Wednesday, October 1, 2008
Governor Schwartenegger signed SB 1329, making California the 26th jurisdiction to adopt UPMIFA, the Uniform Prudent Management of Institutional Funds Act. As we blogged on Sept. 28., the Governor said he would only sign bills that were "high priority" so we're glad he concluded that UPMIFA made the cut.
The California version of UPMIFA includes a presumption that spending above 7% of the value of the fund in one year is imprudent, but excludes from that provision all private or public postsecondary educational institutions and foundations operated by those institutions. The California statute also includes in the statute itself a reminder that spending below 7% does not create a presumption of prudence. That reminder appears in the comments to UPMIFA and certainly is the intent of UPMIFA.
UPMIFA provides that a charity can use the concepts of cy pres to modify a small and old fund, with notice to the Attorney General but without a court proceeding. California changes the definition of "small" from the $25,000 used in the uniform act to $100,000. Several other states have made this change.