Bill Text: FL H0599 | 2011 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Comm_Sub.html

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CS/CS/CS/HB 599

1	A bill to be entitled
2	An act relating to corporations not for profit; creating
3	s. 617.2104, F.S.; providing a short title; providing
4	definitions; providing requirements for the management of
5	funds held by an institution exclusively for charitable
6	purposes; providing standards of conduct in managing and
7	investing institutional funds; providing requirements for
8	appropriation for expenditure or accumulation of an
9	endowment fund by an institution; authorizing an
10	institution to delegate to an external agent the
11	management and investment of an institutional fund;
12	authorizing the release or modification of a restriction
13	on management, investment, or purpose of an institutional
14	fund; providing for determination of compliance; providing
15	for application to existing or newly established
16	institutional funds; providing relationship to federal
17	law; providing requirements for uniformity of application
18	and construction of the act; creating s. 617.2105, F.S.;
19	authorizing reversion of real property to the Board of
20	Trustees of the Internal Improvement Trust Fund if a not-
21	for-profit corporation holding a deed subject to a
22	reverter clause violates deed restrictions; repealing s.
23	1010.10, F.S., relating to the Florida Uniform Management
24	of Institutional Funds Act; providing effective dates.
25
26	Be It Enacted by the Legislature of the State of Florida:
27
28	Section 1.  Section 617.2104, Florida Statutes, is created
29	to read:
30	617.2104  Florida Uniform Prudent Management of
31	Institutional Funds Act.-
32	(1)  SHORT TITLE.-This section may be cited as the "Florida
33	Uniform Prudent Management of Institutional Funds Act."
34	(2)  DEFINITIONS.-For purposes of this section:
35	(a)  "Charitable purpose" means the relief of poverty, the
36	advancement of education or religion, the promotion of health,
37	the promotion of a governmental purpose, or any other purpose
38	the achievement of which is beneficial to the community.
39	(b)  "Endowment fund" means an institutional fund or part
40	thereof that, under the terms of a gift instrument, is not
41	wholly expendable by the institution on a current basis. The
42	term does not include assets that an institution designates as
43	an endowment fund for its own use.
44	(c)  "Gift instrument" means a record or records, including
45	an institutional solicitation, under which property is granted
46	to, transferred to, or held by an institution as an
47	institutional fund.
48	(d)  "Institution" means:
49	1.  A person organized and operated exclusively for
50	charitable purposes, other than:
51	a.  An individual; or
52	b.  A trust subject to s. 518.11;
53
54	2.  A government or governmental subdivision, agency, or
55	instrumentality to the extent that it holds funds exclusively
56	for a charitable purpose; or
57	3.  A trust that had both charitable and noncharitable
58	interests after all noncharitable interests have been terminated
59	if the trust is not subject to s. 518.11.
60	(e)  "Institutional fund" means a fund held by an
61	institution exclusively for charitable purposes. The term does
62	not include:
63	1.  Program-related assets;
64	2.  A fund held for an institution by a trustee that is not
65	an institution;
66	3.  A fund in which a beneficiary that is not an
67	institution has an interest, other than an interest that could
68	arise upon violation or failure of the purposes of the fund; or
69	4.  A fund managed or administered by the State Board of
70	Administration pursuant to its constitutional or statutory
71	authority.
72	(f)  "Person" means an individual, corporation, business
73	trust, estate, trust, partnership, limited liability company,
74	association, joint venture, public corporation, government or
75	governmental subdivision, agency, or instrumentality, or any
76	other legal or commercial entity.
77	(g)  "Program-related asset" means an asset held by an
78	institution primarily to accomplish a charitable purpose of the
79	institution and not primarily for investment.
80	(h)  "Record" means information that is inscribed on a
81	tangible medium or that is stored in an electronic or other
82	medium and is retrievable in perceivable form.
83	(3)  STANDARD OF CONDUCT IN MANAGING AND INVESTING
84	INSTITUTIONAL FUND.-
85	(a)  Subject to the intent of a donor expressed in a gift
86	instrument, an institution, in managing and investing an
87	institutional fund, shall consider the charitable purposes of
88	the institution and the purposes of the institutional fund.
89	(b)  In addition to complying with the duty of loyalty
90	imposed by law other than this section, each person responsible
91	for managing and investing an institutional fund shall manage
92	and invest the fund in good faith and with the care an
93	ordinarily prudent person in a like position would exercise
94	under similar circumstances.
95	(c)  In managing and investing an institutional fund, an
96	institution:
97	1.  May incur only costs that are appropriate and
98	reasonable in relation to the assets, the purposes of the
99	institution, and the skills available to the institution.
100	2.  Shall make a reasonable effort to verify facts relevant
101	to the management and investment of the fund.
102	(d)  An institution may pool two or more institutional
103	funds for purposes of management and investment.
