2023 New York Laws › NPC - Not-For-Profit Corporation › Article 5-A - Prudent Management of Institutional Funds Act › 552 - Standard of Conduct in Managing and Investing an Institutional Fund.

§ 552. Standard  of  conduct  in managing and investing an institutional
fund.
(a) Subject to the intent of a donor expressed in a  gift  instrument,
an  institution,  in managing and investing an institutional fund, shall
consider the purposes  of  the  institution  and  the  purposes  of  the
institutional fund.
(b)  In  addition to complying with the duty of loyalty imposed by law
other than this  article,  each  person  responsible  for  managing  and
investing an institutional fund shall manage and invest the fund in good
faith  and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances.
(c) In managing and investing an institutional  fund,  an  institution
consistent with section 717 (Duty of Directors and Officers):
(1)  may  incur  only  costs  that  are  appropriate and reasonable in
relation to the assets, the purposes of the institution, and the  skills
available to the institution; and
(2)  shall  make  a  reasonable effort to verify facts relevant to the
management and investment of the fund.
(d) An institution may  pool  two  or  more  institutional  funds  for
purposes of management and investment.
(e)  Except  as otherwise provided by a gift instrument, the following
rules apply:
(1) In managing and investing an  institutional  fund,  the  following
factors,   if   relevant,  must  be  considered:  (A)  general  economic
conditions; (B) the possible effect of inflation or deflation;  (C)  the
expected   tax   consequences,   if  any,  of  investment  decisions  or
strategies; (D) the role that each investment or course of action  plays
within  the  overall  investment portfolio of the fund; (E) the expected
total return from income and the appreciation of investments; (F)  other
resources  of  the institution; (G) the needs of the institution and the
fund to make distributions and to preserve capital; and (H)  an  asset's
special  relationship  or  special value, if any, to the purposes of the
institution.
(2) Management and investment decisions about an individual asset must
be made not in isolation but rather in the context of the  institutional
fund's  portfolio  of investments as a whole and as a part of an overall
investment strategy having risk and return objectives reasonably  suited
to the fund and to the institution.
(3)  Except  as  otherwise provided by law other than this article, an
institution may invest in any kind of property  or  type  of  investment
consistent with this article.
(4) An institution shall diversify the investments of an institutional
fund  unless  the  institution  prudently  determines  that,  because of
special circumstances, the  purposes  of  the  fund  are  better  served
without  diversification.  An institution shall review a decision not to
diversify as frequently as circumstances require, but at least annually.
(5) Within a reasonable time after receiving property, an  institution
shall   make  and  carry  out  decisions  concerning  the  retention  or
disposition of the property or to rebalance a  portfolio,  in  order  to
bring  the  institutional fund into compliance with the purposes, terms,
and distribution requirements of the institution as  necessary  to  meet
other  circumstances  of  the  institution  and the requirements of this
article.
(6) A person that has special skills or expertise, or is  selected  in
reliance  upon  the  person's representation that the person has special
skills or expertise, has a duty to use those skills or that expertise in
managing and investing institutional funds.
(f) Each institution shall adopt a written investment  policy  setting
forth  guidelines  on  investments  and  delegation  of  management  and
investment functions in accord with the standards of this article.