§ 36E-4. Appropriation for expenditure or accumulation of endowment fund; rules of construction. - North Carolina Statutes

§ 36E‑4.  Appropriationfor expenditure or accumulation of endowment fund; rules of construction.

(a)        Subject to theintent of a donor expressed in the gift instrument, an institution mayappropriate for expenditure or accumulate so much of an endowment fund as theinstitution determines is prudent for the uses, benefits, purposes, andduration for which the endowment fund is established. Unless stated otherwisein the gift instrument, the assets in an endowment fund are donor‑restrictedassets until appropriated for expenditure by the institution. In making adetermination to appropriate or accumulate, the institution shall act in goodfaith, with the care that an ordinarily prudent person in a like position wouldexercise under similar circumstances, and shall consider, if relevant, thefollowing factors:

(1)        The duration andpreservation of the endowment fund;

(2)        The purposes of theinstitution and the endowment fund;

(3)        General economicconditions;

(4)        The possible effectof inflation or deflation;

(5)        The expected totalreturn from income and the appreciation of investments;

(6)        Other resources ofthe institution; and

(7)        The investmentpolicy of the institution.

(b)        To limit theauthority to appropriate for expenditure or accumulate under subsection (a) ofthis section, a gift instrument must specifically state the limitation.

(c)        Terms in a giftinstrument designating a gift as an endowment, or a direction or authorizationin the gift instrument to use only "income," "interest,""dividends," or "rents, issues, or profits," or "topreserve the principal intact," or words of similar import:

(1)        Create an endowmentfund of permanent duration unless other language in the gift instrument limitsthe duration or purpose of the fund; and

(2)        Do not otherwise limitthe authority to appropriate for expenditure or accumulate under subsection (a)of this section.  (1985,c. 98, s. 1; 2009‑8, s. 2.)