This chapter shall be known as the "Uniform Management of Institutional Funds Act."

The following words or phrases, whenever they appear in this chapter, unless the context clearly indicates otherwise, shall have the meanings ascribed to them in this section:

(1) ENDOWMENT FUND. Any institutional fund, or any part thereof, not wholly expendable by the institution on a current basis under the terms of the applicable gift instrument.

(2) GIFT INSTRUMENT. Any 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.

(3) GOVERNING BOARD. The body responsible for the overall management of an institution or of an institutional fund, whether denominated as trustees, directors, managers, regents, wardens, or other words of similar import.

(4) HISTORIC DOLLAR VALUE. The aggregate fair value in dollars of (i) an endowment fund at the time it became an endowment fund, (ii) each subsequent donation to the fund at the time it is made, and (iii) 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.

(5) INSTITUTION. An incorporated or unincorporated organization organized and operated primarily for or in support of educational, religious, charitable, or other eleemosynary purposes or a governmental organization to the extent that it holds funds exclusively for those purposes.

(6) INSTITUTIONAL FUND. Any fund held by an institution for its exclusive use, benefit, or purposes, but not including: (i) A fund held for an institution by a trustee that is not an institution or (ii) a fund in which a beneficiary that is not an institution has an interest other than possible rights that could arise upon violation or failure of the purposes of the fund.

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 and 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 Section 16-61A-7. This section shall 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 charter of the institution.

Section 16-61A-3 shall not apply if the applicable gift instrument governing a fund specifically indicates the donor's intention that net appreciation shall not be expended. A restriction upon the expenditure of net appreciation shall not be implied solely from a designation of a gift as an endowment, or from a direction or authorization in the applicable gift instrument to use only "income," "earnings," "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 August 31, 1993, as to educational institutions, and to all other institutions on September 1, 2002.

In addition to any investment otherwise authorized by law or by the applicable gift instrument, and without restriction to investments a fiduciary may make, the governing board, subject to any specific limitations set forth in the applicable gift instrument, 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, bonds, debentures, and other securities of profit or nonprofit 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.

(4) Invest all or any part of an institutional fund in any other pooled or common fund available for investment, including shares or interest 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.

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 independent investment advisors, investment counsel or managers, banks, or trust companies, 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 to act in a managerial capacity for the board.

(3) Authorize the payment of compensation for investment, advisory, or management services.

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 conform to the standards for fiduciary investment and management as required under state law. In so doing, the board members shall consider long-and short-term needs of the institution in carrying out its educational, religious, charitable, or other eleemosynary purposes, the present and anticipated financial requirements of the institution, and the expected total return on the investments of the institution.

(a) With the written consent of the donor, the governing board may release, in whole or in part, a restriction imposed by the applicable gift instrument on the use or investment of an institutional fund.

(b) If written consent of the donor cannot be obtained by reason of his or her death, disability, unavailability, or impossibility of identification, the governing board may apply in the name of the institution to the circuit court of the county in which the principal activities of the institution are conducted, for release of a restriction imposed by the applicable gift instrument on the use or investment of an institutional fund. The Attorney General shall be notified of the application and shall be given an opportunity to be heard. If the court finds that the restriction is obsolete, inappropriate, or impracticable, it may by order release the restriction in whole or in part. A release under this subsection may not change an endowment fund to a fund that 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 affected institution .

(d) This section does not limit the application of the doctrines of cy-pres or approximation.