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Florida is 50th State to Enact Uniform Prudent Management of Institutional Funds Act

(June 22, 2011) -

 

Uniform Law Commission
111 N. Wabash Ave., Suite 1010, Chicago, IL  60602
312-450-6600, www.uniformlaws.org

Contact:   Kieran Marion, ULC Legislative Counsel, kmarion@uniformlaws.org  
                  Katie Robinson, ULC Communications Officer, katie.robinson@uniformlaws.org

For Immediate Release:

Florida is the 50th state or territory to enact a new law giving charities more flexibility

June 22, 2011— Florida is the latest state to enact the Uniform Prudent Management of Institutional Funds Act (UPMIFA), important legislation that establishes rules for the management of endowment funds.  UPMIFA was introduced by Rep. Kathleen Passidomo (R-Naples) as HB 599, and was recently signed into law by Florida Governor Rick Scott.  UPMIFA is now the law in every state except Mississippi, Pennsylvania, and Puerto Rico.

During the current economic times, nonprofits and foundations have suffered on several fronts.  Donations have declined and the value of many endowment funds has decreased.  Before UPMIFA, the law on expenditures was inflexible – to the point that a large number of charities could not use their funds because of the restrictions placed on investments or spending.  UPMIFA provides a better framework that gives nonprofits and foundations more flexibility to meet their core missions through use of the funds that are meant for these purposes, but will also provide a more robust standard for preserving these funds long term and guarding against inappropriate expenditures in both good and bad times.

UPMIFA was drafted and approved by the Uniform Law Commission (ULC) in 2006.  It is a revision of the Uniform Management of Institutional Funds Act (UMIFA) of 1972, which was adopted in 48 states.  That original act provided statutory guidelines for management, investment, and expenditures of endowment funds of charitable institutions – institutions such as colleges, universities and hospitals.  The goal of the new UPMIFA remains the same as it was in 1972:  to give charities the freedom to make more effective use of endowment and other investment funds and encourage more productive management of such funds.  However, UPMIFA is an improvement on the old law because it is consistent with advancements in charitable practice, regulation, and comparable areas of nonprofit and trust law over that same timeframe.

UPMIFA expressly addresses the needs of charities by providing for diversification of assets, pooling of assets, total return investment, and whole portfolio management.  It does so in a comprehensive manner that is consistent with modern practices in trust and not-for-profit corporation law.

Under UPMIFA, the rules governing expenditures from endowment funds have been modified to give a governing board more flexibility in making expenditure decisions, so that the board can cope with fluctuations in the value of the endowment.  It does this by providing investment freedom, and by providing updated rules on the expenditure of funds.

The Uniform Prudent Management of Institutional Funds Act provides the nonprofit sector a better legal foundation to weather today’s economy, continue to meet their core missions, and maintain the strongest measures of accountability to donors and to the public.

Since its promulgation by the ULC, UPMIFA has been adopted by 48 states, the District of Columbia, and the U.S. Virgin Islands.  Further information on the Uniform Prudent Management of Institutional Funds Act can be found at the ULC’s website at www.uniformlaws.org

The Uniform Law Commission, now in its 120th year, comprises more than 350 practicing lawyers, governmental lawyers, judges, law professors, and lawyer-legislators from every state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.  Uniform law commissioners are appointed by their states to draft and promote enactment of uniform laws that are designed to solve problems common to all the states.

After receiving the ULC’s seal of approval, a uniform act is officially promulgated for consideration by the states, and legislatures are urged to adopt it.  Since its inception in 1892, the ULC has been responsible for more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, the Uniform Partnership Act, and the Uniform Anatomical Gift Act.

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