On September 17, 2010, New York State modified its laws governing the management and investment of charitable gifts by New York nonprofit institutions. Specifically, the NYS legislature adopted, subject to certain modifications, the Uniform Prudent Management of Institutional Funds Act. The New York version of the Act is called the New York Prudent Management of Institutional Funds Act, or NYPMIFA.
In particular, NYPMIFA should provide relief to those charities struggling to manage endowment funds in tough economic times, especially when those funds are underwater. Boards are advised to educate themselves about the Act's new and important rules. NYPMIFA largely follows UPMIFA, but also contains its own unique requirements. For example, NYPMIFA: (1) sets out clear standards and factors to be used by a board, board committee, or delegated investment manager when managing and investing institutional funds; (2) requires a written investment policy; (3) subject to certain conditions (including, in particular, written notice to certain donors), permits charities to apply a spending policy to endowment funds based on certain specified standards of prudence, and moves away from the "historic dollar value" standard; and (4) makes available a streamlined process by which donor restrictions can be lifted (i.e., certain restrictions on gifts over 20 years old where the applicable fund is less than $100,000).
Charitable institutions with endowments are encouraged to review NYPMIFA in its entirety to fully understand the extent of the Act's new requirements. Importantly, officers should ensure that their Board is aware of all of the Act's changes and that the relevant institutional policies, particularly investment policies, and practices are reviewed and revised accordingly.
For further background on the management and investment of institutional funds in New York, please see our November 11, 2009 blog entry.