Bill Text: FL H0599 | 2011 | Regular Session | Engrossed


Bill Title: Corporations Not For Profit

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2011-05-03 - Ordered enrolled -HJ 1102 [H0599 Detail]

Download: Florida-2011-H0599-Engrossed.html
CS/CS/CS/HB 599

1
A bill to be entitled
2An act relating to corporations not for profit; creating
3s. 617.2104, F.S.; providing a short title; providing
4definitions; providing requirements for the management of
5funds held by an institution exclusively for charitable
6purposes; providing standards of conduct in managing and
7investing institutional funds; providing requirements for
8appropriation for expenditure or accumulation of an
9endowment fund by an institution; authorizing an
10institution to delegate to an external agent the
11management and investment of an institutional fund;
12authorizing the release or modification of a restriction
13on management, investment, or purpose of an institutional
14fund; providing for determination of compliance; providing
15for application to existing or newly established
16institutional funds; providing relationship to federal
17law; providing requirements for uniformity of application
18and construction of the act; creating s. 617.2105, F.S.;
19authorizing reversion of real property to the Board of
20Trustees of the Internal Improvement Trust Fund if a not-
21for-profit corporation holding a deed subject to a
22reverter clause violates deed restrictions; providing for
23retroactive and prospective application; repealing s.
241010.10, F.S., relating to the Florida Uniform Management
25of Institutional Funds Act; providing effective dates.
26
27Be It Enacted by the Legislature of the State of Florida:
28
29     Section 1.  Section 617.2104, Florida Statutes, is created
30to read:
31     617.2104  Florida Uniform Prudent Management of
32Institutional Funds Act.-
33     (1)  SHORT TITLE.-This section may be cited as the "Florida
34Uniform Prudent Management of Institutional Funds Act."
35     (2)  DEFINITIONS.-For purposes of this section:
36     (a)  "Charitable purpose" means the relief of poverty, the
37advancement of education or religion, the promotion of health,
38the promotion of a governmental purpose, or any other purpose
39the achievement of which is beneficial to the community.
40     (b)  "Endowment fund" means an institutional fund or part
41thereof that, under the terms of a gift instrument, is not
42wholly expendable by the institution on a current basis. The
43term does not include assets that an institution designates as
44an endowment fund for its own use.
45     (c)  "Gift instrument" means a record or records, including
46an institutional solicitation, under which property is granted
47to, transferred to, or held by an institution as an
48institutional fund.
49     (d)  "Institution" means:
50     1.  A person organized and operated exclusively for
51charitable purposes, other than:
52     a.  An individual; or
53     b.  A trust subject to s. 518.11;
54
55     2.  A government or governmental subdivision, agency, or
56instrumentality to the extent that it holds funds exclusively
57for a charitable purpose; or
58     3.  A trust that had both charitable and noncharitable
59interests after all noncharitable interests have been terminated
60if the trust is not subject to s. 518.11.
61     (e)  "Institutional fund" means a fund held by an
62institution exclusively for charitable purposes. The term does
63not include:
64     1.  Program-related assets;
65     2.  A fund held for an institution by a trustee that is not
66an institution;
67     3.  A fund in which a beneficiary that is not an
68institution has an interest, other than an interest that could
69arise upon violation or failure of the purposes of the fund; or
70     4.  A fund managed or administered by the State Board of
71Administration pursuant to its constitutional or statutory
72authority.
73     (f)  "Person" means an individual, corporation, business
74trust, estate, trust, partnership, limited liability company,
75association, joint venture, public corporation, government or
76governmental subdivision, agency, or instrumentality, or any
77other legal or commercial entity.
78     (g)  "Program-related asset" means an asset held by an
79institution primarily to accomplish a charitable purpose of the
80institution and not primarily for investment.
81     (h)  "Record" means information that is inscribed on a
82tangible medium or that is stored in an electronic or other
83medium and is retrievable in perceivable form.
84     (3)  STANDARD OF CONDUCT IN MANAGING AND INVESTING
85INSTITUTIONAL FUND.-
86     (a)  Subject to the intent of a donor expressed in a gift
87instrument, an institution, in managing and investing an
88institutional fund, shall consider the charitable purposes of
89the institution and the purposes of the institutional fund.
90     (b)  In addition to complying with the duty of loyalty
91imposed by law other than this section, each person responsible
92for managing and investing an institutional fund shall manage
93and invest the fund in good faith and with the care an
94ordinarily prudent person in a like position would exercise
95under similar circumstances.
96     (c)  In managing and investing an institutional fund, an
97institution:
98     1.  May incur only costs that are appropriate and
99reasonable in relation to the assets, the purposes of the
100institution, and the skills available to the institution.
101     2.  Shall make a reasonable effort to verify facts relevant
102to the management and investment of the fund.
103     (d)  An institution may pool two or more institutional
104funds for purposes of management and investment.
105     (e)  Except as otherwise provided by a gift instrument, the
106following rules apply:
107     1.  In managing and investing an institutional fund, the
