Kansas Statutes

Chapter 58: Personal And Real Property

Part 6.--MISCELLANEOUS PROVISIONS

Article 36: Uniform Management Of Institutional Funds

Statutes:

• 58-3601: Definitions.
• 58-3602: Appropriation of appreciation.
• 58-3603: Rule of construction.
• 58-3604: Investment authority.
• 58-3605: Delegation of investment management.
• 58-3606: Standard of conduct.
• 58-3607: Release of restrictions on use or investments.
• 58-3608: Severability.
• 58-3609: Uniformity of application and construction.
• 58-3610: Short title.

• 58-3601: Definitions. As used in this act: (1) "Institution" means an incorporated or unincorporated organization organized and operated exclusively for educational, religious, charitable, or other eleemosynary purposes or a governmental organization to the extent that it holds funds exclusively for any of these purposes;

        (2)   "institutional fund" means a fund held by an institution for its exclusive use, benefit or purposes, but does not include (i) a fund held for an institution by a trustee which is not an institution or (ii) a fund in which a beneficiary which is not an institution has an interest other than possible rights which could arise upon violation or failure of the purposes of the fund;

        (3)   "endowment fund" means an institutional fund, or any part thereof, which is not wholly expendable by the institution on a current basis under the terms of the applicable gift instrument;

        (4)   "governing board" means the body responsible for the management of an institution or of an institutional fund;

        (5)   "historic dollar value" means the fair value in dollars of an endowment fund at the time it first became an endowment fund, plus the fair value in dollars of each subsequent donation to the fund at the time it is made, plus the fair value in dollars of each accumulation made pursuant to a direction in the applicable gift instrument at the time the accumulation is added to the fund. The determination of historic dollar value made in good faith by the institution is conclusive;

        (6)   "gift instrument" means a will, deed, grant, conveyance, agreement, memorandum, writing, or other governing document (including the terms of any institutional solicitations from which an institutional fund resulted) under which property is transferred to or held by an institution as an institutional fund.

        History:   L. 1973, ch. 226, § 1; July 1.

• 58-3602: Appropriation of appreciation. The governing board may appropriate for expenditure for the uses and purposes for which an endowment fund is established so much of the net appreciation realized or unrealized in the fair value of the assets of an endowment fund over the historic dollar value of the fund as is prudent under the standard established by K.S.A. 58-3606 and amendments thereto. This section does not limit the authority of the governing board to expend funds as permitted under other law, the terms of the applicable gift instrument, or the character of an institution.

        History:   L. 1973, ch. 226, § 2; L. 1997, ch. 85, § 1; July 1.

• 58-3603: Rule of construction. K.S.A. 58-3602 does not apply if the applicable gift instrument indicates the donor's intention that net appreciation shall not be expended. A restriction upon the expenditure of net appreciation may not be implied from a designation of a gift as an endowment, or from a direction or authorization in the applicable gift instrument to use only "income," "interest," "dividends," or "rents, issues or profits," or "to preserve the principal intact," or a direction which contains other words of similar import. This rule of construction applies to gift instruments executed or in effect before or after the effective date of this act.

        History:   L. 1973, ch. 226, § 3; July 1.

• 58-3604: Investment authority. In addition to an investment otherwise authorized by law or by the applicable gift instrument, and without restriction to investments a fiduciary is authorized to make, the governing board (subject to any specific limitations set forth in the applicable gift instrument or in applicable law other than law relating to investments a fiduciary is authorized to make) may:

        (1)   Invest and reinvest an institutional fund in any real or personal property deemed advisable by the governing board, whether or not it produces a current return, including mortgages, stocks and bonds, debentures, and other securities of profit or non-profit corporations, shares in or obligations of associations, partnerships, or individuals, and obligations of any government or subdivision or instrumentality thereof;

        (2)   retain property contributed by a donor to an institutional fund for as long as the governing board deems advisable;

        (3)   include all or any part of an institutional fund in any pooled or common fund maintained by the institution; and

        (4)   invest all or any part of an institutional fund in any other pooled or common fund available for investment, including shares or interests in regulated investment companies, mutual funds, common trust funds, investment partnerships, real estate investment trusts, or similar organizations in which funds are commingled and investment determinations are made by persons other than the governing board.

        History:   L. 1973, ch. 226, § 4; July 1.

• 58-3605: Delegation of investment management. Except as otherwise provided by the applicable gift instrument or by applicable law relating to governmental institutions or funds, the governing board may (1) delegate to its committees, to officers or employees of the institution or the fund, or to agents (including investment counsel) the authority to act in place of the board in investment and reinvestment of institutional funds, (2) contract with independent investment advisors, investment counsel or managers, banks, or trust companies, so to act, and (3) authorize the payment of compensation for investment advisory or management services.

        History:   L. 1973, ch. 226, § 5; July 1.

• 58-3606: Standard of conduct. In the administration of the powers to appropriate appreciation, to make and retain investments, and to delegate investment management of institutional funds, members of a governing board shall exercise ordinary business care and prudence under the facts and circumstances prevailing at the time of the action or decision, and in so doing they shall consider long and short term needs of the institution in carrying out its educational, religious, charitable, or other eleemosynary purposes, its present and anticipated financial requirements, expected total return on its investments, price level trends, and general economic conditions.

        History:   L. 1973, ch. 226, § 6; July 1.

• 58-3607: Release of restrictions on use or investments. (a) A restriction on the use or investment of an institutional fund imposed by the applicable gift instrument may be released, entirely or in part, by the governing board with the written consent of the donor.

        (b)   If consent of the donor cannot be obtained by reason of the death, disability or unavailability, or impossibility of identification of the donor, upon application of the governing board, a restriction on the use or investment of an institutional fund imposed by the applicable gift instrument may be released, entirely or in part, by order of the district court after reasonable notice to the attorney general and an opportunity for him or her to be heard, and upon a finding that the restriction on the use or investment of the fund is obsolete, inappropriate or impracticable. A release under this subsection may not change an endowment fund to a fund which is not an endowment fund.

        (c)   A release under this section may not allow a fund to be used for purposes other than the educational, religious, charitable, or other eleemosynary purposes of the institution affected.

        (d)   The provisions of this section do not limit the application of the doctrine of cy pres.

        History:   L. 1973, ch. 226, § 7; July 1.

• 58-3608: Severability. If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable.

        History:   L. 1973, ch. 226, § 8; July 1.

• 58-3609: Uniformity of application and construction. This act shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act among those states which enact it.

        History:   L. 1973, ch. 226, § 9; July 1.

• 58-3610: Short title. This act may be cited as the "uniform management of institutional funds act."

        History:   L. 1973, ch. 226, § 10; July 1.