California Probate Code 18503 – (a) Subject to the intent of a donor expressed in a gift …
(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.
(b) In addition to complying with the duty of loyalty imposed by law other than this part, 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.
Terms Used In California Probate Code 18503
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- 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 California Probate Code 18502
- Institution: means any of the following:
California Probate Code 18502
- Institutional fund: means a fund held by an institution exclusively for charitable purposes. See California Probate Code 18502
- Instrument: means a will, a document establishing or modifying a trust, a deed, or any other writing that designates a beneficiary or makes a donative transfer of property. See California Probate Code 45
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- 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 California Probate Code 18502
- Property: means anything that may be the subject of ownership and includes both real and personal property and any interest therein. See California Probate Code 62
(c) In managing and investing an institutional fund, an institution is subject to both of the following:
(1) It 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.
(2) It 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 rules apply:
(1) In managing and investing an institutional fund, all of the following factors, if relevant, must 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.
(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 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.
(3) Except as otherwise provided by law other than this part, 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 part.
(6) A person that 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 skills or that expertise in managing and investing institutional funds.
(f) Nothing in this section alters the duties and liabilities of a director of a nonprofit public benefit corporation under § 5240 of the Corporations Code.
(Repealed and added by Stats. 2008, Ch. 715, Sec. 4. Effective January 1, 2009.)