108following factors, if relevant, must be considered:
109     a.  General economic conditions.
110     b.  The possible effect of inflation or deflation.
111     c.  The expected tax consequences, if any, of investment
112decisions or strategies.
113     d.  The role that each investment or course of action plays
114within the overall investment portfolio of the fund.
115     e.  The expected total return from income and the
116appreciation of investments.
117     f.  Other resources of the institution.
118     g.  The needs of the institution and the fund to make
119distributions and to preserve capital.
120     h.  An asset's special relationship or special value, if
121any, to the charitable purposes of the institution.
122     2.  Management and investment decisions about an individual
123asset must be made not in isolation but rather in the context of
124the institutional fund's portfolio of investments as a whole and
125as a part of an overall investment strategy having risk and
126return objectives reasonably suited to the fund and to the
127institution.
128     3.  Except as otherwise provided by law other than this
129section, an institution may invest in any kind of property or
130type of investment consistent with this section.
131     4.  An institution shall diversify the investments of an
132institutional fund unless the institution reasonably and
133prudently determines under this section that the purposes of the
134fund are better served without diversification.
135     5.  Within a reasonable time after receiving property, an
136institution shall make and carry out decisions concerning the
137retention or disposition of the property or to rebalance a
138portfolio in order to bring the institutional fund into
139compliance with the purposes, terms, and distribution
140requirements of the institution as necessary to meet other
141circumstances of the institution and the requirements of this
142section.
143     6.  A person that has special skills or expertise, or is
144selected in reliance upon the person's representation that the
145person has special skills or expertise, has a duty to use those
146skills or that expertise in managing and investing institutional
147funds.
148     (4)  APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF
149ENDOWMENT FUND; RULES OF CONSTRUCTION.-
150     (a)  Subject to the intent of a donor expressed in the gift
151instrument, an institution may appropriate for expenditure or
152accumulate so much of an endowment fund as the institution
153determines is prudent for the uses, benefits, purposes, and
154duration for which the endowment fund is established. Unless
155stated otherwise in the gift instrument, the assets in an
156endowment fund are donor-restricted assets until appropriated
157for expenditure by the institution. In making a determination to
158appropriate or accumulate, the institution shall act in good
159faith with the care that an ordinarily prudent person in a like
160position would exercise under similar circumstances and shall
161consider, if relevant, the following factors:
162     1.  The duration and preservation of the endowment fund.
163     2.  The purposes of the institution and the endowment fund.
164     3.  General economic conditions.
165     4.  The possible effect of inflation or deflation.
166     5.  The expected total return from income and the
167appreciation of investments.
168     6.  Other resources of the institution.
169     7.  The investment policy of the institution.
170     (b)  To limit the authority to appropriate for expenditure
171or accumulate under paragraph (a), a gift instrument must
172specifically state the limitation.
173     (c)  Terms in a gift instrument designating a gift as an
174endowment, or a direction or authorization in the gift
175instrument to use only "income," "interest," "dividends," or
176"rents, issues, or profits," or "to preserve the principal
177intact," or words of similar import:
178     1.  Create an endowment fund of permanent duration unless
179other language in the gift instrument limits the duration or
180purpose of the fund.
181     2.  Do not otherwise limit the authority to appropriate for
182expenditure or accumulate under paragraph (a).
183     (5)  DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.-
184     (a)  Subject to any specific limitation set forth in a gift
185instrument or in law other than this section, an institution may
186delegate to an external agent the management and investment of
187an institutional fund to the extent that an institution could
188prudently delegate under the circumstances. An institution shall
189act in good faith, with the care that an ordinarily prudent
190person in a like position would exercise under similar
191circumstances, in:
192     1.  Selecting an agent.
193     2.  Establishing the scope and terms of the delegation,
194consistent with the purposes of the institution and the
195institutional fund.
196     3.  Periodically reviewing the agent's actions in order to
197monitor the agent's performance and compliance with the scope
198and terms of the delegation.
199     (b)  In performing a delegated function, an agent owes a
200duty to the institution to exercise reasonable care to comply
201with the scope and terms of the delegation.
202     (c)  An institution that complies with paragraph (a) is not
203liable for the decisions or actions of an agent to which the
204function was delegated.
205     (d)  By accepting delegation of a management or investment
206function from an institution that is subject to the laws of this
207state, an agent submits to the jurisdiction of the courts of
208this state in all proceedings arising from or related to the
209delegation or the performance of the delegated function.
