2009 - 2010 LEGISLATURE
February 3, 2009 - Introduced by Senators Risser, Lehman, Cowles, Plale, Lassa,
Miller, Robson, Taylor and Wirch, cosponsored by Representatives Cullen,
Fields, Stone, Davis, Smith, Zepnick, Turner, Berceau, A. Ott, Kaufert,
Kestell, Benedict, Townsend and Shilling. Referred to Committee on
Veterans and Military Affairs, Biotechnology, and Financial Institutions.
1An Act to repeal
112.10; to amend
25.15 (3), 43.58 (7) (b) and 881.01 (2) (a); and 2to create
112.11 of the statutes; relating to: the Uniform Prudent
3Management of Institutional Funds Act, as approved by the National
4Conference of Commissioners on Uniform State Laws.
Analysis by the Legislative Reference Bureau
Currently, the management and investment of assets in funds held by
institutions that are 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, is governed by the
Uniform Management of Institutional Funds Act (UMIFA). This act, approved and
recommended by the National Conference of Commissioners on Uniform State Laws
(NCCUSL), was enacted into Wisconsin law in 1976.
This bill replaces UMIFA with the Uniform Prudent Management of
Institutional Funds Act (UPMIFA), as approved and recommended by NCCUSL in
2006. Significantly, UPMIFA updates the prudence standard established in UMIFA
to govern the management and investment of the above-mentioned funds, providing
that one of the enumerated prudence factors is the preservation of the funds, a factor
not contained in UMIFA. UPMIFA applies to funds held by institutions exclusively
for charitable purposes. A charitable purpose under UPMIFA specifically means the
relief of poverty, the advancement of education or religion, the promotion of health,
the promotion of a governmental purpose, or any other purpose, the achievement of
which is beneficial to the community.
With respect to the management and investment of assets in these funds,
UPMIFA requires those who manage and invest assets to do all of the following:
1. Consider the charitable purposes of the institution and the purposes of the
2. Manage and invest the fund in good faith and with the care an ordinarily
prudent person in a like position would exercise under similar circumstances.
3. Incur only costs that are appropriate and reasonable in relation to the assets,
the purposes of the institution, and the skills available to the institution.
4. Make a reasonable effort to verify facts relevant to the management and
investment of the fund.
5. Generally consider general economic conditions; the possible effect of
inflation or deflation; the expected tax consequences, if any, of investment decisions
or strategies; the role that each investment or course of action plays within the
overall investment portfolio of the fund; the expected total return from income and
the appreciation of investments; other resources of the institution; the needs of the
institution and the fund to make distributions and to preserve capital; and an asset's
special relationship or special value, if any, to the charitable purposes of the
Further, with respect to endowment funds held by these institutions, UPMIFA
authorizes an institution to appropriate for expenditure or accumulate so much of
an endowment fund as the institution determines is prudent for the uses, benefits,
purposes, and duration for which the endowment fund is established. In making a
determination to appropriate or accumulate, an institution must act in good faith,
with the care that an ordinarily prudent person in a like position would exercise
under similar circumstances, and must consider, if relevant, the duration and
preservation of the endowment fund; the purposes of the institution and the
endowment fund; general economic conditions; the possible effect of inflation or
deflation; the expected total return from income and the appreciation of investments;
other resources of the institution; and the investment policy of the institution.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB31, s. 1
25.15 (3) of the statutes is amended to read:
25.15 (3) Exemption. Section Sections 112.11 and
not apply to 3
investments by the board.
