44-15-3. Considerations and standard of conduct for institutions receiving gifts.

Subject to the intent of a donor expressed in a gift instrument or any express written agreement between the donor and the institution, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.#

In addition to complying with the duty of loyalty imposed by law other than this chapter, each person responsible for managing and investing an institutional fund shall manage and invest such fund in good faith and with the care, skill, and caution an ordinarily prudent person in a like position would exercise under similar circumstances, considering the purposes, terms, distribution requirements, and other circumstances of the institutional fund.#

In managing and investing an institutional fund, an institution:#

1. (1)

   May incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution and the institutional fund, and the skills reasonably available to the institution; and#

2. (2)

   Shall make a reasonable effort to verify facts relevant to the management and investment of such fund.#

An institution may pool two or more institutional funds for purposes of management and investment.#

Except as otherwise provided by a gift instrument, the following rules shall apply:#

1. (1)

   In managing and investing an institutional fund, the following factors, if relevant, shall be considered:#

   1. (A)

      General economic conditions;#

   2. (B)

      The possible effect of inflation or deflation;#

   3. (C)

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

   4. (D)

      The role that each investment or course of action plays within the overall investment portfolio of such fund;#

   5. (E)

      The expected total return from income and the appreciation of investments;#

   6. (F)

      Other resources of the institution;#

   7. (G)

      The needs of the institution and such fund to make distributions and to preserve capital;#

   8. (H)

      An asset’s special relationship or special value, if any, to the charitable purposes of the institution or to the donor; and#

   9. (I)

      Any special circumstances;#

2. (2)

   Management and investment decisions about an individual asset shall not be made 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 institutional fund and to the institution;#

3. (3)

   An institution may invest in any kind of property or type of investment consistent with the provisions of this Code section;#

4. (4)

   An institution shall reasonably manage the risk of concentrated holdings of assets by diversifying the investments of the institutional fund or by using some other appropriate mechanism, except as provided in this paragraph, as follows:#

   1. (A)

      The duty imposed by this paragraph shall not apply if the institution reasonably determines that, because of special circumstances, or because of the specific purposes, terms, distribution requirements, and other circumstances of the institutional fund, the purposes of such fund are better served without complying with the duty. For purposes of this paragraph, special circumstances shall include an asset’s special relationship or special value, if any, to the charitable purposes of the institution or to the donor;#

   2. (B)

      No person responsible for managing and investing an institutional fund shall be liable for failing to comply with the duty imposed by this paragraph to the extent that the terms of the gift instrument or express written agreement between the donor and the institution limits or waives the duty; and#

   3. (C)

      The governing board of an institution may retain property contributed by a donor to an institutional fund for as long as the governing board deems advisable;#

5. (5)

   Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to the rebalancing of a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution or the institutional fund as necessary to meet other circumstances of the institution or the institutional fund and the requirements of this chapter;#

6. (6)

   A person that has special skills or expertise, or is selected in reliance upon the person’s representation that such person has special skills or expertise, has a duty to use those skills or expertise in managing and investing institutional funds; and#

7. (7)

   In investing and managing institutional funds, an institution may consider the personal values of the donor, including, but not limited to, a desire to engage in investing strategies that align with social, political, religious, philosophical, environmental, governance, or other values or beliefs of the donor; provided, however, that nothing in this paragraph shall allow an institutional fund to be used for a purpose other than a charitable purpose of the institution.#