210     (e)  An institution may delegate management and investment
211functions to its committees, officers, or employees as
212authorized by law other than this section.
213     (6)  RELEASE OR MODIFICATION OF RESTRICTIONS ON MANAGEMENT,
214INVESTMENT, OR PURPOSE.-
215     (a)  If the donor consents in a record, an institution may
216release or modify, in whole or in part, a restriction contained
217in a gift instrument on the management, investment, or purpose
218of an institutional fund. A release or modification may not
219allow a fund to be used for a purpose other than a charitable
220purpose of the institution.
221     (b)  If consent of the donor in a record cannot be obtained
222by reason of the donor's death, disability, unavailability, or
223impossibility of identification, a governing board may modify a
224restriction contained in a gift instrument regarding the
225management, investment, or use of an institutional fund if the
226fund has a total value of $100,000 or less and the restriction
227has become impracticable or wasteful, impairs the management,
228investment, or use of the fund or if, because of circumstances
229not anticipated by the donor, a modification of a restriction
230will further the purposes of the fund.
231     (c)  If an institution determines that a restriction
232contained in a gift instrument on the management, investment, or
233purpose of an institutional fund is unlawful, impracticable,
234impossible to achieve, or wasteful, the institution, after
235providing written notice to the Attorney General, may release or
236modify the restriction, in whole or part, if:
237     1.  The institutional fund subject to the restriction has a
238total value of at least $100,000 and not more than $250,000;
239     2.  More than 20 years have elapsed since the fund was
240established; and
241     3.  The institution uses the property in a manner
242consistent with the charitable purposes expressed in the gift
243instrument.
244     (d)  The circuit court for the circuit in which an
245institution is located, upon application of that institution,
246may modify a restriction contained in a gift instrument
247regarding the management or investment of an institutional fund
248if the restriction has become impracticable or wasteful, if it
249impairs the management or investment of the fund, or if, because
250of circumstances not anticipated by the donor, a modification of
251a restriction will further the purposes of the fund. The
252institution shall notify the Attorney General of the
253application. To the extent practicable, any modification must be
254made in accordance with the donor's probable intention.
255     (e)  If a particular charitable purpose or a restriction
256contained in a gift instrument on the use of an institutional
257fund becomes unlawful, impracticable, impossible to achieve, or
258wasteful, the circuit court for the circuit in which an
259institution is located, upon application of that institution,
260may modify the purpose of the fund or the restriction on the use
261of the fund in a manner consistent with the charitable purposes
262expressed in the gift instrument. The institution shall notify
263the Attorney General of the application.
264     (7)  REVIEWING COMPLIANCE.-Compliance with this section is
265determined in light of the facts and circumstances existing at
266the time a decision is made or action is taken, and not by
267hindsight.
268     (8)  APPLICATION TO EXISTING INSTITUTIONAL FUNDS.-This
269section applies to institutional funds existing on or
270established after the effective date of this section. As applied
271to institutional funds existing on the effective date of this
272section, this section governs only decisions made or actions
273taken on or after that date.
274     (9)  RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND
275NATIONAL COMMERCE ACT.-This section modifies, limits, and
276supersedes the federal Electronic Signatures in Global and
277National Commerce Act, 15 U.S.C. ss. 7001 et seq., but does not
278modify, limit, or supersede s. 101(c) of that act, 15 U.S.C. s.
2797001(c), or authorize electronic delivery of any of the notices
280described in s. 103(b) of that act, 15 U.S.C. s. 7003(b).
281     (10)  UNIFORMITY OF APPLICATION AND CONSTRUCTION.-In
282applying and construing this uniform act, consideration must be
283given to the need to promote uniformity of the law with respect
284to its subject matter among states that enact it.
285     Section 2.  Effective upon this act becoming a law, section
286617.2105, Florida Statutes, is created to read:
287     617.2105  Corporation issued a deed to real property.-When
288a corporation or foreign corporation subject to this chapter is
289issued a deed to real property in the state by the Board of
290Trustees of the Internal Improvement Trust Fund containing a
291reverter clause that restricts the use of property to specified
292uses in the deed, the failure to put the property to the
293required use within a period of 3 years after the grant, unless
294a stricter time period is contained in the deed, is prima facie
295evidence that the restriction is violated, subjecting the
296property to reversion to the Board of Trustees of the Internal
297Improvement Trust Fund at its discretion. This section applies
298retroactively and prospectively and may not be construed to
299excuse for any period of time a use of the property in violation
300of the restrictive use.
301     Section 3.  Section 1010.10, Florida Statutes, is repealed.
302     Section 4.  Except as otherwise expressly provided in this
303act and except for this section, which shall take effect upon
304this act becoming a law, this act shall take effect July 1,
3052012.


CODING: Words stricken are deletions; words underlined are additions.
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