(a) A governing board may deposit funds under its control as provided in § 51.003 of this code, may invest funds under its control in accordance with Chapter 2256, Government Code and, with regard to donations, gifts, and trusts, may establish endowment funds that operate as trusts and are managed under prudent person standards.
(b) Funds described in this section may also be invested in cash management and fixed income funds held by organizations exempt from federal taxation under Section 501(f) of the Internal Revenue Code of 1986 (26 U.S.C. § 501(f)), as that section may be amended.

(c) If a governing board has under its control at least $25 million in book value of endowment funds, such governing board may invest all funds described in this section under prudent person standards.
(c-1) If a governing board does not have under its control at least $25 million in book value of endowment funds, the governing board may contract to pool its funds described in this section with another institution that meets the $25 million in book value of endowment funds threshold established under Subsection (c), and have its funds invested by that governing board under prudent person standards.
(d) As used in this section, “prudent person standard” is the standard of care described in Article VII, § 11b, of the Texas Constitution, and means that standard of judgment and care that prudent investors, exercising reasonable care, skill, and caution, would acquire or retain in light of the purposes, terms, distribution requirements, and other circumstances of the fund then prevailing, taking into consideration the investment of all the assets of the fund rather than a single investment.