Standards for managing and investing an institutional fund.

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  • (1) In managing and investing an institutional fund, an institution:
    • (a) may incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution, and the skills available to the institution; and
    • (b) shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
  • (2) An institution may pool two or more institutional funds for purposes of management and investment.
  • (3) 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, must be considered:
      • (i) general economic conditions;
      • (ii) the possible effect of inflation or deflation;
      • (iii) the expected tax consequences, if any, of investment decisions or strategies;
      • (iv) the role that each investment or course of action plays within the overall investment portfolio of the fund;
      • (v) the expected total return from income and the appreciation of investments;
      • (vi) other resources of the institution;
      • (vii) the needs of the institution and the fund to make distributions and to preserve capital; and
      • (viii) an asset's special relationship or special value, if any, to the charitable purposes of the institution.
    • (b) Management and investment decisions about an individual asset must be made not in isolation but rather in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
    • (c) Except as otherwise provided by law other than this chapter, an institution may invest in any kind of property or type of investment consistent with the standards of this section.
    • (d) An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification.
    • (e) Within a reasonable time after receiving property, an institution shall make and implement decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, distribution requirements, and other circumstances of the institution and the requirements of this chapter.
    • (f) A person who has special skills or expertise, or is selected in reliance upon the person's representation that the person has special skills or expertise, has a duty to use those special skills or that expertise in managing and investing institutional funds.




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