Act expands prudent investment standards, changes authority to spend portions of endowment
The National Conference of Commissioners on Uniform State Laws (“NCCUSL”) has approved some major revisions to the Uniform Management of institutional Funds Act (See Ready Reference Page: “UMIFA Sets Rules for Charitable Endowments.”) to adopt more modern standards for prudent investing and to allow more flexibility in spending endowment funds.
UMIFA was originally approved in 1972 and was considered highly successful in providing standards for charities to use in managing their investments and spending from endowments. It has been adopted, with some variations, in 48 states.
The new Act is the result of four years of work and debate by a national drafting committee and incorporates modern portfolio theory from the Uniform Prudent Investor Act and the Uniform Principal and Income Act to permit “more efficient management of funds for charitable purposes,” NCCUSL says. To differentiate the new act from UMIFA, it has been named the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”).
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