The Florida Senate

¹1010.10  Florida Uniform Management of Institutional Funds Act.--

(1)  SHORT TITLE.--This section may be cited as the "Florida Uniform Management of Institutional Funds Act."

(2)  DEFINITIONS.--As used in this section, the term:

(a)  "Endowment fund" means an institutional fund, or any part thereof, not wholly expendable by the institution on a current basis under the terms of the applicable gift instrument.

(b)  "Governing board" means the body responsible for the management of an institution or of an institutional fund.

(c)  "Institution" means an incorporated or unincorporated organization organized and operated exclusively for the advancement of educational purposes, or a governmental entity to the extent that it holds funds exclusively for educational purposes.

(d)  "Institutional fund" means a fund held by an institution for its exclusive use, benefit, or purposes. The term excludes a fund held for an institution by a trustee that is not an institution. The term also excludes 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.

(e)  "Instrument" means a will; deed; grant; conveyance; agreement; memorandum; electronic record; 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)  EXPENDITURE OF ENDOWMENT FUNDS.--

(a)  A governing board may expend so much of an endowment fund as the governing board determines to be prudent for the uses and purposes for which the endowment fund is established, consistent with the goal of conserving the purchasing power of the endowment fund. In making its determination the governing board shall use reasonable care, skill, and caution in considering the following:

1.  The purposes of the institution;

2.  The intent of the donors of the endowment fund;

3.  The terms of the applicable instrument;

4.  The long-term and short-term needs of the institution in carrying out its purposes;

5.  The general economic conditions;

6.  The possible effect of inflation or deflation;

7.  The other resources of the institution; and

8.  Perpetuation of the endowment.

Expenditures made under this paragraph will be considered prudent if the amount expended is consistent with the goal of preserving the purchasing power of the endowment fund.

(b)  A restriction upon the expenditure of an endowment fund may not be implied from a designation of a gift as an endowment or from a direction or authorization in the instrument to use only "income," "interest," "dividends," or "rents, issues or profits," or "to preserve the principal intact," or words of similar import.

(c)  The provisions of paragraph (a) shall not apply to instruments if the instrument so indicates by stating, "I direct that the expenditure provision of paragraph (a) of subsection (3) of the Florida Uniform Management of Institutional Funds Act not apply to this gift" or words of similar import.

(d)  This subsection does not limit the authority of a governing board to expend funds as permitted under other law, the terms of the instrument, or the charter of the institution.

(e)  Except as otherwise provided, this subsection applies to instruments executed or in effect before or after the effective date of this section.

(4)  STANDARD OF CONDUCT.--

(a)  Members of a governing board shall invest and manage an institutional fund as a prudent investor would, by considering the purposes, distribution requirements, and other circumstances of the fund. In satisfying this standard, the governing board shall exercise reasonable care, skill, and caution.

(b)  A governing board's investment and management decisions about individual assets shall be made not in isolation but in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy that provides risk and return objectives reasonably suited to the fund and to the institution.

(c)  Among circumstances that a governing board shall consider are:

1.  Long-term and short-term needs of the institution in carrying out its purposes;

2.  Its present and anticipated financial resources;

3.  General economic conditions;

4.  The possible effect of inflation or deflation;

5.  The expected tax consequences, if any, of investment decisions or strategies;

6.  The role that each investment or course of action plays within the overall investment portfolio of the institutional fund;

7.  The expected total return from income and the appreciation of its investments;

8.  Other resources of the institution;

9.  The needs of the institution and the institutional fund for liquidity, regularity of income, and preservation or appreciation of capital; and

10.  An asset's special relationship or special value, if any, to the purposes of the applicable gift instrument or to the institution.

(d)  A governing board shall make a reasonable effort to verify the facts relevant to the investment and management of institutional fund assets.

(e)  A governing board shall diversify the investments of an institutional fund unless the board reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversifying.

(f)  A governing board shall invest and manage the assets of an institutional fund solely in the interest of the institution.

(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 in the applicable gift instrument or in the applicable law, other than law relating to investments by a fiduciary:

(a)  Within a reasonable time after receiving property, shall review the property and make and implement decisions concerning the retention and disposition of the assets, in order to bring the portfolio of the institutional fund into compliance with the purposes, terms, distribution requirements, and other circumstances of the institution, and with the requirements of this section;

(b)  May invest in any kind of property or type of investment consistent with the standards of this section;

(c)  May include all or any part of an institutional fund in any pooled or common fund maintained by the institution; and

(d)  May invest all or any part of the 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.

(6)  DELEGATION OF INVESTMENT MANAGEMENT.--

(a)  Except as otherwise provided by applicable law relating to governmental institutions or funds, a governing board may delegate investment and management functions that a prudent governing body could properly delegate under the circumstances. A governing board shall exercise reasonable care, skill, and caution in:

1.  Selecting an agent;

2.  Establishing the scope and terms of the delegation, consistent with the purposes of the institutional fund; and

3.  Periodically reviewing the agent's actions to monitor the agent's performance and the agent's compliance with the terms of the delegation.

(b)  In performing a delegated function, an agent owes a duty to the governing board to exercise reasonable care to comply with the terms of the delegation.

(c)  The members of a governing board who comply with the requirements of paragraph (a) are not liable for the decisions or actions of the agent to whom the function was delegated.

(d)  By accepting the delegation of an investment or management function from a governing board of an institution that is subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state in all actions arising from the delegation.

(7)  INVESTMENT COSTS.--In investing and managing trust assets, a governing board may only incur costs that are appropriate and reasonable in relation to the assets and the purposes of the institution.

(8)  RELEASE OF RESTRICTIONS ON USE OR INVESTMENT.--

(a)  With the written consent of the donor, a governing board may release, in whole or in part, a restriction imposed by the applicable instrument on the use or investment of an institutional fund.

(b)  If written consent of the donor cannot be obtained by reason of the donor's death, disability, unavailability, or impossibility of identification, a governing board may release, in whole or in part, a restriction imposed by the applicable instrument on the use or investment of an institutional fund if the fund has a total value of less than $100,000 and if the governing board, in its fiduciary judgment, concludes that the value of the fund is insufficient to justify the cost of administration as a separate institutional fund.

(c)  If written consent of the donor cannot be obtained by reason of the donor's death, disability, unavailability, or impossibility of identification, a governing board may apply in the name of the institution to the circuit court of the county in which the institution is located for release of a restriction imposed by the applicable instrument on the use or investment of an institutional fund. The Attorney General shall be notified of the application and shall be given an opportunity to be heard. If the court finds that the restriction is unlawful, impracticable, impossible to achieve, or wasteful, it may by order release the restriction in whole or in part. A release under this subsection may not change an endowment fund to a fund that is not an endowment fund.

(d)  A release under this subsection may not allow a fund to be used for purposes other than the educational purposes of the institution affected.

(e)  This subsection does not limit the application of the doctrine of cy pres.

(9)  UNIFORMITY OF APPLICATION AND CONSTRUCTION.--This act shall be applied and construed so as to effectuate its general purpose to make uniform the law with respect to the subject of this act among those states which enact it.

(10)  This section expires July 1, 2004.

History.--s. 13, ch. 2003-399.

¹Note.--Section 13, ch. 2003-399, created s. 1010.10 "[i]n order to implement Specific Appropriations 123-130 of the 2003-2004 General Appropriations Act, effective upon this act becoming a law and applicable retroactive to January 7, 2003."