Arizona Laws 10-11803. Appropriation for expenditure or accumulation of endowment fund; construction
A. Subject to the intent of a donor expressed in the gift instrument, an institution may 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. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors:
Terms Used In Arizona Laws 10-11803
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Donor: The person who makes a gift.
- Endowment fund: means an institutional fund or part of an institutional fund that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis. See Arizona Laws 10-11801
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Gift instrument: means a record or records, including an institutional solicitation, under which property is granted to, transferred to or held by an institution as an institutional fund. See Arizona Laws 10-11801
- Institution: means any of the following:
(a) A person, other than an individual, organized and operated exclusively for charitable purposes. See Arizona Laws 10-11801
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency or instrumentality or any other legal or commercial entity. See Arizona Laws 10-11801
1. The duration and preservation of the endowment fund.
2. The purposes of the institution and the endowment fund.
3. General economic conditions.
4. The possible effect of inflation or deflation.
5. The expected total return from income and the appreciation of investments.
6. Other resources of the institution.
7. The investment policy of the institution.
B. To limit the authority to appropriate for expenditure or accumulate under subsection A, a gift instrument must specifically state the limitation.
C. Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only income, interest, dividends or rents, issues, or profits, or to preserve the principal intact, or words of similar import:
1. Create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund.
2. Do not otherwise limit the authority to appropriate for expenditure or accumulate under subsection A.