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 Arizona Laws 10-11802

  • Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Distribution: means a direct or indirect transfer of money or other property, except its own shares, or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. See Arizona Laws 10-140
  • 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.
  • Gift instrument: means a record or records, including an institutional solicitation, under which property is granted to, transferred to or held by an institution as an institutional fund. See Arizona Laws 10-11801
  • Individual: includes the estate of an incompetent or deceased individual. See Arizona Laws 10-140
  • Institution: means any of the following:

    (a) A person, other than an individual, organized and operated exclusively for charitable purposes. See Arizona Laws 10-11801

  • Institutional fund: means a fund held by an institution exclusively for charitable purposes. See Arizona Laws 10-11801
  • Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency or instrumentality or any other legal or commercial entity. See Arizona Laws 10-11801
  • Property: includes both real and personal property. See Arizona Laws 1-215

B. In addition to complying with the duty of loyalty imposed by law other than in this chapter, 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 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 shall make reasonable efforts 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 apply:

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 in 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.

(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 not be made in isolation but shall be made 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 this chapter, an institution may invest in any kind of property or type of investment consistent with 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 carry out 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 and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this chapter.

6. A person that has special skills or expertise, or that is selected in reliance on the person’s representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.

 

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