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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Corporations and Associations
Chapter : INVESTMENTS FOR ELEEMOSYNARY PURPOSES
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10-11801 Definitions
In this chapter, unless the context otherwise requires:
1. "Endowment fund" means an institutional fund, or any part of an institutional
fund, not wholly expendable by the institution on a current basis under the terms of the
applicable gift instrument.
2. "Gift instrument" means 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" means the body responsible for the management of an
institution or an institutional fund.
4. "Historic dollar value" means the aggregate fair value in dollars of:
(a) An endowment fund at the time it became an endowment fund.
(b) Each subsequent donation to the fund at the time it is made.
(c) Each accumulation made pursuant to a direction in the applicable gift
instrument at the time the accumulation is added to the fund.
5. "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.
6. "Institutional fund" means a fund held by an institution for its exclusive use,
benefit or purposes. Institutional fund does not include either:
(a) A fund held for an institution by a trustee that is not an institution.
(b) A fund in which a beneficiary that is not an institution has an interest, other
than possible rights that could arise on violation or failure of the purposes of the
fund.
10-11802 Appropriation of appreciation
A. The governing board may appropriate for expenditure for the uses and purposes
for which an endowment fund is established as 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 10-11806. This
section does not limit the authority of the governing board to spend funds as permitted
under other law, the terms of the applicable gift instrument or the charter of the
institution.
B. The determination of historic dollar value made in good faith by the institution
is conclusive.
10-11803 Rule of construction
Section 10-11802 does not apply if the applicable gift instrument indicates the
donor's intention that net appreciation shall not be spent. A restriction on 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 that contains other similar words. This rule of
construction applies to gift instruments executed or in effect before or after August 18,
1987.
10-11804 Investment authority
In addition to an 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 or
in the applicable law other than law relating to investments by a fiduciary, 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 of a
government.
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 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.
10-11805 Delegation of investmentmanagement
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, officers or employees of the institution or the
fund, or 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.
3. Authorize the payment of compensation for investment advisory or management
services.
10-11806 Standard of conduct
In the administration of the powers to appropriate appreciation, to make and retain
investments and to delegate investment management or 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. In so doing they shall
consider long-term 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.
10-11807 Release of restrictions on use orinvestment
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 the donor's
death, disability, unavailability or impossibility of identification, the governing board
may apply in the name of the institution to the superior court 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 release, by order, the restriction in
whole or in part. A release under this subsection does 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
institution affected.
D. This section does not limit the application of the doctrine of cy-pres.
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