Iowa Code 540A.103 – Standard of conduct — managing and investing institutional fund
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Terms Used In Iowa Code 540A.103
- 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.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- person: means individual, corporation, limited liability company, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity. See Iowa Code 4.1
- property: includes personal and real property. See Iowa Code 4.1
540A.103 Standard of conduct — managing and investing institutional fund.
1. Subject to the intent of a donor expressed in a gift instrument, an institution shall
consider the charitable purposes of the institution and the purposes of the institutional fund in managing and investing an institutional fund.
2. In addition to complying with the duty of loyalty imposed by law other than this chapter, each person responsible for managing and investing an institutional fund shall 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. All of the following shall apply to an institution managing and investing an institutional fund:
a. An institution may 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.
b. An institution shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
4. Subject to the intent of a donor expressed in a gift instrument, an institution may pool two or more institutional funds for purposes of management and investment.
5. Except as otherwise provided by a gift instrument, all of the following rules shall apply:
a. In managing and investing an institutional fund, the following factors, if relevant, shall be considered:
(1) General economic conditions.
(2) The possible effect of inflation or deflation.
(3) The expected tax consequences, if any, of investment decisions or strategies.
(4) The role that each investment or course of action plays within the overall investment portfolio of the fund.
(5) The expected total return from income and the appreciation of investments. (6) Other resources of the institution.
(7) The needs of the institution and the fund to make distributions and to preserve capital. (8) An asset’s special relationship or special value, if any, to the charitable purposes of
the institution.
b. Management and investment decisions about an individual asset shall be made in the context of the institutional fund’s portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
c. Except as otherwise provided by law, an institution may invest in any kind of property or type of investment consistent with this section.
d. An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification.
e. Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this chapter.
f. A person that has special skills or expertise, or is selected in reliance upon the person’s representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.
2008 Acts, ch 1066, §3, 11
1. Subject to the intent of a donor expressed in a gift instrument, an institution shall
consider the charitable purposes of the institution and the purposes of the institutional fund in managing and investing an institutional fund.
2. In addition to complying with the duty of loyalty imposed by law other than this chapter, each person responsible for managing and investing an institutional fund shall 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. All of the following shall apply to an institution managing and investing an institutional fund:
a. An institution may 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.
b. An institution shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
4. Subject to the intent of a donor expressed in a gift instrument, an institution may pool two or more institutional funds for purposes of management and investment.
5. Except as otherwise provided by a gift instrument, all of the following rules shall apply:
a. In managing and investing an institutional fund, the following factors, if relevant, shall be considered:
(1) General economic conditions.
(2) The possible effect of inflation or deflation.
(3) The expected tax consequences, if any, of investment decisions or strategies.
(4) The role that each investment or course of action plays within the overall investment portfolio of the fund.
(5) The expected total return from income and the appreciation of investments. (6) Other resources of the institution.
(7) The needs of the institution and the fund to make distributions and to preserve capital. (8) An asset’s special relationship or special value, if any, to the charitable purposes of
the institution.
b. Management and investment decisions about an individual asset shall be made in the context of the institutional fund’s portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
c. Except as otherwise provided by law, an institution may invest in any kind of property or type of investment consistent with this section.
d. An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification.
e. Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this chapter.
f. A person that has special skills or expertise, or is selected in reliance upon the person’s representation that the person has special skills or expertise, has a duty to use those skills or that expertise in managing and investing institutional funds.
2008 Acts, ch 1066, §3, 11