becoming a law, this act shall take effect July 1,
305	2012.

CODING: Words stricken are deletions; words underlined are additions.