2/3/00.....3209s

4may00.....4251h

2000 SESSION

99-0856

09/01

SENATE BILL 97

COMMITTEE: Banks

AMENDED ANALYSIS

This bill allows the governing body managing a charitable trust which is an institutional fund to appropriate expenditures from the realized and unrealized net appreciation in the fair value of the charitable trust.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

2/3/00.....3209s

4may00.....4251h

99-0856

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand

Be it Enacted by the Senate and House of Representatives in General Court convened:

250:1 Management of Institutional Funds; Declaration of Purpose. Amend RSA 292-B:1 to read as follows:

292-B:1 Declaration of Purpose. It is hereby declared to be in the public interest and to be the policy of the state to promote, by all reasonable means, the maintenance and growth of eleemosynary institutions by encouraging them and those who manage one or more charitable trusts which are for the sole benefit of eleemosynary institutions or other charitable purposes to establish and continue investment policies, without artificial constraints, which will provide them with the means to meet the present and future needs of such eleemosynary institutions and charitable purposes pursuant to the provisions of this act. To this end it is hereby declared to be in the public interest and to be the policy of the state to encourage such institutions and those who manage charitable trusts for the benefit of such institutions or other charitable purposes to adopt investment policies whose objective is to obtain the highest possible total rate of return consistent with the standard of prudence.

250:2 Definition of Institutional Fund. RSA 292-B:1-a, II is repealed and reenacted to read as follows:

II. "Institutional fund" means a fund held for or by an institution for its exclusive use, benefit, or purposes, and includes a fund held by a trustee for one or more institutions or other charitable purposes in which no beneficiary that is not an institution or charitable beneficiary has an interest, other than possible rights that could arise upon violation or failure of the purposes of the fund. The term "institutional fund" shall not include a fund held by a town or other municipality under RSA 31:19 or a fund created by a town or other municipality under RSA 31:19-a.

250:3 Definition of Endowment Fund. Amend RSA 292-B:1-a, III is repealed and reenacted to read as follows:

III. "Endowment fund" means an institutional fund, or any part thereof, not wholly expendable to or by [the] an institution on a current basis under the terms of the applicable gift instrument.

250:4 Definition of Historic Dollar Value; Gift Instrument. Amend RSA 292-B:1-a, IV-VI to read as follows:

IV. "Governing board" means the body responsible for the management of an institution or of an institutional fund or a trustee or trustees of a charitable trust.

V. "Historic dollar value" means the aggregate fair value in dollars of (i) an endowment fund at the time it became an endowment fund, (ii) each subsequent donation to the fund at the time it is made, and (iii) each accumulation made pursuant to a direction in the applicable gift instrument at the time the accumulation is added to the fund. The determination of historic dollar value made in good faith by the institution or one who holds the institutional fund is conclusive.

VI. "Gift instrument" means a will, deed, grant conveyance, agreement, memorandum, writing, or other governing document (including the terms of any institutional solicitations from which an institutional fund resulted) under which property is transferred to or held for or by an institution as an institutional fund.

250:5 Rule of Construction. Amend RSA 292-B:3 to read as follows:

292-B:3 Rule of Construction. RSA 292-B:2 does not apply if the applicable gift instrument indicates the donor's specific intention that net appreciation shall not be expended or that the provisions of RSA 292-B shall not apply to gifts made under the gift instrument. A restriction upon the expenditure of net appreciation may not be implied from a designation of a gift as an endowment, or from a direction or authorization in the applicable gift instrument to use only "income," "interest," "dividends," or "rents, issues or profits," or "to preserve the principal intact," or a direction which contains other words of similar import. This rule of construction applies to gift instruments executed or in effect before or after the effective date of this chapter.

250:6 Standard of Conduct. Amend RSA 292-B:6 to read as follows:

292-B:6 Standard of Conduct. In the administration of the powers to appropriate appreciation, to accumulate income or add income to principal, to make and retain investments, and to delegate investment management of institutional funds, members of a governing board shall exercise [ordinary business care and prudence] general standards of prudent investment as defined under RSA 564-A under the facts and circumstances prevailing at the time of the action or decision. In so doing they shall consider long and short term needs of the institution in carrying out its educational, religious, charitable, or other eleemosynary purposes, its present and anticipated financial requirements, expected total return on its investments, price level trends, and general economic conditions. Provided, however, the appropriation of appreciation in any year in an amount greater than 7 percent of the fair market value of the assets of the institution's endowment funds (calculated on the basis of market values determined at least quarterly and averaged over a period of 3 or more years) shall create a rebuttable presumption of imprudence on the part of the governing board.

250:7 Release of Restrictions on Use or Investment. Amend RSA 292-B:7, II to read as follows:

II. If written consent of the donor cannot be obtained by reason of his death, disability, unavailability, or impossibility of identification, the governing board may apply in the name of the institution or institutional fund to the [superior] probate court for release of a restriction imposed by the applicable gift instrument on the use or investment of an institutional fund. The attorney general shall be notified of the application and shall be given an opportunity to be heard. If the court finds that the restriction is obsolete, inappropriate, or impracticable, it may by order release the restriction in whole or in part. A release under this subsection may not change an endowment fund to a fund that is not an endowment fund.

250:8 Effective Date. This act shall take effect 60 days after its passage.

(Approved: June 12, 2000)

(Effective Date: August 11, 2000)