LRBs0053/1
RAC:nwn&jld:md
2009 - 2010 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2009 ASSEMBLY BILL 58
May 4, 2009 - Offered by Representative Cullen.
AB58-ASA1,1,5
1An Act to repeal 112.10;
to amend 25.15 (3), 43.58 (7) (b), 615.10 (5), 620.25 (2)
2and 881.01 (2) (a); and
to create 112.11 of the statutes;
relating to: the
3Uniform Prudent Management of Institutional Funds Act, as approved by the
4National Conference of Commissioners on Uniform State Laws, and
5investment standards for assets in accounts for gift annuities.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB58-ASA1,1,87
25.15
(3) Exemption. Section Sections 112.11 and 881.01
does
do not apply to
8investments by the board.
AB58-ASA1, s. 2
9Section
2. 43.58 (7) (b) of the statutes is amended to read:
AB58-ASA1,2,1710
43.58
(7) (b) If a gift, bequest, or endowment is made to any public library, the
11library board may pay or transfer the gift, bequest, or endowment, or its proceeds,
1to the treasurer of the municipality or county in which the public library is situated;
2may entrust the gift, bequest, or endowment to a public depository under ch. 34; may
3pay or transfer the gift, bequest, or endowment to the library board's financial
4secretary; or may pay or transfer the gift, bequest, or endowment to a charitable
5organization, described in section
501 (c) (3) of the Internal Revenue Code and
6exempt from federal income tax under section
501 (a) of the Internal Revenue Code,
7the purpose of which is providing financial or material support to the public library.
8A payment or transfer of a gift, bequest, or endowment by a library board to a
9charitable organization described in this paragraph made prior to March 19, 2008,
10is not invalid as lacking statutory authority to make the payment or transfer. If the
11library board pays or transfers the gift, bequest, or endowment to the financial
12secretary, the financial secretary may invest the gift, bequest, or endowment as
13permitted under s. 66.0603 (1m) or
112.10 (4) 112.11 (3); or may delegate investment
14authority for the gift, bequest, or endowment as permitted under s. 66.0603 (2) or
15112.10 112.11 (5). The financial secretary shall hold office only during membership
16on the library board and shall be elected annually at the same time and in the same
17manner as the other officers of the library board.
AB58-ASA1,2,22
20112.11 Uniform Prudent Management of Institutional Funds Act. (1) 21Short title. This section may be cited as the "Uniform Prudent Management of
22Institutional Funds Act."
AB58-ASA1,2,23
23(2) Definitions. In this section:
AB58-ASA1,3,224
(a) "Charitable purpose" means the relief of poverty, the advancement of
25education or religion, the promotion of health, the promotion of a governmental
1purpose, or any other purpose, the achievement of which is beneficial to the
2community.
AB58-ASA1,3,63
(b) "Endowment fund" means an institutional fund or part thereof that, under
4the terms of a gift instrument, is not wholly expendable by the institution on a
5current basis. "Endowment fund" does not include assets that an institution
6designates as an endowment fund for its own use.
AB58-ASA1,3,97
(c) "Gift instrument" means a record or records, including an institutional
8solicitation, under which property is granted to, transferred to, or held by an
9institution as an institutional fund.
AB58-ASA1,3,1010
(d) "Institution" means any of the following:
AB58-ASA1,3,1211
1. A person, other than an individual, organized and operated exclusively for
12charitable purposes.
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2. A government or governmental subdivision, agency, or instrumentality, to
14the extent that it holds funds exclusively for a charitable purpose.
AB58-ASA1,3,1615
3. A trust that had both charitable and noncharitable interests, after all
16noncharitable interests have terminated.
AB58-ASA1,3,1817
(e) "Institutional fund" means a fund held by an institution exclusively for
18charitable purposes, but does not include any of the following:
AB58-ASA1,3,1919
1. Program-related assets.
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2. A fund in which a beneficiary that is not an institution has an interest, other
21than an interest that could arise upon violation or failure of the purposes of the fund.
AB58-ASA1,3,2522
(f) "Person" means an individual, corporation, business trust, estate, trust,
23partnership, limited liability company, association, joint venture, public corporation,
24government or governmental subdivision, agency, or instrumentality, or any other
25legal or commercial entity.
AB58-ASA1,4,3
1(g) "Program-related asset" means an asset held by an institution primarily
2to accomplish a charitable purpose of the institution and not primarily for
3investment.
AB58-ASA1,4,54
(h) "Record" means information that is inscribed on a tangible medium or that
5is stored in an electronic or other medium and is retrievable in perceivable form.
AB58-ASA1,4,9
6(3) Standard of conduct in managing and investing an institutional fund. 7(a) Subject to the intent of a donor expressed in a gift instrument, an institution, in
8managing and investing an institutional fund, shall consider the charitable purposes
9of the institution and the purposes of the institutional fund.
AB58-ASA1,4,1310
(b) In addition to complying with the duty of loyalty imposed by law other than
11this section, each person responsible for managing and investing an institutional
12fund shall manage and invest the fund in good faith and with the care an ordinarily
13prudent person in a like position would exercise under similar circumstances.
