Connecticut General Statutes 45a-535b – Standard of conduct in managing and investing institutional funds
(a) Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.
Terms Used In Connecticut General Statutes 45a-535b
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Donor: The person who makes a gift.
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Person: means an individual, corporation, statutory or business trust, estate, trust, partnership, limited liability company, association, joint venture, court, government, governmental subdivision, agency or instrumentality, public corporation or any other legal or commercial entity. See Connecticut General Statutes 45a-499c
- Property: means anything that may be the subject of ownership, whether real or personal and whether legal or equitable, or any interest therein. See Connecticut General Statutes 45a-499c
(b) In addition to complying with the duty of loyalty imposed by law other than sections 45a-535 to 45a-535i, inclusive, each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
(c) In managing and investing an institutional fund, an institution:
(1) 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
(2) Shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
(d) An institution may pool two or more institutional funds for purposes of management and investment.
(e) Except as otherwise provided by a gift instrument, the following shall apply to an institution:
(1) In managing and investing an institutional fund, the following factors, if relevant, shall be considered:
(A) General economic conditions;
(B) The possible effect of inflation or deflation;
(C) The expected tax consequences, if any, of investment decisions or strategies;
(D) The role that each investment or course of action plays within the overall investment portfolio of the fund;
(E) The expected total return from income and the appreciation of investments;
(F) Other resources of the institution;
(G) The needs of the institution and the fund to make distributions and to preserve capital; and
(H) An asset’s special relationship or special value, if any, to the charitable purposes of the institution.
(2) Management and investment decisions about an individual asset shall 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.
(3) Except as otherwise provided by law other than sections 45a-535 to 45a-535i, inclusive, an institution may invest in any kind of property or type of investment consistent with the standards of this section.
(4) 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.
(5) 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 sections 45a-535 to 45a-535i, inclusive.
(6) 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.