104	(e)  Except as otherwise provided by a gift instrument, the
105	following rules apply:
106	1.  In managing and investing an institutional fund, the
107	following factors, if relevant, must be considered:
108	a.  General economic conditions.
109	b.  The possible effect of inflation or deflation.
110	c.  The expected tax consequences, if any, of investment
111	decisions or strategies.
112	d.  The role that each investment or course of action plays
113	within the overall investment portfolio of the fund.
114	e.  The expected total return from income and the
115	appreciation of investments.
116	f.  Other resources of the institution.
117	g.  The needs of the institution and the fund to make
118	distributions and to preserve capital.
119	h.  An asset's special relationship or special value, if
120	any, to the charitable purposes of the institution.
121	2.  Management and investment decisions about an individual
122	asset must be made not in isolation but rather in the context of
123	the institutional fund's portfolio of investments as a whole and
124	as a part of an overall investment strategy having risk and
125	return objectives reasonably suited to the fund and to the
126	institution.
127	3.  Except as otherwise provided by law other than this
128	section, an institution may invest in any kind of property or
129	type of investment consistent with this section.
130	4.  An institution shall diversify the investments of an
131	institutional fund unless the institution reasonably and
132	prudently determines under this section that the purposes of the
133	fund are better served without diversification.
134	5.  Within a reasonable time after receiving property, an
135	institution shall make and carry out decisions concerning the
136	retention or disposition of the property or to rebalance a
137	portfolio in order to bring the institutional fund into
138	compliance with the purposes, terms, and distribution
139	requirements of the institution as necessary to meet other
140	circumstances of the institution and the requirements of this
141	section.
142	6.  A person that has special skills or expertise, or is
143	selected in reliance upon the person's representation that the
144	person has special skills or expertise, has a duty to use those
145	skills or that expertise in managing and investing institutional
146	funds.
147	(4)  APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF
148	ENDOWMENT FUND; RULES OF CONSTRUCTION.-
149	(a)  Subject to the intent of a donor expressed in the gift
150	instrument, an institution may appropriate for expenditure or
151	accumulate so much of an endowment fund as the institution
152	determines is prudent for the uses, benefits, purposes, and
153	duration for which the endowment fund is established. Unless
154	stated otherwise in the gift instrument, the assets in an
155	endowment fund are donor-restricted assets until appropriated
156	for expenditure by the institution. In making a determination to
157	appropriate or accumulate, the institution shall act in good
158	faith with the care that an ordinarily prudent person in a like
159	position would exercise under similar circumstances and shall
160	consider, if relevant, the following factors:
161	1.  The duration and preservation of the endowment fund.
162	2.  The purposes of the institution and the endowment fund.
163	3.  General economic conditions.
164	4.  The possible effect of inflation or deflation.
165	5.  The expected total return from income and the
166	appreciation of investments.
167	6.  Other resources of the institution.
168	7.  The investment policy of the institution.
169	(b)  To limit the authority to appropriate for expenditure
170	or accumulate under paragraph (a), a gift instrument must
171	specifically state the limitation.
172	(c)  Terms in a gift instrument designating a gift as an
173	endowment, or a direction or authorization in the gift
174	instrument to use only "income," "interest," "dividends," or
175	"rents, issues, or profits," or "to preserve the principal
176	intact," or words of similar import:
177	1.  Create an endowment fund of permanent duration unless
178	other language in the gift instrument limits the duration or
179	purpose of the fund.
180	2.  Do not otherwise limit the authority to appropriate for
181	expenditure or accumulate under paragraph (a).
182	(5)  DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.-
183	(a)  Subject to any specific limitation set forth in a gift
184	instrument or in law other than this section, an institution may
185	delegate to an external agent the management and investment of
186	an institutional fund to the extent that an institution could
187	prudently delegate under the circumstances. An institution shall
188	act in good faith, with the care that an ordinarily prudent
189	person in a like position would exercise under similar
190	circumstances, in:
191	1.  Selecting an agent.
192	2.  Establishing the scope and terms of the delegation,
193	consistent with the purposes of the institution and the
194	institutional fund.
195	3.  Periodically reviewing the agent's actions in order to
196	monitor the agent's performance and compliance with the scope
197	and terms of the delegation.
198	(b)  In performing a delegated function, an agent owes a
199	duty to the institution to exercise reasonable care to comply
200	with the scope and terms of the delegation.
201	(c)  An institution that complies with paragraph (a) is not
202	liable for the decisions or actions of an agent to which the
203	function was delegated.
204	(d)  By accepting delegation of a management or investment
205	function from an institution that is subject to the laws of this
206	state, an agent submits to the jurisdiction of the courts of
207	this state in all proceedings arising from or related to the
208	delegation or the performance of the delegated function.
209	(e)  An institution may delegate management and investment
210	functions to its committees, officers, or employees as
211	authorized by law other than this section.