AB58-ASA1,4,1414
(c) In managing and investing an institutional fund, an institution:
AB58-ASA1,4,1615
1. May incur only costs that are appropriate and reasonable in relation to the
16assets, the purposes of the institution, and the skills available to the institution.
AB58-ASA1,4,1817
2. Shall make a reasonable effort to verify facts relevant to the management
18and investment of the fund.
AB58-ASA1,4,2019
(d) An institution may pool 2 or more institutional funds for purposes of
20management and investment.
AB58-ASA1,4,2121
(e) Except as otherwise provided by a gift instrument, the following rules apply:
AB58-ASA1,4,2322
1. In managing and investing an institutional fund, the following factors, if
23relevant, shall be considered:
AB58-ASA1,4,2424
a. General economic conditions.
AB58-ASA1,4,2525
b. The possible effect of inflation or deflation.
AB58-ASA1,4,26
1c. The expected tax consequences, if any, of investment decisions or strategies.
AB58-ASA1,5,32
d. The role that each investment or course of action plays within the overall
3investment portfolio of the fund.
AB58-ASA1,5,44
e. The expected total return from income and the appreciation of investments.
AB58-ASA1,5,55
f. Other resources of the institution.
AB58-ASA1,5,76
g. The needs of the institution and the fund to make distributions and to
7preserve capital.
AB58-ASA1,5,98
h. An asset's special relationship or special value, if any, to the charitable
9purposes of the institution.
AB58-ASA1,5,1310
2. Management and investment decisions about an individual asset shall not
11be made in isolation but rather in the context of the institutional fund's portfolio of
12investments as a whole and as a part of an overall investment strategy having risk
13and return objectives reasonably suited to the fund and to the institution.
AB58-ASA1,5,1514
3. Except as otherwise provided by law other than this section, an institution
15may invest in any kind of property or type of investment consistent with this section.
AB58-ASA1,5,1816
4. An institution shall diversify the investments of an institutional fund unless
17the institution reasonably determines that, because of special circumstances, the
18purposes of the fund are better served without diversification.
AB58-ASA1,5,2319
5. Within a reasonable time after receiving property, an institution shall make
20and carry out decisions concerning the retention or disposition of the property or to
21rebalance a portfolio, in order to bring the institutional fund into compliance with the
22purposes, terms, and distribution requirements of the institution as necessary to
23meet other circumstances of the institution and the requirements of this section.
AB58-ASA1,6,3
16. A person that has special skills or expertise, or is selected in reliance upon
2the person's representation that the person has special skills or expertise, has a duty
3to use those skills or that expertise in managing and investing institutional funds.
AB58-ASA1,6,14
4(4) Appropriation for expenditure or accumulation of endowment fund;
5rules of construction. (a) Subject to the intent of a donor expressed in the gift
6instrument, an institution may appropriate for expenditure or accumulate so much
7of an endowment fund as the institution determines is prudent for the uses, benefits,
8purposes, and duration for which the endowment fund is established. Unless stated
9otherwise in the gift instrument, the assets in an endowment fund are
10donor-restricted assets until appropriated for expenditure by the institution. In
11making a determination to appropriate or accumulate, the institution shall act in
12good faith, with the care that an ordinarily prudent person in a like position would
13exercise under similar circumstances, and shall consider, if relevant, the following
14factors:
AB58-ASA1,6,1515
1. The duration and preservation of the endowment fund.
AB58-ASA1,6,1616
2. The purposes of the institution and the endowment fund.
AB58-ASA1,6,1717
3. General economic conditions.
AB58-ASA1,6,1818
4. The possible effect of inflation or deflation.
AB58-ASA1,6,1919
5. The expected total return from income and the appreciation of investments.
AB58-ASA1,6,2020
6. Other resources of the institution.
AB58-ASA1,6,2121
7. The investment policy of the institution.
AB58-ASA1,6,2322
(b) To limit the authority to appropriate for expenditure or accumulate under
23par. (a), a gift instrument shall specifically state the limitation.
AB58-ASA1,7,224
(c) Terms in a gift instrument designating a gift as an endowment, or a direction
25or authorization in the gift instrument to use only "income," "interest," "dividends,"
1or "rents, issues, or profits," or "to preserve the principal intact," or words of similar
2import:
AB58-ASA1,7,43
1. Create an endowment fund of permanent duration, unless other language
4in the gift instrument limits the duration or purpose of the fund.
AB58-ASA1,7,65
2. Do not otherwise limit the authority to appropriate for expenditure or
6accumulate under par. (a).
AB58-ASA1,7,13
7(5) Delegation of management and investment functions. (a) Subject to any
8specific limitation set forth in a gift instrument or in law other than this section, an
9institution may delegate to an external agent the management and investment of an
10institutional fund to the extent that an institution could prudently delegate under
11the circumstances. An institution shall act in good faith, with the care that an
12ordinarily prudent person in a like position would exercise under similar
13circumstances, in all of the following: