New Hampshire Revised Statutes 292-B:4 – Appropriation for Expenditure or Accumulation of Endowment Fund; Rules of Construction
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I. Subject to the intent of a donor expressed in the gift instrument and to paragraphs IV and V, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider the following factors:
(a) The duration and preservation of the endowment fund;
(b) The purposes of the institution and the endowment fund;
(c) General economic conditions;
(d) The possible effect of inflation or deflation;
(e) The expected total return from income and the appreciation of investments;
(f) Other resources of the institution; and
(g) The investment policy of the institution.
II. To limit the authority to appropriate for expenditure or accumulate under paragraph I, a gift instrument must specifically state the limitation.
III. Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only “income,” “interest,” “dividends,” or “rents, issues, or profits,” or “to preserve the principal intact,” or words of similar import:
(a) Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund; and
(b) Do not otherwise limit the authority to appropriate for expenditure or accumulate under paragraph I.
IV. Any institution administering an endowment fund with a market value of $2,000,000 or more in the aggregate shall notify the attorney general upon its adoption of the provisions of RSA 292-B.
V. (a) If an institution has endowment funds with an aggregate value of less than $2,000,000, the institution shall notify the attorney general at least 60 days prior to an appropriation for expenditure of an amount that would cause the value of the institution’s endowment funds to fall below the aggregate historic dollar value of the institution’s endowment funds. During the 60-day period the attorney general may require the institution to obtain court approval for the proposed expenditure.
(b) For purposes of this paragraph, “historic dollar value” means the aggregate value in dollars of:
(1) Each endowment fund at the time it became an endowment fund;
(2) Each subsequent donation to the fund at the time the donation is made; and
(3) Each accumulation made pursuant to a direction in the applicable gift instrument at the time the accumulation is added to the fund.
(c) The institution’s determination of historic dollar value made in good faith is conclusive.
VI. The appropriation for expenditure in any year of any amount greater than 7 percent of the fair market value of an endowment fund, calculated on the basis of fair market value determined at least quarterly and averaged over a period of not less than 3 years immediately preceding the year in which the appropriation for expenditure was made, creates a rebuttable presumption of imprudence. For an endowment fund in existence for fewer than 3 years, the fair market value of the endowment fund shall be calculated for the period of time the endowment fund has been in existence.
(a) The duration and preservation of the endowment fund;
Terms Used In New Hampshire Revised Statutes 292-B:4
- Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- 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.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- following: when used by way of reference to any section of these laws, shall mean the section next preceding or following that in which such reference is made, unless some other is expressly designated. See New Hampshire Revised Statutes 21:13
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- person: may extend and be applied to bodies corporate and politic as well as to individuals. See New Hampshire Revised Statutes 21:9
- state: when applied to different parts of the United States, may extend to and include the District of Columbia and the several territories, so called; and the words "United States" shall include said district and territories. See New Hampshire Revised Statutes 21:4
(b) The purposes of the institution and the endowment fund;
(c) General economic conditions;
(d) The possible effect of inflation or deflation;
(e) The expected total return from income and the appreciation of investments;
(f) Other resources of the institution; and
(g) The investment policy of the institution.
II. To limit the authority to appropriate for expenditure or accumulate under paragraph I, a gift instrument must specifically state the limitation.
III. Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only “income,” “interest,” “dividends,” or “rents, issues, or profits,” or “to preserve the principal intact,” or words of similar import:
(a) Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund; and
(b) Do not otherwise limit the authority to appropriate for expenditure or accumulate under paragraph I.
IV. Any institution administering an endowment fund with a market value of $2,000,000 or more in the aggregate shall notify the attorney general upon its adoption of the provisions of RSA 292-B.
V. (a) If an institution has endowment funds with an aggregate value of less than $2,000,000, the institution shall notify the attorney general at least 60 days prior to an appropriation for expenditure of an amount that would cause the value of the institution’s endowment funds to fall below the aggregate historic dollar value of the institution’s endowment funds. During the 60-day period the attorney general may require the institution to obtain court approval for the proposed expenditure.
(b) For purposes of this paragraph, “historic dollar value” means the aggregate value in dollars of:
(1) Each endowment fund at the time it became an endowment fund;
(2) Each subsequent donation to the fund at the time the donation is made; and
(3) Each accumulation made pursuant to a direction in the applicable gift instrument at the time the accumulation is added to the fund.
(c) The institution’s determination of historic dollar value made in good faith is conclusive.
VI. The appropriation for expenditure in any year of any amount greater than 7 percent of the fair market value of an endowment fund, calculated on the basis of fair market value determined at least quarterly and averaged over a period of not less than 3 years immediately preceding the year in which the appropriation for expenditure was made, creates a rebuttable presumption of imprudence. For an endowment fund in existence for fewer than 3 years, the fair market value of the endowment fund shall be calculated for the period of time the endowment fund has been in existence.