§ 36E-3. Standard of conduct in managing and investing institutional fund. - North Carolina Statutes

§ 36E‑3.  Standard ofconduct in managing and investing institutional fund.

(a)        Subject to theintent of a donor expressed in a gift instrument, an institution, in managingand investing an institutional fund, shall consider the charitable purposes ofthe institution and the purposes of the institutional fund.

(b)        In addition tocomplying with the duty of loyalty imposed by law other than this Chapter, eachperson responsible for managing and investing an institutional fund shallmanage and invest the fund in good faith and with the care an ordinarilyprudent person in a like position would exercise under similar circumstances.

(c)        In managing andinvesting an institutional fund, an institution:

(1)        May incur only coststhat are appropriate and reasonable in relation to the assets, the purposes ofthe institution, and the skills available to the institution; and

(2)        Shall make areasonable effort to verify facts relevant to the management and investment ofthe fund.

(d)        An institution maypool two or more institutional funds for purposes of management and investment.

(e)        Except as otherwiseprovided by a gift instrument, the following rules apply:

(1)        In managing andinvesting an institutional fund, the following factors, if relevant, must beconsidered:

a.         General economicconditions;

b.         The possible effectof inflation or deflation;

c.         The expected taxconsequences, if any, of investment decisions or strategies;

d.         The role that eachinvestment or course of action plays within the overall investment portfolio ofthe fund;

e.         The expected totalreturn from income and the appreciation of investments;

f.          Other resources ofthe institution;

g.         The needs of theinstitution and the fund to make distributions and to preserve capital; and

h.         An asset's specialrelationship or special value, if any, to the charitable purposes of theinstitution.

(2)        Management andinvestment decisions about an individual asset must be made not in isolationbut rather in the context of the institutional fund's portfolio of investmentsas a whole and as a part of an overall investment strategy having risk andreturn objectives reasonably suited to the institutional fund and to theinstitution.

(3)        Except as otherwiseprovided by law other than this Chapter, an institution may invest in any kindof property or type of investment consistent with this section.

(4)        An institution shalldiversify the investments of an institutional fund unless the institutionreasonably determines that, because of special circumstances, the purposes ofthe fund are better served without diversification.

(5)        Within a reasonabletime after receiving property, an institution shall make and carry outdecisions concerning the retention or disposition of the property or torebalance a portfolio in order to bring the institutional fund into compliancewith the purposes, terms, and distribution requirements of the institution asnecessary to meet other circumstances of the institution and the requirementsof this Chapter.

(6)        A person that hasspecial skills or expertise, or is selected in reliance upon the person'srepresentation that the person has special skills or expertise, has a duty touse those skills or that expertise in managing and investing institutionalfunds. This subdivision does not apply to a volunteer who is not compensatedbeyond reimbursement for expenses.  (1985, c. 98, s. 1; 2009‑8, s. 2.)