212	(6)  RELEASE OR MODIFICATION OF RESTRICTIONS ON MANAGEMENT,
213	INVESTMENT, OR PURPOSE.-
214	(a)  If the donor consents in a record, an institution may
215	release or modify, in whole or in part, a restriction contained
216	in a gift instrument on the management, investment, or purpose
217	of an institutional fund. A release or modification may not
218	allow a fund to be used for a purpose other than a charitable
219	purpose of the institution.
220	(b)  If consent of the donor in a record cannot be obtained
221	by reason of the donor's death, disability, unavailability, or
222	impossibility of identification, a governing board may modify a
223	restriction contained in a gift instrument regarding the
224	management, investment, or use of an institutional fund if the
225	fund has a total value of $100,000 or less and the restriction
226	has become impracticable or wasteful, impairs the management,
227	investment, or use of the fund or if, because of circumstances
228	not anticipated by the donor, a modification of a restriction
229	will further the purposes of the fund.
230	(c)  If an institution determines that a restriction
231	contained in a gift instrument on the management, investment, or
232	purpose of an institutional fund is unlawful, impracticable,
233	impossible to achieve, or wasteful, the institution, after
234	providing written notice to the Attorney General, may release or
235	modify the restriction, in whole or part, if:
236	1.  The institutional fund subject to the restriction has a
237	total value of at least $100,000 and not more than $250,000;
238	2.  More than 20 years have elapsed since the fund was
239	established; and
240	3.  The institution uses the property in a manner
241	consistent with the charitable purposes expressed in the gift
242	instrument.
243	(d)  The circuit court for the circuit in which an
244	institution is located, upon application of that institution,
245	may modify a restriction contained in a gift instrument
246	regarding the management or investment of an institutional fund
247	if the restriction has become impracticable or wasteful, if it
248	impairs the management or investment of the fund, or if, because
249	of circumstances not anticipated by the donor, a modification of
250	a restriction will further the purposes of the fund. The
251	institution shall notify the Attorney General of the
252	application. To the extent practicable, any modification must be
253	made in accordance with the donor's probable intention.
254	(e)  If a particular charitable purpose or a restriction
255	contained in a gift instrument on the use of an institutional
256	fund becomes unlawful, impracticable, impossible to achieve, or
257	wasteful, the circuit court for the circuit in which an
258	institution is located, upon application of that institution,
259	may modify the purpose of the fund or the restriction on the use
260	of the fund in a manner consistent with the charitable purposes
261	expressed in the gift instrument. The institution shall notify
262	the Attorney General of the application.
263	(7)  REVIEWING COMPLIANCE.-Compliance with this section is
264	determined in light of the facts and circumstances existing at
265	the time a decision is made or action is taken, and not by
266	hindsight.
267	(8)  APPLICATION TO EXISTING INSTITUTIONAL FUNDS.-This
268	section applies to institutional funds existing on or
269	established after the effective date of this section. As applied
270	to institutional funds existing on the effective date of this
271	section, this section governs only decisions made or actions
272	taken on or after that date.
273	(9)  RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND
274	NATIONAL COMMERCE ACT.-This section modifies, limits, and
275	supersedes the federal Electronic Signatures in Global and
276	National Commerce Act, 15 U.S.C. ss. 7001 et seq., but does not
277	modify, limit, or supersede s. 101(c) of that act, 15 U.S.C. s.
278	7001(c), or authorize electronic delivery of any of the notices
279	described in s. 103(b) of that act, 15 U.S.C. s. 7003(b).
280	(10)  UNIFORMITY OF APPLICATION AND CONSTRUCTION.-In
281	applying and construing this uniform act, consideration must be
282	given to the need to promote uniformity of the law with respect
283	to its subject matter among states that enact it.
284	Section 2.  Effective upon this act becoming a law, section
285	617.2105, Florida Statutes, is created to read:
286	617.2105  Corporation issued a deed to real property.-When
287	a corporation or foreign corporation subject to this chapter is
288	issued a deed to real property in the state by the Board of
289	Trustees of the Internal Improvement Trust Fund containing a
290	reverter clause that restricts the use of property to specified
291	uses in the deed, the failure to put the property to the
292	required use within a period of 3 years after the grant, unless
293	a stricter time period is contained in the deed, is prima facie
294	evidence that the restriction is violated, subjecting the
295	property to reversion to the Board of Trustees of the Internal
296	Improvement Trust Fund at its discretion. This section may not
297	be construed to excuse for any period of time a use of the
298	property in violation of the restrictive use.
299	Section 3.  Section 1010.10, Florida Statutes, is repealed.
300	Section 4.  Except as otherwise expressly provided in this
301	act and except for this section, which shall take effect upon
302	this act becoming a law, this act shall take effect July 1,
303	2012.

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