SB31, s. 2
43.58 (7) (b) of the statutes is amended to read:
(b) If a gift, bequest, or endowment is made to any public library, the 6
library board may pay or transfer the gift, bequest, or endowment, or its proceeds,
to the treasurer of the municipality or county in which the public library is situated; 2
may entrust the gift, bequest, or endowment to a public depository under ch. 34; may 3
pay or transfer the gift, bequest, or endowment to the library board's financial 4
secretary; or may pay or transfer the gift, bequest, or endowment to a charitable 5
organization, described in section 501
(c) (3) of the Internal Revenue Code and 6
exempt from federal income tax under section 501
(a) of the Internal Revenue Code, 7
the purpose of which is providing financial or material support to the public library. 8
A payment or transfer of a gift, bequest, or endowment by a library board to a 9
charitable organization described in this paragraph made prior to March 19, 2008, 10
is not invalid as lacking statutory authority to make the payment or transfer. If the 11
library board pays or transfers the gift, bequest, or endowment to the financial 12
secretary, the financial secretary may invest the gift, bequest, or endowment as 13
permitted under s. 66.0603 (1m) or 112.10 (4) 112.11 (3)
; or may delegate investment 14
authority 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 16
on the library board and shall be elected annually at the same time and in the same 17
manner as the other officers of the library board.
SB31, s. 3
112.10 of the statutes is repealed.
SB31, s. 4
112.11 of the statutes is created to read:
20112.11 Uniform Prudent Management of Institutional Funds Act. (1) 21Short title.
This section may be cited as the "Uniform Prudent Management of 22
Institutional Funds Act."
In this section:
(a) "Charitable purpose" means the relief of poverty, the advancement of 25
education or religion, the promotion of health, the promotion of a governmental
purpose, or any other purpose, the achievement of which is beneficial to the 2
(b) "Endowment fund" means an institutional fund or part thereof that, under 4
the terms of a gift instrument, is not wholly expendable by the institution on a 5
current basis. "Endowment fund" does not include assets that an institution 6
designates as an endowment fund for its own use.
(c) "Gift instrument" means a record or records, including an institutional 8
solicitation, under which property is granted to, transferred to, or held by an 9
institution as an institutional fund.
(d) "Institution" means any of the following:
1. A person, other than an individual, organized and operated exclusively for 12
2. A government or governmental subdivision, agency, or instrumentality, to 14
the extent that it holds funds exclusively for a charitable purpose.
3. A trust that had both charitable and noncharitable interests, after all 16
noncharitable interests have terminated.
(e) "Institutional fund" means a fund held by an institution exclusively for 18
charitable purposes, but does not include any of the following:
1. Program-related assets.
2. A fund held for an institution by a trustee that is not an institution.
3. A fund in which a beneficiary that is not an institution has an interest, other 22
than an interest that could arise upon violation or failure of the purposes of the fund.
(f) "Person" means an individual, corporation, business trust, estate, trust, 24
partnership, limited liability company, association, joint venture, public corporation,
government or governmental subdivision, agency, or instrumentality, or any other 2
legal or commercial entity.
(g) "Program-related asset" means an asset held by an institution primarily 4
to accomplish a charitable purpose of the institution and not primarily for 5
(h) "Record" means information that is inscribed on a tangible medium or that 7
is stored in an electronic or other medium and is retrievable in perceivable form.
8(3) Standard of conduct in managing and investing an institutional fund. 9
(a) Subject to the intent of a donor expressed in a gift instrument, an institution, in 10
managing and investing an institutional fund, shall consider the charitable purposes 11
of the institution and the purposes of the institutional fund.
(b) In addition to complying with the duty of loyalty imposed by law other than 13
this section, each person responsible for managing and investing an institutional 14
fund shall manage and invest the fund in good faith and with the care an ordinarily 15
prudent person in a like position would exercise under similar circumstances.
(c) In managing and investing an institutional fund, an institution:
1. May incur only costs that are appropriate and reasonable in relation to the 18
assets, the purposes of the institution, and the skills available to the institution.
2. Shall make a reasonable effort to verify facts relevant to the management 20
and investment of the fund.
(d) An institution may pool 2 or more institutional funds for purposes of 22
management and investment.
(e) Except as otherwise provided by a gift instrument, the following rules apply:
1. In managing and investing an institutional fund, the following factors, if 25
relevant, shall be considered:
a. General economic conditions.
b. The possible effect of inflation or deflation.